Modern entrepreneurs from the CIS countries have the right to earn money worldwide. Companies can be registered in any corner of the globe. And the legislation of some countries offers to minimize tax payments if the established rules are followed.

We’re talking about Cyprus, Malta, and island nations under the British Crown. These are considered classic offshore jurisdictions. However, there are also countries that are not considered offshore but where the annual payments are only a few hundred dollars (or euros). These include Canada, Germany, and the UAE. In this article, we’ll focus on the UAE. This country is unique in its own right and is ideal for opening a company in the UAE for entrepreneurs from CIS countries.

CONTENT:

1. For Entrepreneurs: A Little About the Emirates
2. What is an “Offshore in the UAE”
3. What Are the Advantages of the UAE for Entrepreneurs
4. Are There Any Drawbacks of the UAE for Business Opening by Non-Residents?
5. Company Registration in the United Arab Emirates: A Step-by-Step Guide
6. Registering Offshore Companies
7. How to Open an Offshore Company in the United Arab Emirates?

For Entrepreneurs: A Little About the Emirates

The Emirates offer entrepreneurs a fairly lenient tax regime. This is a country without personal income tax even for non-residents. Additionally, if a business is engaged in banking, chemical, or oil refining activities, there will be no corporate profit tax.

Also on the topic: Registering Offshore Companies in Hungary: Details and Recommendations

Although the UAE is not part of the Organisation for Economic Co-operation, which includes European countries, it has signed a convention on the abolition of tax information exchange. This means that lists of all beneficiaries and entrepreneurs are completely closed. Of course, if the owner of the company is not a resident of the country and a court order has been issued to obtain detailed information, the authorities will comply. But there’s a way out. You can quickly re-register an offshore company as an onshore one, making local residency a matter of time.

There is no taxation as such in the Emirates. There is only a value-added tax of 5% for companies engaged in the sale of goods or services within the country.

When dealing with financial institutions (taking loans, credit, inheritance), you must adhere to Sharia law. The concept of nominal ownership does not exist here at all.

What is an “Offshore in the UAE”

The Arab Emirates is a country that emerged from a barren desert but quickly became one of the most developed. The fact is, their government focused not on resources (which are absent here) but on people. Native residents receive numerous benefits and bonuses. For example, locals are provided with the opportunity to study at any university in the world at the government’s expense. After marriage, they can get a “young family development” bank account, which in a few years will allow them to buy a house or an apartment. Local entrepreneurs are also “blessed” by the government. They can run their business with minimal taxes and have access to the largest investor database in the world, who come to the state. Each sees potential benefits and strives to invest in one of the most developed countries. The UAE has branches of all major banks on the planet. In general, the key is to present yourself correctly to attract both investors and government organizations to achieve excellent profits.

But what about non-residents? We have only talked about the benefits available to natives. There are many advantages for non-residents as well. To understand them, one needs to delve into the concept of “offshore.”

Thus, the “offshore industry” is divided into three types:

• Classic. These include countries like Belize or the Dominican Republic. These states reduce the tax burden on a company to zero (only an annual tax fee is required), but have a poor reputation. Some European countries believe that these offshore zones are used by businessmen to evade taxes. They are right. Hence, there is a “blacklist” of countries. Companies registered in these jurisdictions often face difficulties in finding cooperation or investment.
• Low-tax. These include islands near Great Britain and Cyprus. They have an interesting tax system: some companies pay taxes, others do not, depending on their activity. These countries have a good reputation and are not on the “blacklists.”
• Moderate-tax. Examples include Denmark or Austria. These countries have audits but offer very low tax rates. Their reputation is excellent.

The United Arab Emirates do not fall into any of these classifications. Companies established here not only have a good reputation but also pay low taxes. The state strives to create comfortable conditions for both domestic and foreign entrepreneurs.

What Are the Advantages of the UAE for Entrepreneurs

The UAE offshore zone is suitable for entrepreneurs from CIS countries because:

• You can buy an established company in the UAE with an excellent reputation, or set up your own and build a good reputation. In other words, the country is not on any “blacklists,” nor are the companies registered there;
• The political situation is stable. Political riots or coups have not occurred in the country for over 100 years;
• The population and government are welcoming to foreigners. Although the majority are Muslims, any business is respected here. The key is to adhere to the country’s religious laws, such as not eating or drinking in public during Ramadan, avoiding wearing shorts or short skirts, and not approaching women;
• You will obtain a legitimate business that can “recoup” all expenses within the first year. However, it is essential to comply with tax and other legislation. Government authorities are always vigilant;
• Banks have an impeccable reputation. You will benefit from this reputation if you manage to register a company in the UAE. Many financial institutions want to open branches in this country;
• Several free zones offer tax-free goods and services across the country, each with different focuses and conditions.
• The country continually improves its legislation regulating foreign business. The government provides a simple registration process for non-residents.

With all this, you get enormous opportunities for development and low taxes. Companies are not taxed on their profits. Audits are required only in Jebel Ali and Dubai.

Are There Any Drawbacks of the UAE for Opening Business by Non-Residents?

Opening an offshore company in the UAE certainly has many advantages, but there are also drawbacks, just like in any other jurisdiction. We’ll warn you in advance: all the negatives pale in comparison to the positives. Therefore, starting a business here is quite profitable.

Drawbacks for non-residents opening a business in the Emirates:

1. When opening a company in the UAE, you cannot operate within the country or rent an office. To get a real legal address, you must either purchase a property or pay an annual tax.
2. Registering an onshore company grants the entrepreneur a residency visa. This means you can visit the UAE at any time at your discretion without needing additional documentation. Offshore company registration does not provide this option.
3. A business plan must be prepared before opening a company. In practice, this is more of a formality, but you will need to adhere to it.
4. It is also necessary to mention the influence of Sharia law. This set of Muslim rules and laws must be followed by both residents and non-residents. They are considered a form of divine guidance that must be observed. This includes religious obligations, interactions with others, handling specific situations, legal work, and religious dogma. Non-residents may be forgiven for deviating from some rules, but compliance is not excluded.
5. Signing documents for opening a company and setting up a bank account requires the presence of at least one of the company’s founders. Therefore, you will need to visit the Emirates for a day or more, depending on the circumstances. This means you will need to obtain a visa, which is not always straightforward.
6. The UAE has not signed an apostille agreement. In simple terms, you cannot present documents that are not translated into Arabic and notarized by a local notary. This also applies to the company registration certificate in the UAE. Unfortunately, the legalization of documents is a rather costly procedure.
7. The dry, hot climate. Yes, this can also be considered a drawback, as people with conditions such as cardiovascular diseases may struggle with it. You will still need to visit the Emirates a few times a year after setting up the company.

Another drawback is the unique business methods of local residents. Our mentalities are quite different, so we may not understand them, and they may not understand us. However, if you are setting up an offshore company, you need not worry about this drawback, as operations will be conducted solely outside the country.

Company Registration in the United Arab Emirates: A Step-by-Step Guide

The company INVESTMAKLER can assist you in registering a company in the United Arab Emirates or buying an existing one. To prepare you for what to expect, we have compiled a step-by-step guide outlining all the documents and types of companies.

Details in the article: Opening Offshore Companies: Features, Timelines, and Cost Calculation

In the UAE, you can open three types of businesses:

1. Offshore. You can conduct business exclusively outside the country;
2. Free Zone Company. Free Zone allows operations both within the country and abroad;
3. Mainland. Mainland business can operate worldwide, including within the UAE. However, registration and operation require a local investor.

Offshore Company Registration

This option is the simplest and fastest among the three mentioned above. While conducting business in the Emirates will be prohibited, you will obtain the reputation of an honest and legal company.

An offshore company is created as a joint-stock company. The founders’ liability is limited to the authorized capital. Both individuals and legal entities, regardless of their residency, can participate in the formation. Business activities can be conducted worldwide. If you have a licensed registration agent, you can set up the company even without your presence. The law imposes the following requirements on offshore businesses:

1. The organizational and legal form must be a Joint Stock Company with Limited Liability, either Incorporated or Limited.
2. The business activities should be based on Islamic law, but the type of activity can be mixed.
3. According to the Federal Law on “Commercial Companies” and the Regulation from 2016 that supplements it, any company must clearly define and delineate its legal status.
4. A director and at least one shareholder must be appointed, who can be either an individual or a legal entity.
5. The law requires a secretary employed under a contract. The authorized capital must be at least $2,740, but partial payment is not required at the time of registration.
6. The board of directors must meet at least once a year anywhere in the world and document the meeting with minutes.
7. A legal address, which serves as the headquarters or main office, must be provided during registration.
8. There is no profit tax, and the legislation does not impose requirements for audit, statistical, tax, or financial reports.

To register, you need to prepare a set of documents and pay certain fees. The fees cover:

• State duty;
• Registration address;
• Registration agency services;
• Stamp production;
• Nominee service;
• Translation and notarization of the document package.

Each year after the company is established, you will need to pay:

1. The state duty as stipulated in the tax legislation.
2. The subscription fee for the registration address.
3. Nominee service fees (renewal for maintaining beneficiary confidentiality).

For information on the required documents, you can contact our specialists using the phone numbers listed on the website or by leaving a request.

How to Open an Offshore Company in the United Arab Emirates?

You can handle the documentation yourself. However, to save your money, nerves, and time, we recommend contacting us.

INVESTMAKLER offers services for opening businesses of the three types described above—local, offshore, and onshore. We will set up a company with your chosen name.

Costs will need to be discussed separately with our consultants, as they are highly individual and based on the business plan. However, we consider state duties, obtaining a legal address, and other expenses.

Our specialists will check the company name (to ensure it is not already registered), prepare and fill out all documents in English and Arabic, and handle the registration process. They will also pay all fees and charges and select the legal address. You will receive the Certificate of Incorporation, Memorandum of Association, and Share Certificate—essential documents for the offshore company founder.

If you wish to open an onshore company, the procedure is the same. You will receive the Certificate of Incorporation, License, and Lease Agreement. For specific countries, all documents are authenticated (translated and notarized).

You only need to provide a copy of your passport, a bank statement, and a registration address. Leave a request on the website now or call the numbers listed here. We will be happy to answer all your questions.