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Dubai is constantly evolving, and is on track to become one of the most free and attractive cities in the world for companies, expatriates and investors. Christoph has had a Dubai residency for two years and Juliana, a contributor at Staatenlos, particularly enjoys the time she spends in this emirate. Today she writes about her impressions as a woman in Dubai and presents the new offers proposed by Staatenlos in the region.

Oh, so after all paradise on Earth does exist?

Dubai, one of the seven emirates which constitute the United Arab Emirates (UAE), is the most open region in the country and a nerve centre of the world. Its air accessibility is excellent, and the city possesses magnificent infrastructure (the growth and spread of which shows no signs of slowing down) and a perhaps unexpected level of safety. Don’t let its Arabic name or location mislead you: 85% of its population is made up of international expats, meaning it is perfectly possible to lead a western lifestyle without suffering any kind of discrimination. In recent years, not only has a large part of potentially problematic legislation been decriminalised, but it also has in fact been entirely repealed.

Although the UAE are neighbours to countries like Saudi Arabia, we cannot tar them all with the same brush. Dubai is well known for its incredible quality of life, high degree of safety and wide-ranging offer of products, services and entertainment. Here not only do women have guaranteed rights such as being able to drive, they also enjoy vast privileges in government offices and in many other institutions. Those who understand the authentic local life know that Islamic customs only apply to those who voluntarily decide to follow them.

I have a personal confession to make

I am Brazilian, and in my country, it is extremely common for women to be greeted in the street with honking from car horns, or even to be catcalled. I find it very uncomfortable, for example, having to constantly pull my skirt down “so as not to draw attention”, forever wary of being followed or of a motorbike lurking behind me with two guys likely to attempt a mugging. My experience in Dubai could not be more contrasting: I can move around and live freely, safe in the knowledge that I won’t be harassed, with no sense whatsoever that I’m about to have my purse stolen or that I have to wear a burka or any other type of veil.

People here are very helpful; they even bring your purse or wallet back to your house if you forget it or lose it in the street. Who would have thought? What’s more, the education and schooling system is one of the best and most prestigious in the world. All these aspects make the UAE an attractive and safe destination.

When we talk about paradise, typically we think of sun and beaches, and Dubai has lots of both. It is amazing what has been built “in the desert”. The UAE have a desert and hot climate, with average temperatures of 20 degrees from December to February and 35 degrees from June to September. Rainfall is sparse between December and April and almost non-existent the rest of the year. Living in the Emirates without air conditioning is quite challenging, and lots of expats prefer to spend the hot summer in other parts of the world. Fortunately, this is precisely the best period in the year to enjoy Europe.

For those of us who live according to flag theory, both Dubai and the United Arab Emirates as a whole are particularly favourable for planting the most important flags: establishing a residence, setting up a company or choosing it as a recreational destination, for example. Dubai is more than merely a strategic hub, it is “unique window” where you can find everything you need. In addition, being able to do everything in English is a great advantage—understanding Arabic can be helpful, but is not an absolute must.

What about taxes?

It’s very straightforward. The numbers don’t lie:

  • No direct taxes.
    That said, it must be noted that discussions are ongoing around the possibility of introducing a 9% tax rate on companies on the continent which have annual net profits of $100,000 (375,000 AED) and upwards. The date anticipated was the 1 June 2023, but that has been pushed back to at least 2024, as there is currently insufficient infrastructure to impose direct taxation.
    In any case, it is possible to reduce your future corporation tax to zero. One option, for example, would be to pay yourself a salary in your company at the exact amount necessary to keep the company’s profits from exceeding the $100k pre-tax limit allowed.
  • A VAT rate of 5%—only applicable to clients of the six states of the Gulf Cooperation Council, or GCC.
  • Entry only every 180 days—there is no maximum absence for holders of the Golden Visa.
  • One disadvantage is that you can only obtain the tax certificate after spending 183 days there.
  • Residence is not obligatory.
  • Dubai possesses a good number of tax treaties (although not with Germany nor with the United States).
  • Low levels of bureaucracy; often it is not even mandatory to keep accounts.

Dubai is growing! It is a great place to establish your business and make good contacts.

What Dubai has instead of taxes are licences: you need a licence both for Free-Trade Zones (FTZ) and for companies on the mainland. This is essentially a kind of fixed tax that in turn allows you to have your residence in Dubai. Because any company can sponsor you and your family members or friends to obtain a residence permit. Below we will look at what type of companies they are.

Free trade zones vs. mainland companies

Most companies in the UAE and Dubai are located on the mainland (that is, not in free zones). The peninsula is regulated by the Department of Economic Development (DED), a government body. It is governed according to the state’s legal system and mainland companies abide by the terms set forth in law. Most of the double taxation treaties in Dubai are only available for mainland companies. These companies are not subject to territorial restrictions and operate both outside and within the borders of the country.

Mainland companies are obliged to keep accounting which, generally speaking, entails higher costs, but it does provide much greater flexibility, reputation and access to bank accounts and payment platforms. As a result, at the present moment this would be our recommendation for the largest companies who wish to remain tax free in Dubai.

Forming a mainland company also opens up the possibility of growing your business to other parts of Dubai and the UAE.

From 2022, mainland companies can be completely owned by foreigners. Previously it was necessary to find an Emirati sponsor who had a 51% share in the company. This risk no longer exists, except for certain specific business activities.

The advantages of mainland LLCs:

  • No corporation tax (at the time of writing)
  • Possibility to have complete company ownership (100%)
  • Allows for building business links within the UAE
  • Gives a better impression to banks and business partners compared to a free zone company
  • Provides access to all kinds of payment platforms (stripe) and bank accounts
  • No income tax if you live in the UAE
  • No requirement to deposit ‘social capital’
  • No limits on granting visas

Free zones, however, are jurisdictions managed independently of the State. Companies in free zones can only operate within the respective area or outside the UAE. Licences for companies within these zones are awarded according to the company’s business activity.

The majority of free zones determine the activity of a company based on a list of permitted activities and then issue a licence for a specific category, which entails certain annual charges. As a result, a company operating across different categories must assume the cost of several licences or request a “General Trading” licence, which allows for the combining of activities from different sectors.

Common licence categories are company, services and consultancy, industry, holding, online commerce, education, media, freelance or self-employed. This depends entirely on how complicated each particular zone wants to make it. There are almost 100 different free trade zones in the Emirates.

However, free zones currently have a big problem: business accounts. Owing to its often-anonymous nature, the lack of bookkeeping and of business substance, both international and local banks are relatively reticent to open accounts for these companies. In general, you have to pay high commission fees to open an account, and even more so with local banks. This tax can be spread out as an “accelerated tax”, but even in that case the account can take up to two or three months to be fully operational. At least you will have an account for your company.

There are some alternatives such as the Hong Kong operator Wise, Currenxie.com or the new Dubai Fintech: Wio.com. That said, there is no reason to rely solely on these options: if you need a business account in Dubai, we can guarantee you one at a similarly high rate. If we cannot deliver this, we will give you your money back.

The advantages of free zone companies:

  • They are exempt from corporation and operating tax
  • They are exempt from withholding taxes
  • Owners who are UAE residents are exempt from income tax
  • There is often no public registry of commerce (full corporate anonymity)
  • It is possible to have 100% foreign ownership
  • In most cases, you don’t need to pay VAT. However, input tax can be deducted with reference to the mainland
  • No requirement to publish annual accounts
  • No accounting obligations
  • No trade barriers or quotas
  • Simple directives for importing and exporting
  • Straightforward processes for awarding licences
  • Liberal labour laws
  • Fast growth

International Free Zone Authority (IFZA)

The International Free Zone Authority is governed by the DIEZA law (DSO, DAFSA, JAFZA) which stipulates in Article 17 that companies established in the IFZA are exempt from tax for 50 years. It is currently the most widely recommended free zone in the UAE, especially for regular online business owners. It forms part of Dubai’s so-called Silicon Oasis.

It was founded in 2018 by experts from various zones and combines low costs with good service.

At Staatenlos we have a good relationship with the IFZA board.

IFZA offers licences in sectors of holdings, consultancy, services, trade and general trade. Classification is performed from a list of permitted activities, which contains more than 1000 entries. We have been working with IFZA for three years now.

The advantages of IFZA compared to other free zones:

  • There is no public register, in contrast to other zones
  • There is no physical office requirement (IFZA has 15,000 square meters of office space if you so wish)
  • There are no accounting obligations
  • It is hassle-free, cheaper and with community management
  • IFZA is the first completely B2B (business to business) free trade zone
  • It boasts a banking association with local banks

Here is an important point regarding the economic substance: if you run an active and credible business and not a “letterbox company”, you have nothing to worry about. The rules of economic substance only apply if you use the company to invoice your own companies, be it through licences, consultancy or purchasing invoices. If you transfer your business completely to the Emirates, you won’t need an office nor employees.

In Dubai, you can run a company even without a visa. That said, we do recommend that you get one, because having one is a necessary requirement for opening business accounts locally. Otherwise, you will be forced to rely on the few international banks who are willing to open a business account your company in a free zone.

About American LLCs with a Dubai visa

Are mainland companies too expensive and complicated? Are the banking and payment options offered by free zones too limited? Well, we have a solution for you: combine your residence in the UAE with an American LLC. As well as in Dubai, we have also been offering our services in the United States for years. At Staatenlos we currently manage more than 700 companies in our Florida headquarters. As well as Florida, we also help with setting up LLCs in New Mexico (the best option to maintain anonymity), Wyoming and Delaware.

Income tax exemption in the Emirates can be combined perfectly with the tax benefits of an LLC, as a disregarded entity—as the technical parlance has it—is only taxed when its members are required to pay taxes. This makes it a perfect solution to be used in Dubai tax-free.

Naturally, you will still require a company in Dubai to obtain a visa. Residence permits cost $7,000, and for each additional permit you must pay $2,000 a year. Free zone companies can sponsor up to six residence permits. Consider it a fixed tax rate that grants you residency in Dubai. The company in question can be a functioning business, but this is not absolutely essential. A purely letterbox company, which has no activity, is also currently admissible.

Setting up your business through an LLC has several advantages over local options:

  • No restrictions on commercial activities permitted
  • Fast and free opening of business accounts from distance
  • Good and cheap payment providers
  • Generally greater reputation and acknowledgement
  • No need to register for VAT purposes
  • No accounting or tax return requirements (in contrast to mainland companies)
  • No substance requirement (in case you want to inform of your own company)
  • Fast incorporation from distance (maximum of a week, including the EIN)
  • Low costs ($1,500 extra in a packet with a Dubai company with a visa, or otherwise $2,000)

Staatenlos is now operating in Dubai!

As you can imagine, we now offer a full package of services in the Emirates, as well as in the United States. Ultimately, there are more scams here than almost anywhere else: lots of poor, naïve business owners are sold false promises at rates that are frankly off the scale. Other German-speaking providers shamelessly sell free zone companies with visas—that we offer for $7,000—for double or triple our tariff, without a VIP service, a bank account and completely unchallenged.

Of course, we are not start from scratch: for years we have been developing local networks to offer you the best experience and service possible, and of course at a fair price. Check it out! Our local team is made up of individuals with excellent connections who master both English and Arabic.

When establishing a company or emigrating to Dubai, all founders (in this case yourself) face problems such as opening bank accounts (business accounts often only operate with an accelerated procedure), obtaining a visa, selecting the appropriate business activity and the correct location, and finding one’s way in a new culture. Your main task should not be the bureaucratic process of setting up a company, but being able to focus on your primary business activity, don’t you think?

Our local team has great expertise in this process and we have no doubt that it will be able to help you, be it in choosing the correct licence or opening a bank account. In the following section of this article, you will find a more detailed explanation of our services and costs.

We can also help you acquire a Golden Visa or a Remote Work Visa. The Golden Visa is valid for 10 years and does not require you to enter the country every 180 days. That said, it does require a substantial real estate investment, currently as much as $555,000 (2 million AED), otherwise you must prove outstanding achievements in various fields. As regular “stateless” readers will know, typically only the investment option makes sense. In this case, we can also support you to find property with good real estate agents on the ground.

Another option is the Remote Work Visa for digital nomads who first want to try out Dubai. Among other things, a proof of income of $5,000 a month is required. The visa is limited to a year and it is not a full residence visa like the other options. The standard, two- to three-month tourist visa should be sufficient to give you a general idea of what Dubai is like.

Incidentally, the so highly praised Freelancer Visas don’t exist. After all, you are nothing more than one of the six people sponsored by a company in the free zone. The package is then sold at extremely inflated prices like a self-employed work visa. Nevertheless, as a freelancer, no bank will take you on to carry out your business in the place. In this case it would make more sense to at least choose an American LLC.

If you want to run your business in Dubai but a free trade zone is too expensive for you, we can put you in contact with other interested parties. A free zone shared between six people costs less than $3,000 a year. Don’t hesitate to get in touch with us if you are interested and you don’t know anyone else who wants to participate in a free zone in Dubai.

What do we offer?

  • Company formation (without visa): $5,000
  • Company formation (with visa): $7,000
  • Each additional visa: $2,000
  • Business account: $4,000 (accelerated procedure with money-back guarantee)
  • Individual account: $500
  • Accounting: from $150
  • Trustee chairman: from $8,400 (for substratum as a non-resident)
  • Creation of a VIP company with visa: $9,500
  • Creation of a VIP company with visa and an American LLC: $11,000
  • Mainland VIP company: from $13,000 (depending on the business activity) with accounting and non-anonymous

 

If you opt for a VIP package, all the services will be easier, faster and more comfortable. Choosing this option, you will have all the support of the local team when submitting your application in situ and you won’t have to worry about the residence process.

In Dubai, you still won’t be able to access a permanent residency, but the visa sponsored by the company can be renewed every three years. On approval of your visa in the country, UAE law requires people to reside in Dubai at least one day in every 180 days to keep their residence visa. Transit through Dubai is perfectly sufficient as long as you pass border control.

If you prefer to save the expense of the VIP service, it is not absolutely essential: you can also complete the whole immigration process yourself straight away. In contrast to other countries, you don’t need a lawyer for everything. It depends on how long you can bear queueing for and how much time and patience you have. Currently, you may have to wait between two and three weeks in Dubai until you have completed all the appointments (digitalizing the application, medical checks, taking your fingerprint, visa stamp). During this time, you cannot leave the country.

For those interested in a VIP service, we can get the whole process done for you in two working days. In fact, you would only need to be in Dubai for two days and be away from your business for a few hours. You will not find a more efficient residence in terms of time anywhere in the world. And all this for only $2,500 extra in the stateless VIP package. Bear in mind that even in the standard procedure you will have to pay almost $1,000 for individual appointments and waste a lot more time.

Another option would be setting up your business in another emirate. Take into consideration that you will have to go there for all administrative matters, which can be a great hassle, especially because a free zone in Umm Al Quwain could quickly go horribly wrong with almost any business activity…

Calendar for setting up a company with Staatenlos

  1. Consultation with the local team: drawing up a detailed itinerary for the trip.
  2. Our offer: questionnaire: (UBO, economic substance, copy of passport and photo).
  3. Your agreement: client confirmation, presentation of documents, transfer of the invoice amount.
  4. Let’s go! Issue of entry visa and presence in the place to settle the residence.

It is important to note that we only start processing your request upon receipt of payment, because first and foremost we need to pay the authorities.

For Staatenlos consultations, normal tariffs apply. However, you can pay the $1,000 when you have truly settled your business in Dubai. Our local team will be delighted to offer advice about UAE free of charge.

The incorporation process is so simple that no lawyers, apostilles or certificates of good conduct are needed: the only thing we require is a form with information about the final beneficiary, the economic substance, a copy of your passport and a nice biometric photo. The best thing of all is, at least in a free trade zone, you can set yourself up comfortably from distance!

Timeline when setting up a company in a free trade zone

Stay with visa: more than 12 working days

VIP stay: between two and three working days

  • Start of the incorporation (from distance): two to three weeks
  • PCR test and medical check: up to 48 hours
  • Application for the Emirates’ identification document and taking of fingerprints: between one and two weeks
  • Application for the Emirates’ VIP identification document and taking of fingerprints: between five and 10 working days.
  • Visa stamp: between three and five working days
  • VIP visa stamp: 24 hours
  • Opening of your personal bank account: two to eight weeks

A valid health insurance is necessary for residence in Dubai. We have good options to obtain health insurance thanks to our Staatenlos insurance. If you do not have the necessary insurance, please go ahead and book a free consultation with our insurance team by going to this link.

It is also obligatory to have a local telephone number: you will have to obtain a local SIM card to obtain residence in Dubai.

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