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Setting Up A Company in Dubai

On Behalf of | Dec 6, 2023 | Business, Dubai, International Tax and Business Entities |

Setting up a company in mainland Dubai or within one of its free trade zones presents a U.S. or EU client with distinct advantages and disadvantages. The international law firm Urban Thier & Federer, P.A., with its presence in the U.S., EU, and Dubai, can play a pivotal role in guiding clients through the intricacies of these choices.

Establishing a company in mainland Dubai offers proximity to the local market, enabling easier access to the broader UAE consumer base. This can be advantageous for businesses that rely heavily on local transactions or services. Additionally, operating in mainland Dubai may provide businesses a better chance to engage in government contracts and provide a wider range of business activities compared to free trade zones.

However, there are notable disadvantages. Some Mainland business activities will require a local partner, although recent reforms have allowed most Mainland business activities to be 100% Foreign owned too. All Mainland businesses are subject to 9% corporate tax on profits for businesses operating in mainland Dubai, though certain sectors may be exempt.

On the other hand, setting up in a free trade zone, such as the Dubai International Financial Centre (DIFC) or Jebel Ali Free Zone (JAFZA), offers significant benefits. Free zones also allow 100% foreign ownership, providing clients with full control of their enterprises.

Additionally, businesses in free trade zones benefit from various incentives, including tax exemptions, customs duty privileges if they are a custom bound, gated zone, and streamlined administrative procedures. It remains to be seen whether they will also be exempt from the 9% Corporate tax. The indications show that some activities within Free Zone companies will indeed be exempt while other activities may not be.

Nonetheless, companies in free trade zones may face limitations in conducting business within the local market. They are typically designed for international trade and may have restrictions on operating within the UAE outside the free zone. This could hinder businesses that rely on a significant portion of local clientele.

Urban Thier & Federer, P.A., with its global presence, can guide clients through the legal intricacies associated with each option. The firm can assist in navigating local partnership requirements in mainland Dubai or optimizing the advantages offered by free trade zones, ensuring compliance with local regulations, and maximizing the benefits for the client’s specific business needs. UTF cooperates closely with experienced local partners such as the established service provider Central Hub Corporate Services LLC to guide its clients through the intricacies and complexities of UAE and free trade zone laws.

Whether to set up a company in mainland Dubai or a free trade zone involves a careful consideration of the specific goals and nature of the business. The expertise of an international law firm like UTF becomes invaluable in helping clients make informed decisions, mitigate risks, and capitalize on the unique opportunities presented by each option.

Urban Thier & Federer, P.A., in partnership with Central Hub Corporate Services LLC, will be ready to assist and serve all corporates in their new or existing business requirements in the UAE.