set up a subsidiary company UAE – Daytraa Business Solutions

/// How to Set Up a Company in UAE

The United Arab Emirates (UAE) is a global business hub, offering a dynamic economy, strategic location, and investor-friendly policies. Whether you’re an overseas company looking to engage with UAE customers or planning to establish a legal presence, the UAE provides a variety of business options tailored to your needs. This guide explores the different business structures, licensing requirements, and tax implications to help you make informed decisions.

Business Options in the UAE

The UAE offers multiple avenues for foreign businesses to operate:

Engaging with UAE Customers from Overseas

Direct Engagement: Companies can interact directly with UAE-based customers or clients from their overseas location.
Using a UAE Agent or Distributor: Partnering with a local agent or distributor can simplify market entry and operations in the UAE.

Operating Within the UAE

Fly-in Fly-out Basis: For projects not requiring a local license, foreign entities can operate temporarily in the UAE.
Sub-contracting: Foreign companies can participate in UAE projects as sub-contractors under a local contractor.
Unincorporated Joint Ventures: Collaborate with local or foreign partners to undertake projects in the UAE.

Establishing a Legal Presence

Mainland UAE: Set up in a mainland emirate to conduct business within the UAE and internationally.
Free Trade Zone (FTZ) as an Onshore Entity: Operate within the FTZ and outside the UAE.
FTZ as an Offshore Company: Conduct business exclusively outside the UAE.

Note: All entities must obtain a valid license for their business activities within a specific emirate or FTZ. Expanding operations to another emirate or FTZ requires additional licensing.

Mainland vs. Free Zone: Key Differences

What is a Mainland Company?

A mainland company is registered with the Department of Economic Development (DED) of the respective emirate. It has no jurisdictional restrictions on commercial activities but may require a UAE local sponsor or agent for certain business activities.

Key Features:

Scope of Business: Operate inside and outside the UAE without limitations.
Legal Types: Limited Liability Company (LLC), Sole Establishment, Branch of Foreign/Free Zone/Local Entity, etc.
Ownership: Up to 100% foreign ownership for over 1,000 activities in Dubai (other emirates may require 51% local sponsorship).
Office Space: Required, with flexible options available.
Visa Eligibility: Depends on the company’s visa quota.
Taxation: Subject to 5% VAT and 9% Corporate Tax (effective June 2023).

What is a Free Zone Company?

A free zone company operates within a specific jurisdiction under the regulations of the Free Zone Authority. It offers 100% foreign ownership and tax benefits but is restricted to operating within the free zone and outside the UAE.

Key Features:

Scope of Business: Operate within the free zone and internationally.
Legal Types: Limited Liability Company, Branch, or Representative Office.
Ownership: 100% foreign ownership.
Office Space: Required, with flexi-desk options available.
Visa Eligibility: Linked to office size, with a 2-year validity.
Taxation: Subject to 5% VAT and 9% Corporate Tax (with exemptions for qualifying free zone businesses).

Taxation in the UAE

Corporate Tax (CT)

The UAE introduced a federal Corporate Tax regime effective from June 2023. Key details include:

CT Rate:
- 0% for taxable income up to AED 375,000.
- 9% for taxable income above AED 375,000.
- A different rate for large multinationals under OECD Pillar Two guidelines.
Exemptions:
- Natural resource extraction businesses (subject to Emirate-level taxation).
- Dividends, capital gains, and qualifying intra-group transactions.
- Personal income, real estate investments, and foreign investor returns.

Value Added Tax (VAT)

Introduced in 2018 at a rate of 5%.
Mandatory registration for businesses with taxable supplies exceeding AED 375,000.

Why Choose the UAE for Your Business?

Strategic Location: Gateway to the Middle East, Africa, and Asia.
Tax Benefits: No personal income tax, corporate tax exemptions, and VAT advantages.
Business-Friendly Environment: 100% foreign ownership, streamlined licensing, and world-class infrastructure.
Diverse Economy: Opportunities in sectors like trade, tourism, real estate, and technology.

How We Can Help

At DAYTRAA BUSINESS SOLUTIONS, we specialize in guiding foreign businesses through the complexities of setting up in the UAE. Our services include:

Business Structure Advisory: Choosing between mainland, free zone, or offshore setups.
Company Registration: Handling licensing, documentation, and approvals.
Tax and Compliance Support: Ensuring adherence to VAT, Corporate Tax, and ESR regulations.

Visa and HR Solutions: Assisting with employee visas and labor law compliance.

Understanding the Indian Labor Market

India offers a vast pool of skilled and educated workers. However, the competition for employment opportunities is intense, and businesses must navigate through a large number of candidates for each open position. To streamline the hiring process, foreign companies should establish a well-defined recruitment strategy that effectively filters the best talent from a broad pool of applicants.

“Ready to Setup Your Company in UAE?”

Ready to establish your business in the UAE? Reach out to DAYTRAA BUSINESS SOLUTIONS for expert guidance on company formation, licensing, and compliance. Let us help you navigate the UAE’s business landscape and achieve your growth objectives.