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How to Set Up Zero Tax Company in Dubai

Romanian entrepreneurs have a growing intention to set up companies in Dubai. This is because the current Prime Minister, Mr. Marcel Ciolacu, wants to increase taxes for entrepreneurs.

The Government’s draft project drives away especially SMEs, the small and medium enterprises that contribute the most to the economy. This is why lots of entrepreneurs search for friendlier fiscal residences. Among these destinations, Dubai seems to be the most accessible.

The most significant advantage for those who want to open a company in Dubai is that individuals can move their tax residence if they obtain a residence visa, which can be obtained for three years by establishing a resident company there. Therefore, I can also change my fiscal residence as an individual. Still, if I live for a minimum of 180 days in the EAI area, I automatically become a non-taxpayer as an individual. And I can carry out my activity there, with a company with 5% tax, now since June, but on dividends with 0%, this for a small turnover.

Fiscal consultant Vlad Suleaev for Digi 24 Ro about fiscal residency in Dubai

What are the advantages of setting up a business in Dubai?

Dubai companies in skyscrapers

Dubai, one of the fastest-growing business hubs in the world, offers many advantages for entrepreneurs looking to set up their own companies. From its strategic location to its business-friendly environment, Dubai presents an unbeatable opportunity for success. Let’s dive into some key advantages of setting up a business in this bustling metropolis.

First and foremost, Dubai’s strategic location is a gateway to the East and the West. Situated at the crossroads of Europe, Asia, and Africa, the city provides businesses with unparalleled access to a vast market of over 2.5 billion people. This advantageous position allows companies to tap into diverse markets and expand their reach globally.

Moreover, Dubai boasts a thriving economy with a solid and stable currency. The city’s robust infrastructure, world-class facilities, and advanced technological capabilities make it an ideal base for businesses across various industries. Whether you’re in finance, technology, tourism, or logistics, Dubai offers the perfect environment for growth and prosperity.

In addition, Dubai’s pro-business policies and regulations are designed to attract foreign investment and foster entrepreneurship. The government has implemented numerous initiatives to simplify the process of setting up a company, ensuring a streamlined and efficient experience for entrepreneurs. The ease of doing business in Dubai is further enhanced by its transparent legal framework, which protects investors’ rights and provides a secure business environment.

Another advantage of setting up a business in Dubai is its tax-friendly regime. The city imposes no personal or corporate income taxes, allowing businesses to enjoy higher profitability and retain more earnings. This favourable tax environment attracts investors and encourages entrepreneurship and innovation.

Furthermore, Dubai offers a skilled and diverse workforce comprising talented professionals worldwide. The city strongly emphasizes education and training, ensuring businesses have access to a pool of highly qualified individuals. Companies can benefit from different perspectives and ideas with a multicultural workforce, fostering creativity and innovation.

Additionally, Dubai provides excellent infrastructure and high quality of life for residents and businesses. The city is known for its modern amenities, world-class healthcare facilities, and top-notch education institutions. With a safe and cosmopolitan environment, entrepreneurs and their employees can enjoy a comfortable and fulfilling lifestyle while pursuing their business goals.

Lastly, Dubai’s vibrant and dynamic business community is a significant advantage for entrepreneurs. The city hosts numerous industry events, conferences, and networking opportunities, allowing business owners to connect with like-minded professionals and potential clients. Dubai’s collaborative spirit and entrepreneurial mindset create a supportive ecosystem that fosters growth and success.

How to set up your zero tax company in Dubai

Businessmen in Dubai talking on how to set up a company

Are you an entrepreneur with big dreams and a desire to seize new opportunities? Look no further than Dubai, the thriving business hub in the heart of the Middle East. With its strategic location, vibrant economy, and investor-friendly policies, Dubai offers a golden opportunity for business owners to set up their companies and thrive in one of the world’s most dynamic markets.

Legal requirements to set up a company in Dubai

Setting up a company in Dubai can be a game-changer for your business. With its strategic location, booming economy, and business-friendly environment, Dubai offers endless opportunities for entrepreneurs. But before you embark on this exciting journey, it’s crucial to understand the legal requirements that you need to fulfill. This blog post will walk you through the essential legal requirements to set up a company in Dubai.

Determine the Business Activity. The first step is to determine the nature of your business activity. Dubai has different licenses based on the activity, such as professional, commercial, industrial, or tourism. Identifying a suitable license for your business ensures compliance with regulations.

Choose the Legal Structure. Dubai offers various legal structures for setting up a company, including sole proprietorship, partnership, limited liability company (LLC), and free zone company. Each structure has its requirements, benefits, and limitations. Selecting the structure that aligns with your business goals and objectives is essential.

Find a Local Sponsor. A local sponsor or agent is mandatory for specific legal structures, such as LLCs. A local sponsor must be a UAE national or a company wholly owned by UAE nationals. They will hold 51% of the shares in the company, while you retain 49% ownership. A local sponsor can provide guidance, support, and local knowledge to navigate through the legal procedures.

Register Your Business Name. Choosing a unique and appropriate name for your business is essential. The name should not violate any trademark laws and should reflect the nature of your business. Once you have decided on a name, register it with the Department of Economic Development (DED) in Dubai. The registration process involves submitting the necessary documents and paying the required fees.

Obtain Approvals and Permits. Depending on the nature of your business, you may need to obtain additional approvals and permits from various government agencies. For example, if you are setting up a restaurant, you must obtain approvals from the Dubai Municipality and the Dubai Food Control Authority. Researching and identifying the approvals and permits required for your business activity is essential.

Secure a Physical Address. To register your company, you must have a physical address in Dubai. This can be a commercial or virtual office provided by a business center. The address will be used for official correspondence and as your company’s registered address.

Prepare the Memorandum of Association. The Memorandum of Association (MOA) is a legal document that outlines the critical details of your company, such as the business activities, shareholders, and capital. The MOA should be prepared following the guidelines provided by the DED.

Obtain the Trade License. Once all the necessary documents and approvals are in place, you can apply for the trade license. The DED issues the trade license and allows you to conduct business in Dubai legally.

Taxes companies in Dubai have to pay

Dubai, the thriving global business hub, has long been recognized for its favorable business environment. As business owners contemplating setting up a company here, understanding the tax implications is crucial. In this blog post, we will shed light on the taxes that companies in Dubai have to pay, revealing the remarkable tax advantage that awaits.

Corporate Income Tax

One of the most attractive aspects of Dubai’s tax landscape is the absence of corporate income tax. Yes, you read that right! Companies in Dubai are exempt from paying corporate income tax on their profits. This unique feature presents an incredible advantage, allowing businesses to retain a larger portion of their earnings for reinvestment, expansion, or rewarding stakeholders.

Personal Income Tax

Dubai has a zero percent personal income tax policy, meaning employers and employees can enjoy the fruits of their labour. Unlike many other countries, where personal income tax can consume a significant portion of earnings, Dubai’s tax system empowers individuals to keep more of their hard-earned money, fostering a culture of financial growth and prosperity.

Value Added Tax (VAT)

Introduced in 2018, Dubai implemented a 5% Value Added Tax (VAT) on certain goods and services. While this may seem like a deviation from the tax advantage narrative, it is essential to note that the VAT applies to a limited range of goods and services, such as hospitality, entertainment, and luxury items. Most essential goods, such as food, healthcare, and education, are exempt from VAT. This strategic approach ensures that the burden of taxation is minimal for both individuals and businesses, promoting economic growth and enhancing the overall competitiveness of Dubai as a business destination.

Custom Duties

Dubai’s strategic location and world-class infrastructure have made it a global trade hub. Dubai has implemented a low customs duty regime to facilitate international trade further. Dubai’s average custom duty rate is around 4%, significantly lower than many other countries. This favourable climate for international trade attracts businesses to establish their presence in Dubai and encourages importing and exporting goods, stimulating economic activity and creating new opportunities.

Withholding Tax

Another tax advantage that companies in Dubai enjoy is the absence of withholding tax. Withholding tax is typically levied on payments made to non-residents as a deduction for taxes owed on income generated within a country. In Dubai, however, there is no withholding tax, allowing businesses to make payments to foreign entities without any deductions, further enhancing the city’s investment potential.

Costs and fees involved in setting up a business in Dubai

Two business men talking about costs of Dubai companies

If you’ve been contemplating setting up a business in Dubai, you’re on the cusp of a transformative journey that could propel your entrepreneurial dreams to new heights. Dubai’s strategic location, business-friendly environment, and tax advantages make it an ideal destination for ambitious business owners.

Company Formation Costs

To establish a business in Dubai, you must choose between legal structures, including mainland, free zone, or offshore companies. Each option comes with its own set of cost considerations:

Mainland Company

Setting up a mainland company involves obtaining a trade license from the Department of Economic Development (DED). The cost may vary depending on the business activity and the chosen location. Generally, expect to allocate funds for trade name reservation, initial approval, notary fees, sponsor fees, and office rent.

Free Zone Company

Free zones in Dubai offer attractive benefits, such as 100% foreign ownership, zero taxation, and simplified incorporation procedures. While the incorporation costs might be slightly higher than mainland companies, these fees are often justified by the facilities and services provided, including pre-built office spaces, shared services, and access to a dedicated business community. Some typical costs associated with setting up a free zone company include license fees, registration fees, visa fees, office space rental, and ongoing maintenance fees.

Offshore Company

Dubai also allows the establishment of an offshore company, offering privacy, asset protection, and tax optimization benefits. The costs involved in setting up an offshore company typically include registration fees, agent fees, and ongoing maintenance fees.

Visa and Immigration Costs

As a business owner, you must obtain visas for yourself, your employees, and any dependents. The cost of visas and immigration services can vary depending on the visa type, duration, and number of individuals. Considering these costs when planning your budget for setting up a business in Dubai is essential.

Office Space Costs

Renting office space in Dubai is a significant expense for your budget. The cost of office space can vary depending on the location, size, and facilities provided. Whether you choose a mainland, free zone, or offshore company, it’s crucial to consider the cost of office rent or lease as part of your overall business setup costs.

Sponsorship Costs

Setting up a mainland company in Dubai requires a local sponsor or partner who holds a majority share (51%) of the company. The cost of sponsorship can vary depending on the sponsor’s involvement in the business and the negotiation between parties. It’s essential to allocate funds for sponsorship.

Legal and Regulatory Costs

When setting up a company in Dubai, it is essential to adhere to the legal and regulatory requirements. This includes obtaining necessary licenses and permits and complying with local laws and regulations. These costs can include legal fees, government fees for licensing and permits, and any additional costs associated with regulatory compliance.

Professional Services Costs

Seeking professional guidance and assistance is crucial when setting up a business in Dubai. Hiring the services of a local business consultant, lawyer, or accountant can help navigate the complexities of the process and ensure compliance with local regulations. These professional services come at a cost, so allocating funds for their fees is essential.

Marketing and Advertising Costs

Promoting your business in Dubai is essential for success. Allocating a budget for marketing and advertising services is crucial to create brand awareness and attract customers. Expenses can include advertising campaigns, online marketing efforts, and participation in industry events and exhibitions.

Operational Costs

Apart from the initial setup costs, it is essential to consider ongoing operational expenses. This includes utilities, employee salaries, insurance, and other overhead costs. It is crucial to have a clear understanding of these expenses to ensure the sustainability of your business in the long run.

Miscellaneous Costs

There may be additional costs that are specific to your business or industry. Identifying and accounting for these miscellaneous expenses in your budget is essential. This could include costs for specialized equipment, technology, or any other unique requirements for setting up your business in Dubai.

In conclusion, setting up a company in Dubai can be profitable, but it is crucial to all the necessary costs involved. From sponsorship fees to legal and regulatory expenses, professional services, marketing and advertising costs, operational expenses, and any miscellaneous costs specific to your business, it is essential to have a comprehensive understanding of all the financial aspects.

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