Dubai is a tax free. If you live and work in the Emirate, your income will be paid to you fully. Furthermore, if you buy a house to live in, you will not be subject to any taxes, because direct personal taxation is against the law in Dubai.
There are two options for business setup in UAE:
- Mainland business setup;
- Free zone business setup.
If you choose to conduct business in UAE mainland, you will be required the support of a local sponsor or a local service agent. The local sponsor will hold maximum of 51% of shares, and the remaining 49% of shares are for a foreign investor for industrial and trading companies. For a professional company set up, a local service agent is required, but in this type of company foreign investor will hold 100% of shares.
Advantages of Mainland Company Registration:
- 0% corporate tax as well as 0% Personal income tax;
- You can do business with any part of UAE;
- Mainland company setup in UAE has flexibility to rent office everywhere;
- Wide range of license types as well as activities are available;
- It allows to conduct business in all UAE;
- Mainland company Formation has no yearly mandatory audit;
Second option is a free zone business setup. Free Zone Companies are businesses that 100% owned by the local or foreign investor who set it up. You don’t require a sponsor or an agent to act as a liaison to manage the venture.
A free zone business can only operate within the free zone and outside the UAE, which means no business can be conducted outside Free Zone within Dubai or any other Emirate.
This point poses a problem if your main market is Dubai/UAE.
However, you may legally appoint a broker or service agent for local market distribution.
On the other hand, if you setup a company in the mainland, you may carry out business activities both locally and internationally.
A free zone company enjoys many advantages. Some of them are:
- No personal income or capital gain taxes;
- 100% foreign ownership is allowed in free zone business;
- No corporate taxes;
- No duties on import or export;
- 100% repatriation of capital and profits;
- Modern efficient communications;
- Liberal labor laws and no recruitment problems;
- Attractive working environment;
- Excellent support services.