2024 January

We advise you to read through this guide to fully understand the steps required on how to incorporate a company in Dubai. The process of establishing a company in the UAE involves only a few simple steps, in all seven emirates.

Steps involved in incorporating a business.

Starting a business in ordinary ways involves a series of steps, including:

1. Identifying a business activity
2. Selecting an appropriate legal form
3. Registering the trade name
4. Applying for an initial approval
5. Drafting a Memorandum of Association and local service agent agreement
6. Select a business location
7. Get additional government approvals
8. Submit documents and pay fees

Identifying the business activity

Business activity is the basis for selecting the legal form and type of licence, whether commercial, industrial or professional, etc. There are six types of licences. They are: industrial, commercial, professional, tourism, agricultural and occupational.

Depending on your business goals and activities, Digits will recommend the most suitable business entity.

Select the legal form

The legal form depends mainly on the business requirements. Moreover, the legal form is basis for identifying applicable laws and regulations. In the UAE, an investor can select one of these legal forms:

• General partnership

• Limited partnership

• Limited liability company (LLC)

• Public joint stock company (PJSC)

• Private joint stock company (PrJSC)

• Civil company

• Local company branch

• GCC company branch

• Foreign company branch

• Free zone company branch

• Sole establishment

• Holding companies.

Register the trade name

A trade name distinguishes one business from another. It also reflects the nature and the form of the business. An investor can apply for the trade name through the economic department in each emirate, through its website or mobile application.

Provisions for selecting the trade name:

The trade name must:

• be followed by the business structure acronym (legal form of the company) such as: LLC, EST, PJSC, PrJSC
• not violate the public morals or the public order of the country
• be compatible with the required type of activity and the legal status of the company or business entity
• not contain names of any religion, or governing authority, nor names or logos of any external bodies
• not have been previously registered

Initial approval

An initial approval is the UAE Government’s ‘no objection’ towards a particular business being established in the country. This approval also allows the investor to proceed with the next steps to set up a business and for the authorities to issue the license. It does not, however, grant the investor permission to run the business or practice the business activity.

MOA and LSA

A Memorandum of Association (MOA) is required if the legal form of the company is a civil company, limited liability company, public shareholding company, or private shareholding company. A local service agent agreement (LSA) is required if it is a sole proprietorship.

Select a business location

All businesses in the UAE must have a physical address to operate from. The company premises and location must comply with requirements specified by the emirate’s Department of Economic Development, as well as zoning policies and regulations of local municipalities or other competent authorities. In Dubai, the tenancy contract for office or warehouse space has to be registered through the Dubai Land Department’s Ejari portal.

Get additional government approvals

In some cases, additional approvals from government entities governing certain business activities are required.

Submit Required Documents

All the above documents including lease agreements need to be submitted after getting attested.

How can Digits help you?

Digits can recommend the most suitable business entity for you Once ready, Digits will proceed to draft and notarize the company’s Memorandum and Articles of Association. Corporate forms and certificates will then be filed with the Dubai Department of Economic Development for approval. To comply with Dubai’s laws, Digits will then assist you to register for employment purposes and obtain a VAT number with the Federal Tax Authority. If you are looking to apply for licenses (trading, commercial, industrial and professional), Digits will further advise on the requirements. We will also assist in securing relevant business licenses and registrations with the Department of Economic Development. You can be confident you are in the best hands when Digits undertakes your Dubai company’s accounting and tax services.

Digits will timely prepare your firm’s financial statements, corporate tax returns and bookkeeping on your behalf. Digits will complete all annual filings and tax returns for your company before the stipulated deadlines set out by the government.

Additionally, Dubai’s Commercial Law also mandates that businesses continually perform audits. If necessary, we will assist you in obtaining a reliable accountant. This is to ensure that you can continue to legally conduct business with your Dubai entity, while staying compliant to regulatory obligations.

Ready to incorporate company in Dubai? Contact us to find out more about how to incorporate a company in UAE.

Since UAE follows residency-based taxation, where resident entities are taxed with respect to their worldwide income, double taxation may occur where income is taxed in both the source country and resident country. To avoid this UAE has entered into Double Taxation Avoidance Agreement (DTAA) with multiple countries.

An updated list of DTAs can be found on the Ministry of Finance’s website at:

https://mof.gov.ae/wp-content/uploads/2023/08/Avoidance-of-Double-Taxation-Agreements1.pdf

Public and private companies, investment firms, air transport firms and other companies operating in the UAE, as well as other types of UAE residents, may benefit from Avoidance of Double Taxation Agreements (“DTA”).

In order to benefit from a DTA, a person generally requires to provide a TRC to prove that the person is resident in another country and subject to tax in that country. The TRC is a certificate issued for eligible government entities, companies and individuals to take advantage of agreements of double taxation avoidance on income to which the UAE is a signatory.

Eligibility Criteria:

Natural persons

The applicant must have been a resident of the UAE for at least 180 days. Also an annual lease agreement officially documented by the competent authorities, such as EJARI in Dubai, municipalities in other Emirates and free zone authorities must be attached to the application.

The following documents are required for individual TRC applications:

• Passport Copy
• UAE Residence Visa Copy
• Emirates ID Copy
• A certified copy of (residential) lease agreement or Tenancy Contract Copy (an annual lease agreement officially documented by the competent authorities, such as EJARI in Dubai, municipalities in other Emirates and free zone authorities)
• Source of income (e.g. Salary Certificate, Trade License etc)
• Validated bank statements for 6 months from a local UAE Bank.
• A report from the General Directorate of Residency and Foreigners Affairs or Federal Authority for Identity and Citizenship (ICA) specifying the number of days the resident has stayed in the UAE (The applicant must have been a resident of the UAE for at least 180 days).
• Tax forms (if any) from the country in which the certificate is to be submitted. If the Tax form requires FTA Signature and Stamp, the user is requested to send the original form to FTA via courier with return service. The applicant should fill and sign the fields related to his details and information for FTA to attest the form.

Legal persons

In order to be eligible to apply for a TRC, the legal person must have been established for a period of at least one year. Financial accounts must be audited or prepared by an accredited audit firm and attached with other required documents to the application. The report must be certified and stamped by the audit firm. The audited financial report to be attached to the application must cover the year for which the certificate is requested. If the certificate is requested for the present year, the audit report must be covering the past year.

The following documents are required for individual TRC applications:

• A copy of the trade license and directors/shareholders’ attachment.
• Establishment contract certified by official authorities (if it is not a Sole Company).
• A copy of the legal person’s owners/partners/directors’ passports
• A copy of the legal person’s owners/partners/directors’ Emirates IDs
• A copy of the legal person’s owners/partners/directors’ permits of residence
• A certified copy of the audited financial accounts (Financial accounts must be audited or prepared and stamped by an accredited audit firm and must cover the year for which the certificate is requested. If the certificate is requested for the present year, the audit report must be covering the past year).
• Validated bank statements for 6 months from a local UAE Bank.
• A certified copy of the lease agreement.
• Tax forms (if any) from the country in which the certificate is to be submitted. If the Tax form requires FTA Signature and Stamp, the user is requested to send the original form to FTA.

How can Digits help you?

Digits has competent tax experts who can assist you in your tax-related activities such as tax registration, correspondences with FTA, obtaining certificates, determining tax treatments, tax accounting, formatting tax invoices, preparing tax returns, calculation of outstanding tax, filing of tax returns, tax record maintenance, periodic tax reviews, compliance checks, understanding the recent developments in tax regulation, arranging training sessions for employees, tax planning, assessing the impact of tax on cash flows, compiling tax policies and procedures, ensuring adequate internal controls in tax-related processes, tax system implementation, preparing files for FTA audits and more such functions ensuring compliance with the tax rules.

This brings us to the conclusion of the discussion on tax residency certificates under UAE law. Do you need help in obtaining a Tax Residency Certificate? Feel free to contact Digits.