United Arab Emirates

The tax-efficient UAE option

The United Arab Emirates (UAE) is now the gold standard by which all other jurisdictions are judged. Alongside its the option of an offshore LLC, the UAE offers the choice of no fewer than 38 free zones in which to start a company.

A UAE offshore company cannot trade within the UAE and its onshore presence can amount to no more than its registered office. In addition, as a non-tax resident, an offshore company does not benefit from the UAE’s tax treaty network.

On the other hand, a UAE offshore company can open a bank account in Dubai. There is the added benefit that the UAE does not appear on any international blacklists.

The freezone alternative

Alongside the offshore entity is the famed freezone entity. Your choice of freezone will depend on the nature of your business, your budget and any immigration considerations.

If we take the example of general trading business, you would want to consider either the Umm Al Quwain Freezone or the Fujairah Freezone. We normally advise clients to think in terms of no less than £7,500 in the first year including start-up costs and roughly £6,500 in subsequent years. Please note that these fees include leased office space and three visas. We charge a bank introduction fee of £500.

For solo entrepreneurs, we can also obtain an Umm Al Quwain freelancer permit for £5,000. This fee includes one visa and also a bank introduction. Please note that this permit allows you to trade in your own name and obtain residency in the UAE. It does not constitute a freestanding company.

Residency and more

Once your freezone company is set up, you can apply for a residence permit. The number of permits available to you will depend on the freezone. So, if you are specifically looking to achieve full-time tax residency for you and your dependents in the UAE, this will be an important factor in your choice of freezone. In all cases, your residency permits will be valid for three years.

The cost of your visa application and medical test fees will likely come to something around £1,000. You will also need to factor in the cost of a trip to Dubai to undergo those medical tests and to pick up your residence permit.

Because UAE banks expect to meet new clients in person as part of their due diligence, we recommend that clients combine the bank and medical visits in a single trip. We can, however, undertake bank due diligence before you embark on a trip to the UAE in order to cut the risk of a wasted trip.

In summary, we see the UAE as a trade-off between high start-up costs on the one hand, and long-term tax efficiency on the other. As a result, we offer all of our clients a detailed consultation on fees before they commit to a UAE freezone structure.

Contact us

Slokas Iela 103A – 2, RIGA LV–1083
+371 (67) 66 08 10

Key facts

• nil corporate and personal income taxes

• no disclosure of beneficial owners

• no audit requirements in many freezones

• stable banking sector

• relaxed due diligence for freezone companies

the UAE does not appear on any international blacklists.