Establishing in the UAE

At first glance, there appear to be a bewildering number of options of how to include the UAE within your business structure and strategy. We believe that the UAE, with its more liberal and modernised corporate infrastructure compared to other Gulf States, makes it a first choice as part of your international corporate structure. In this business briefing, we will examine all of the options available and explain which may be appropriate for your objectives.

The main differentiating factor between the options is whether you wish to conduct business onshore within the UAE i.e. with UAE registered organisations or not. It is important to note here that Free Zones are considered offshore for UAE purposes, even though they are physically located within the UAE.

All UAE entities, both onshore and offshore benefit from zero-taxes and the ability to bank within the UAE, amongst other advantages. There are 3 categories of options.

Option 1 – UAE International Business Company (RAK-IC)

The concept of an IBC is well established in international corporate planning and parallels can be drawn to the models of both the alternative zero-tax jurisdictions (e.g. BVI, Seychelles) and low tax jurisdictions (e.g. Malta, Cyprus, Ireland), with a similar OECD and Companies Act model.

In 2006, Ras Al-Khaimah (RAK), the third largest emirate of the UAE, adopted the IBC model and permits the establishment of a RAK-IC within the RAK Free Zone. RAK-IC’s are zero-tax, do not require an audit and are a modern, flexible corporate vehicle offering anonymity and banking within the UAE.

Option 2 - UAE Free Zone Companies

Abu-Dhabi, Dubai and Ras Al-Khaimah (RAK), are the three main states of seven within the UAE in order of wealth (referring to share of UAE GDP). All three cities operate on a local level for legislation relating to business matters, subject to Federal legislation set by UAE Government Policy.

Each of these three states has established Free Zones (FZ’s). These are either areas of industrialised land or individual property developments that have been granted FZ status. Consider them as a physical presence in the UAE, but offshore for the purposes of your home territory and offshore for UAE purposes, since the main use of such FZ companies is for the carrying out of business outside of the UAE. Such FZ’s operate as individual and competing businesses, with variations in sector specialism, requirements for physical presence and costs.

FZ companies are ideal for multinational groups that require a physical, strategic presence in the UAE but do not intend to carry out business with the UAE itself. They are entitled to carry out business world-wide, including elsewhere in the Middle East, subject to any additional requirements of those markets.

For a current list of UAE FZ’s with links to the individual official sites, please visit our website.

Option 3 – UAE Onshore Local Presence

If you wish to carry out business in the UAE with the UAE, then you need to consider one of the following onshore options.

  • (a) Locally Incorporated LLC,

    This would be in the form of a 49%/51% split in favour of the local sponsor, with additional agreements in place to address the commercial reality of the joint-venture in the form of a Service Agency Agreement or Commercial Agency Agreement.

  • (b) Branch of a foreign company,

    A branch maintains 100% foreign ownership but is required to have a local sponsor and again this would be via a Service Agency Agreement or Commercial Agency Agreement.

  • (c) Branch of a UAE FZ company,

    This is identical to (b) and normally arises where a FZ company also wishes to carry out business activities onshore within the UAE.

  • (d) Representative office of a foreign company

    Although this is an administrative office and it cannot carry out any business activities, it does still require a local sponsor under a Service Agency Agreement.

Establishing an onshore presence within the UAE requires a local sponsor, who may also be your local commercial partner. Whilst this can be a complex requirement, it has been firmly established in the business community of the UAE and there are many levels of solutions for this requirement.

Such a local sponsor will enable your company, branch, or representative office to carry out business within the UAE and with UAE entities, opening up the potential of the local market

Summary Table of Options


Connect With Us

Signia Group
Level 4, Al Mamoura Bld 'B' Mohamed Bin Khalifa Street,
PO Box 46400, Muroor, Abu Dhabi, United Arab Emirates.

Tel: +971 (0)2 659 4021

Fax: +971 (0)2 659 4019