Are you considering to start your business in UAE and wants to work with some local entities worldwide? Just know that Holding Company formation in UAE might come as an amazing idea. Read further to know how? With this idea any expat could earn an amazing fortune. A UAE holding firm gives expats a range of benefits, such as the protection of their assets, limited liability, tax efficiency and much more.
Luckily, setting up a holding company in Dubai is fairly easy and doesn’t require big amount for investment. This blog will cover all aspects of what a holding company is, how to operate it in the UAE, the benefits of a holding company in the UAE, common types, the criteria to meet for setting up a holding company, the associated costs, and much more.
Details of Holding Company in UAE?
A UAE holding company is a distinctive type of corporation that possess other entity shares or assets. The holding company does not interfere in any activity of business itself, but it has to manage its subsidiaries. In this way, shareowners can safeguard themselves from issues of liability by sperate their share or assets from the liabilities of their branches.
The UAE permit the holding companies incorporation in all its Emirates. Business entity that holds the bulk of shares of another company is known as holding firm. Like this, overseas entrepreneurs and investors can enjoy full ownership of the corporate investment they have made through mergers or acquisitions. The approach of holding firms is used in different countries worldwide. If you wish to open a holding company in UAE, you don’t have to meet any paid-up capital criteria. With just $1 or less capital, you can own a UAE holding firm.
Categories of Holding Companies
It’s on priority to decide the category of holding firm you want to manage before registering it. There are two sorts of holding firms in the UAE:
- Onshore Holding Companies
- Free Zone Holding Companies
1: Onshore Holding Company
According to the UAE law you need to form an onshore or mainland holding company, if you want to form a trading business or activity in the UAE. For such establishments, the UAE’s Ministry of Economy is the regulatory body. And you must comply to the UAE’s Companies’ regulation.
To establish offshore companies that can run worldwide, onshore Holding firms are an excellent way to create this. The legislation of Companies in UAE permits your mainland holding company to manage administrative and business activities through the branch companies inside and outside of the UAE without interfering in business activities.
2: Freezone Holding Company
Second option is free zone Holding Company; The UAE Economy is known to be as one of the most developed economies worldwide. Their govt. has established more than 60 economic free zones in UAE’s major Emirates, to facilitate overseas investors. You can start your business with minimize taxes, as well as little investment at the same time. A free zone is a perfect way to start your business with great flexibility because it offers many incentives, like
- Generous tax exemptions
- No currency restrictions,
- Ability to repatriate 100% of your profits and principal investment.
The UAE government has also announced that after UAE’s new corporate tax regime comes into effect in 2023, the free zone businesses will continue to enjoy zero corporate taxation.
Why Choose UAE for Holding Company formation?
In recent years, Dubai has been transforming from an oil-based economy to an entirely service-based system. There are several advantages of holding company setup in Dubai and other parts of the UAE. Some of them are given below:
1: Easy Banking
Opening a business bank account in the UAE can be particularly challenging for newcomers. If you have an ID and hold a UAE business license from JAFZA, opening a business bank account could be much easier. Moreover, through internet banking you can access funds at will from anywhere around the globe, proving the greater power of business finance wherever you live.
2: Limited liability
One of the most noteworthy benefits is that your assets are safe from legal action against your business. If your business gets into trouble, your assets belonging to other subsidiaries will remain safe. so, you don’t have to worry about losing all of your assets. Even if a subsidiary runs into financial trouble, the remaining subsidiaries remain safe from liquidation action or regulatory oversight.
3: Tax Efficiency with offshore status
To take advantage of this benefit, you must first register a holding company in the UAE. The income of foreign companies will not be taxed in the country. You also get the benefit of double taxation agreements with more than 80 countries in Latin America, Europe and Asia.
4: Establishing Credit
Banks and other lenders are likely to be more willing to lend or extend credit to you if they see that your investment is worth more than what you are asking for. The value of the parent company’s assets will also form part of that entity’s overall financial strength, so it could be argued that by investing in the subsidiary you have actually increased its overall value. Other than this:
- No corporate tax
- A local or overseas investors can take advantage from better privacy, through a holding company.
- Simplified management procedures for subsidiaries also offers by the holding company and many other benefits also.
Criteria to Open a UAE Holding Company?
These are the points of How to Set Up a Holding Company in UAE.
- Choosing the right holding company business activity
- Obtaining permission from relevant agencies and authorities
- Depending on the location to set up your business, you must obtain a Holding Company License Dubai from the relevant Emirate government or free zone.
- Registration with the authorities of the free zone or the Ministry of Economy (MOE)
- Opening a bank account for business in the UAE
- Visa application, if necessary.
Costs of Holding Company formation in UAE
Total cost of forming a company in UAE, includes:
- Initial approval: AED 120
- Fees Business Center: AED 25,000 (if needed)
- Business name registration: AED 600
- Application of License: AED 600
- Selected free zone licensing fees usually start from AED 15,000.
- Including rental, administrative, and consultation costs, forming a holding company may cost you round about AED 20,000 or more.
Holding company setup in the UAE is a good way to safeguard and manage your assets. It also offers many advantages such as tax efficiency, greater flexibility, minor risks, no specific capital needs, and greater diversification of subsidiaries.
Although the process is simple, you need to prepare all the documentation and complete the paperwork properly in order to work more efficiently. Beyond View’s industry leading business consultants have considerable expertise in establishing businesses in Dubai and the UAE. Contact us today to make it easy for you to get started with your UAE holding company. We’d love to assist!