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Dubai Holding Company Setup

Unlocking 5 Key Advantages of Establishing a Holding Company in Dubai, UAE

Holding Company in Dubai UAE

Dubai is a favored destination for founders coming from all over the world to register a holding company. It presents a vast majority of opportunities in terms of business environment, strategic location, infrastructure, and innovative ways for new businesses. While establishing a holding company in Dubai as a foreigner might appear intricate, the rewards are considerable. With appropriate legal guidance and an understanding of the process, establishing a holding company can be seamless.

‍This article will elaborate on the advantages awaiting founders in Dubai, the requirements you need to consider, and how our team at LawBridge can support you with establishing a holding company.

What Are the Advantages When Establishing a Holding Company in Dubai UAE?

Launching a holding company in Dubai UAE offers numerous benefits. Here, we outline the top five:

1. Tax System

Against common assumption, the UAE is not tax-free, however, taxes are relatively low and favorable for foreign companies, as there is no double taxation and no withholding taxes. As of June 1, 2023, a 9% corporate tax has been introduced, and a 5% VAT has been in place since 2018. Yet, managing a holding company in Dubai remains cost-efficient and exemptions to the above-mentioned taxation rules exist, as you will see later in this article.

2. Promotion of Foreign Investment

Dubai’s government actively encourages foreign investment, providing a range of incentives for founders establishing their holdings. Historically, Dubai holds a long history of trade and its early adaption to globalization speaks for the openness to new business formations.

3. Strategic Location

Dubai creates the connecting point of the Eastern and Western world, bridging the global markets and bringing together businesses from various cultures. With a holding company in Dubai, you as the owner automatically gain access to markets in Asia, Africa, and Europe, which makes the location a good base for holding companies that oversee subsidiaries in various parts of the world. Moreover, Dubai has a useful infrastructure, including airports, seaports, roads, and further, a well-functioning digital infrastructure. This enhances the ease of doing business in Dubai for holding companies that need facilitating logistics, travel, or communications.

4. Business Formations

Dubai allows founders to select from various corporate structures based on their investment, preferences, and business model, each offering distinct advantages:

a) Partnership:

An agreement of two or more individuals or entities collaborating to run a business.

‍b) Limited Liability Company or LLC:

A LLC is a legal entity, where the members are not personally liable for the company’s debts or liabilities. Partnerships are not subject to corporate taxes. VAT applies if revenues exceed the threshold set by the UAE’s Federal Tax Authority (AED 375,000).

‍c) Joint-stock Company:

A Joint-stock company is an entity where shares of the company’s stock can be bought and sold by shareholders. Usually, a joint-stock company is not subject to corporate taxes. However, VAT is applicable, similar to business entities if they exceed the VAT registration threshold.

‍d) Free Zone Business:

A business set up within the specific Free Zones of Dubai. These zones are designed to promote foreign investment with special tax, customs, and import/export benefits. Companies within the Freezones are exempt from corporate taxes for a given number of years (typically 15-50 years). However, this can be different in specific zones. VAT is applied similarly to mainland companies if the company provides goods or services outside the free zone.

5. Skilled Labor Market

Dubai provides a skilled labour market and living conditions. Holding companies have a diverse talent pool in Dubai, including skilled professionals from all over the world. Besides this, Dubai further offers a very open and unique culture and the opportunity to network and grow a company conferences and global business events are held throughout the year.

What is Required for Dubai Holding Company Setup?

For a holding company setup in Dubai, it’s mandatory to establish a management board responsible for guiding organizational, legal, and regulatory matters. This board also oversees subsidiary activities, setting boundaries regarding risks, such as foreign currency exposure and other industry-related risks.

How can LawBridge help you?

As you might have realized, establishing a holding company in Dubai comes with advantages. Nonetheless, the process of establishing the entity is not easy as many pitfalls can cost you a lot of money and time. At LawBridge we support our clients not only with establishing holding companies, we also guide you through the legal services in Dubai to ensure that you set up the correct entity that will save you taxes right from the beginning.

With the support of our experts, you can concentrate on your core business operations. We ensure that each phase of the company formation is executed correctly. For expert business and legal guidance, consider scheduling a free consultation with one of our legal specialists at lawbridge.ae.

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