Frequently Asked Questions
A trade license, also known as a business license, is an official document that outlines the permissible operations of a company within the United Arab Emirates (UAE).
These licenses fall into three primary categories:
- Professional license – Designed for professionals, craftsmen, and artisans.
- Commercial license – Suited for all types of trading activities.
- Industrial license – Intended for all industrial and manufacturing operations.
The specific requirements can differ based on whether you’re setting up your company in a free zone or on the mainland. However, the fundamental documents typically include:
1. Attested copies of passports for shareholders and directors.
2. Proof of address.
3. Bank statements covering a minimum of three months.
4. Education certificates (if applicable).
5. Certificate of share capital deposit (if it is a requirement).
A visa is an official authorization that allows foreign nationals to legally reside in a country and, in the context of business in the UAE, it is essential for individuals who wish to operate a business there. The type of visa required can vary based on the jurisdiction and the structure of the business. There are three primary types of visas available in the UAE:
1. Investor visa – This is for businesses with a single shareholder, often referred to as Sole Ownership.
2. Partner visa – Designed for businesses with multiple shareholders.
3. Employment visa – Issued by specific free zones and may have various designations such as General Manager or Director, typically for individuals employed within the company.
Starting the visa process in the UAE typically involves these steps:
1. Obtain a Trade License:
Before applying for a visa, you need to have a valid trade license for your business. Ensure you have completed all the necessary steps to obtain the trade license.
2. Receive the Establishment Card:
After obtaining your trade license, you will either receive your establishment card automatically (depending on the jurisdiction) or you may need to request it separately.
3. Prepare Required Documents:
To apply for a visa, gather the following documents:
– Passport copy.
– Digital passport-sized photo.
– Entry permit.
– Current visa status (this may be optional if you are already inside the country with a different visa).
4. Submit Visa Application:
Once you have the required documents, you can submit your visa application. This is typically done through a government-approved typing center or an authorized immigration service center.
5. Medical Examination and Biometrics:
Depending on the type of visa, you may need to undergo a medical examination and provide biometric data (fingerprinting and retina scans) at a designated medical center or immigration office.
6. Visa Stamping:
After approval, your visa will be stamped in your passport. This step is often done at the immigration office or a designated visa stamping center.
7. Emirates ID:
For long-term visas, you will also need to apply for an Emirates ID card, which serves as a government-issued identification document.
8. Residence Visa:
Once your visa is stamped and you have your Emirates ID, you will have a valid residence visa, allowing you to legally live and work in the UAE.
Please note that visa requirements and processes may vary depending on the specific free zone or jurisdiction in the UAE. It’s advisable to consult with your business setup consultant or the relevant government authorities to ensure you have the most up-to-date information for your specific case.
A free zone is a designated economic area in the United Arab Emirates (UAE) that offers various advantages to businesses looking to establish a presence in the country. These advantages include:
1. 100% Foreign Ownership:
In a free zone, foreign investors can have full ownership of their businesses, without the need for a local sponsor or partner.
2. Repatriation of Profits:
Businesses operating in free zones are typically allowed to repatriate 100% of their profits back to their home countries.
3. Tax Benefits:
Free zones often provide tax incentives, including 0% income tax and corporate tax exemptions (subject to certain conditions).
4. Customs Duties:
There are no customs duties on imports and exports within the free zone, making it attractive for companies engaged in international trade.
5. Share Capital Requirements:
In most free zones, there are no strict requirements for paid-up share capital, reducing the financial burden on new businesses.
6. Office Space Flexibility:
Depending on the specific free zone, some allow businesses to operate without the need for physical office space, offering flexible solutions like virtual offices.
However, it’s important to note that businesses registered in a free zone are typically restricted to conducting their operations within that particular free zone and internationally. If they wish to do business in the UAE mainland, they may need to seek permission from both the relevant free zone authority and the local Department of Economic Development. This can involve setting up a branch or subsidiary outside the free zone to operate in the mainland market. Each free zone may have its own specific regulations and licensing requirements, so it’s essential for businesses to research and choose the free zone that best suits their needs.
Free Zone Company:
– Limited to operating within the specific free zone.
– Historically offered 100% foreign ownership.
– 100% profit repatriation.
– 0% income tax in most cases.
– Limited to specific business activities.
– Restrictions on trading in the UAE mainland.
– Can operate anywhere in the UAE and internationally.
– Recent changes allow 100% foreign ownership.
– 100% profit repatriation.
– 0% income tax in most cases.
– Access to over 3,000 business activities.
– Can bid on government contracts.
– Flexible visa options.
– Easier bank account opening.
For mainland trade licenses, renewal is required on an annual basis. In contrast, the validity period for a free zone license varies and is determined by the respective free zone authority, spanning from one to five years.
A shareholder is an individual or a legal entity that possesses shares in a company, representing ownership or equity in that company.
As for corporate tax requirements in the UAE, starting from June 1, 2023, the UAE has implemented a low corporate tax rate of 9%. To ensure compliance with the new tax law, businesses in the UAE, including freelancers and free zone companies, must:
1. Register for corporate tax from June 2023 onward.
2. Maintain accurate accounting records.
3. Submit corporate tax returns to the Federal Tax Authority (FTA).
It’s important to note that not all businesses will be subject to corporate tax, but all must adhere to these steps to meet regulatory obligations.