 Direct Export
The easiest way of starting business with the United Arab Emirates is through direct export. Every UAE company has a licence for importing goods. Custom duties are 5% for the imported goods wheareas alcohol, tobacco, weapons, pearls and anaesthetics require special permissions.
It is strictly recommended to compose a purchase contract adapted to the local conditions of the United Arab Emirates and to receive payments in advance or verfied through a letter of credit.
Commercial Agent
In the majority of cases companies enter the market through a commercial agent. By law, the appointed agent has to be a citizen of the United Arab Emirates. In case the agent is a company the company has to be fully owned by a UAE citizen.
The commercial agent acts for the account of his (foreign) principal company and receives an agreed commission for these services.
According to UAE commercial agents law the rights of the agent exceed the rights of the principal. Therefore the company should be very careful in selecting and appointing a commercial agent.
Special attention needs to be paid to the definition of the commerical agent contract. Contracts should be bound to a sales guarantee and a specific regional area (e.g. Emirate Dubai, Abu Dhabi, etc.).
A commercial agents has to be distinguished from a contract dealer who buys and imports goods from a foreign company and sells them on his behalf.
Branch & Representative Office
These business structures reduce the need for national participation through a UAE citizen.
Branch:
The branch is legally regarded as a part of its parent company and can carry out activities similar to those of its parent company. It has the permission to perform contracts or conduct other activities specified in the issued licence. However, the branch is not permitted to import goods from its parent company. Therefore the branch needs to appoint local trade agents.
Representative Office:
The tasks of a representative office are limited to promoting activities for the parent company. It can gather information and solicited orders and projects to be performed by the parent company's head office.
In both cases the branch or representative office must appoint a UAE national as a service agent. The service agents has no permission to participate in the management of the company. He usually performs tasks such as communicating with governmental institutions or other administrative matters. The fees for the agent are matter of negotiation of the two parties.
Limited Liability Company (LLC)
A majority of foreign companies register a Limited Liability Company for their business activities in the United Arab Emirates. The LLC is easy to registern, the foreign investor can carry out the management and liability is limited to the joint capital.
In a Limited Liability Company the local entity participartion (UAE national) has to be at least 51%. However, it can be contractually agreed that the UAE national does not participate in active management and profit sharing. In return the UAE national usually receives a fixed or variable (based on turnover, profit or sales) commission for his stake in the company.
Professional Firm / Professional Company
Professional firms (sole proprietorships) and professional companies (partnerships) can operate in the service and consulting field of architecture, engineering, medicine, legal consulting and other academical and technical professions. Both establishments need a national service agent and the liability of partners is not limited.
General Partnership
General partnership companies are limited to UAE nationals only. The Dubai government does not presently encourage the establishment of partnership-en-commendam and share partnership companies
Limited Partnership
see above
Partnership limited by Shares
see above
Joint-Venture Company
A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in a specific activity. The local equity participation in the joint venture must be at least 51% with mutually agreed profit and loss distribution. Joint ventures are suitable for companies working together on specific projects.
Public and Private Shareholding Companies
The law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. With minimum capital requirements of AED 10,000,000 for a public shareholding company and AED 2,000,000 for a private shareholding company both business forms are suitable primarily for large projects or operations. The chairman and majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.
Offshore Company
Offshore companies are used to protect assets, legally mitigate taxes and provide corporate structures necessary for the efficient operation of international companies. Import/Export and general trading activities are one of the most popular uses of Offshore Companies. Registering an offshore company is a fast and easy process of only one to two weeks. One-time registration fees are AED 10,000 and a yearly licence renewal costs AED 1,500. The founder of the offshore company has to appoint a registered agents as a contact person. The agent's compensation is negotiable and based on his range of activities.
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