For those who are unfamiliar, the UAE is a grouping of relatively autonomous jurisdictions. While the most well-known is Dubai, there are others. Now when you incorporate in the UAE, the first choice is whether you want an offshore company or IBC (International Business Company) in one of the Free Trade Zones (FTZ) or an onshore company.
The difference is that the IBC cannot do any business within the UAE and is only allowed to do business outside of the UAE. In return, these companies are allowed to be 100% foreign owned and operate (to a large extent) tax free. While the onshore company can do business both locally within the UAE (US tax UAE in-depth article) and internationally. In return they must have a local Emirati partner and are subject to VAT (value added tax).
Incorporation is a virtual minefield. Do a search and be prepared to be bombarded by “agents” who compete largely on price with advertising in broken English on crass websites.
Originally the idea was for each of the nearly 50 FTZs to specialize in different industries. While many do specialize, to a large extent, many of them allow the same types of “general” businesses and it’s hard to really distinguish one from another.
Given this aggressive marketplace, you have the obvious temptation to just go for the cheapest. BIG freaking mistake. For anyone who has attended my webinars or watched my videos you would know that the name of the game is banking. So this is what drives your decisions otherwise you end up with an IBC and no way of accessing corporate banking.
Feel free to research the strongest UAE banks but this is what we found as the TOP 10 here – https://www.theasianbanker.com/ab500/2018-2019/strongest-banks-me
Obviously the stronger the bank, the harder it is to get an account. The weaker banks are often easier to get in…but do you want an account with a strong or weak bank? Your call.
So once you realize that the FTZs are the wild wild west with the agents running around unregulated and many taking “short cuts”, you can understand why the banks are nervous. They stand as the real gate keeper to the system as they seek to weed out the obvious undesirables. So like many jurisdictions, expect to be grilled and interrogated. Be prepared with the relevant paperwork that proves that you are experienced and competent in your line of work.
Now most UAE banks do not allow a free zone companies with a general trade license to open a corporate account with them. This is particularly true for businesses with virtual offices.
- Providing a residential address: This may help compensate for the lack of dedicated office space.
- Bring previous personal bank statements including tax records etc.
- Applying through the major shareholder: It is preferred that the major shareholder in the company applies for the bank account. The shareholder must also have a valid UAE visa and Emirates ID.
- Submitting a business plan: Applicants can also provide the business plan.
For offshore companies: Applicants from offshore companies are recommended to invest in a Dubai free zone that is a good fit for their business rather than the most affordable one.