Because many readers will read the UAE posts individually, much of the content will be the same or very similar.
Dubai is a subnational entity – an emirate – of the United Arab Emirates (or more commonly UAE). Together with Abu Dhabi, it is one of two emirates that have veto powers in the Federal Supreme Council.
The UAE is a federation of hereditary absolute monarchies called emirates, which are led by emirs.
There is an overall government, led by president Sheikh Khalifa (whose full name is Khalifa bin Zayed Al Nahyan), who is also the emir of the emirate Abu Dhabi, where in the capital city of Abu Dhabi is located. The emirs of the other six emirates join the president on the Federal Supreme Council.
The presidency is effectively hereditary.
As an international financial center (offshore jurisdiction), UAE is a complicated one. Taxes are almost unheard of but forming a business is unfortunately not always easy and banking, although of high quality, is difficult to arrange.
Addressing the topic of incorporation and running a business, numerous free-trade zones have been set up and each emirate is sufficiently independent to set up its own laws on incorporation.
Dubai is the name of both the emirate and the city. The city is much more known than the emirate.
And yes, it’s just like in all the pictures and promo videos you might have seen. There is also a lot more to Dubai. The city and emirate expand beyond the hip and cool city center.
Geography and Demography
|Full Name:||Dubai (دبي)|
|Other major languages:||None|
|Type of government:||Absolute monarchy|
|Legal system:||Mix of civil and Islamic law|
|Population:||2.1 million (of which 1.3 million in the city of Dubai)|
|GDP per capita:||25,000 USD|
|Currency:||United Arab Emirates Dirham (AED), pegged at 1 AED = 3.6725 USD|
Incorporation and Business
UAE is a true zero-tax jurisdiction. Resident and non-resident companies are taxed the same: not at all.
Many jurisdictions simply don’t tax non-resident companies and couple this with an easy regulatory framework to attract non-resident companies; for example Cyprus and Gibraltar. The accounting gymnastics utilized for those structures can look worse than incorporating in a jurisdiction that taxes neither residents nor non-residents. While it may be intuitive to bundle Cayman Islands and Bermuda into this group of jurisdictions, neither of them have big companies operating locally (aside from a barely-staffed office here or there to qualify for tax residence).
UAE does. UAE has some of the world’s busiest ports and a lively commercial sector, spanning everything from financial services to manufacturing.
As a whole, UAE enjoys a strong international reputation. It is known that its FTZ and subnational divisions don’t always live up to international standards but this is more or less tolerated. UAE is a necessary ally in the region to many western (and eastern) governments. It does enough to get by without any major reputational backlashes.
Many compliance officers and risk managers fail to look beyond the country stated in the registered office address of a company, not realizing that there can be a big difference within the UAE.
Incidentally, Dubai is home to one of the most famous and reputable FTZs in the world.
Based on that most readers of STREBER Weekly, who are looking to form a company, are start-ups or freelancers, forming a company in Dubai is probably not the right choice for you. You are most likely going to find Ras al-Khaimah more interesting. In RAK, you can incorporate what is essentially an IBC but with the reputational advantages of the UAE.
However, if you are curious about setting up an actual office and presence somewhere without paying a dime in tax, keep reading. Dubai might be just what you need.
Because UAE is not a signatory to the 1961 Apostille Treaty, it can be very tedious to open bank account for UAE companies on your own outside of UAE. Unless using a corporate service provider which can place you with overseas banks through their long-standing strong relationship with partner banks, getting documents certified can be a huge time and money sink as it needs to be legalized by an embassy to be valid.
Because of UAE’s peculiar standing and unique conditions, many service providers offer full director services for a relatively modest fee to make companies appear resident in UAE. This can sometimes be successfully deployed to make a UAE company satisfy foreign tax authorities’ tax residency rules and not be deemed a local company. Your mileage may vary. As always, be very careful and seek professional advice.
Free Trade Zones
There are over 20 different FTZs in Dubai. Some of the most popular or known include Dubai Internet City, Dubai International Financial Center, Jebel Ali Free Zone (JAFZA), and Dubai Airport Free Zone.
Incorporating, getting an office, hiring staff, and handling immigration are easy across the FTZs. Since each FTZ is designed for a set of specific purposes, it’s important to pick the right one.
Considering that licenses and premises are required, costs are comparatively low, but too high for those seeking just to form an entity somewhere and operate remotely. As I mentioned earlier, Ras al-Khaimah is likely a better option.
Dubai Internet City (DIC)
I wish I were joking but the Dubai Internet City website is currently down for maintenance.
Located within the jurisdiction of Dubai Creative Clusters Authority (formerly Dubai Technology And Media Free Zone), The DIC is meant for online businesses. Walking around the DIC, you can see many familiar names on post boxes.
It’s easy to get to and from the DIC with the driverless and fully automatic Dubai metro.
Dubai International Financial Center (DIFC)
The DIFC is a free zone dedicated to financial services such as banking, wealth management, and insurance.
Some 1,800 licenses have been issued in the DIFC. This number includes surrendered licenses and dissolved companies. Many are branches of foreign banks and other financial service providers.
Jebel Ali Free Zone (JAFZA)
Jafza was set up in 1985 and is focused on manufacturing, construction, shipping, and warehousing. It has since grown to become the world’s largest free zone in area.
Each FTZ has its own regulator which is answerable to the Dubai authorities which in turn are answerable to the Supreme Council.
Aside from the oil sector and branches of foreign banks, there is no corporate tax rate anywhere in the UAE.
Required but need not be submitted. Audits are usually optional.
Varies but generally very secretive.
Banks in Dubai are licensed by the Central Bank but may operate from the Dubai International Financial Center.
UAE has adopted the IBAN standard. This can be of a tremendous advantage to entrepreneurs with business partners in the EU. UAE is not a member of SEPA, though.
Cards are often available in multiple currencies, with USD being the most common aside from AED.
The banks are generally easy-going once an account is opened but the banks are more inquisitive than for example Europeans, Americans, and Canadians might be used to from banking at home.
The UAE culture is very personal. It’s important to establish a personal relationship with your contacts at the bank in order to build trust. The same could be said about for example banking in Switzerland, but the difference is that the Swiss banker will be very unlikely to deviate from the policies even after trusting you whereas a banker in the UAE will waive through transactions that perhaps should have been looked at closer.
Open a Bank Account in Dubai
Opening a bank account is theoretically not different from opening a bank account in UAE. In reality, the banks based in Dubai are usually more easy-going than in for example Abu Dhabi.
A personal visit is practically always required. Exceptions occur but are rare and usually reserved for persons or corporations of substantial wealth. Personal relationships are very important in UAE and the Middle East as a whole; far more so than in for example Europe or the Americas.
Assuming you’re not just open a small savings or investment account, you will get a personal contact at the bank. This person will be the first point of contact for any queries you may have to the bank. This can make banking take longer (for example if your contact is away or unavailable), but it’s how business is done the region.
Paperwork is not different from most other jurisdictions. Non-resident and foreign companies are welcome but anything more alien than a RAK IC may face a lot of questions about why they are banking in UAE. An introducer is effectively required for any such account opening.
Due diligence is taken fairly seriously. It would be a huge detriment to the kingdom’s finances if it were to become blacklisted by FATF, OECD, US, and the EU for money laundering.
During the Lebanese banking crisis, a lot of capital flowed to UAE, where investors were drawn not just by the financial stability but also the relatively strong banking secrecy. UAE was known as a country that did not give in to international pressure easily.
Today, UAE has signed up for both FATCA and OECD AEOI. Outside of that, secrecy remains strong. The banks are very diligent to satisfy FATCA but OECD AEOI is not taken at all as seriously.
Banks in UAE
As of writing, there are 46 commercial banks in UAE:
- ABN Amro Bank NV
- Abu Dhabi Commercial Bank
- Abu Dhabi Islamic Bank
- Al Ahli Bank of Kuwait
- Al Rafidain Bank
- Al Hilal Bank
- Arab African International Bank
- Arab Bank For Investment And Foreign Trade
- Arab Bank PLC
- Bank Melli Iran
- Bank of Baroda
- Bank of Sharjah
- Bank Saderat Iran
- Blom Bank France SA
- Banque Du Caire
- Calyon Bank
- Al Khaliji France
- BNP Paribas Bank
- HSBC Bank Middle East
- CitiBank NA
- Commercial Bank International
- Commercial Bank of Dubai
- Dubai Islamic Bank
- Dubai Bank PJSC
- El Nilein Bank
- Emirates NBD
- Emirates Islamic Bank
- First Gulf Bank
- Habib Bank Limited
- Habib Bank AG Zurich
- Invest Bank
- Janata Bank
- Lloyds Bank TSB
- Mashreq Bank
- National Bank of Abu Dhabi
- National Bank of Bahrain
- National Bank of Fujairah
- National Bank of Oman
- National Bank of RAK
- National Bank of UAQ
- Noor Islamic Bank PJSC
- Sharjah Islamic Bank
- Standard Chartered Bank
- Union National Bank
- United Arab Bank
- United Bank Limited
There are eight branches of foreign banks:
- Bank of Bahrain & Kuwait
- Barclays Bank
- Doha Bank
- ED & F Investment Products Ltd.
- ICICI Bank
- Korea Exchange Bank
- Standard Bank London Ltd.
- Union Bancaire prive’e (CBI-TDB)
- Westdeutche Landesbank
The UAE Central Bank does a commendable job declaring ownership and making financials on banks it supervises easy to find (for those banks that do publicly share their financials):
- Licensed Banks & Other Financial Institutions’ Ownership
- Links to Banks’ Published Financial Data
- Links to Banks’ Charges in the UAE
Living in Dubai
It can get very, very hot in UAE. Temperatures well over 40°C (104°F) are common in summer and it rarely dips below 20°C (68°F) at the peak of winter.
Dubai is a city of stark contrasts.
Most western expats love it but some find it either too shallow or too conservative. Before settling down in Dubai, it is wise to spend a week or two here, preferably in early or late summer when the weather is getting cooler and tourist season peaks.
In the end, few expats last more than five to ten years. But that’s often enough time to build up significant savings and wealth.
Infrastructure in Dubai is top notch and it is generally very safe. There is comparatively little adjusting a non-Arabic expat needs to do to fit into Dubai.
While not entirely as easy as Ras al-Khaimah, it is nonetheless fairly trivial to obtain residence permit in Dubai for investors and entrepreneurs which are starting a business.
There are a myriad of ways to accomplish this. All in all, a budget of 20 – 40,000 AED should be expected for all the paperwork.
All in all, the process takes a couple of weeks to complete. It’s not as fast, cheap, and convenient as Panama, but it is truly tax free.
Residents can apply for citizenship after 30 years (7 years for those of certain Arabic descent), provided that they speak Arabic, have a stable income, and have no criminal record.
Taxation is on consumption and usage and not income.
This can make Dubai incredibly attractive and totally tax free.
UAE is one of the finest jurisdictions in the world and Dubai is one of the most exciting places in the region.
While not a suitable option for those seeking something akin to an IBC or typical LLC, Dubai is an excellent jurisdiction for setting up a business with physical premises in a tax free and business-friendly environment.
Banking in the UAE as a whole is very good, but one should plan a visit to the bank.