Recently, the demand for company incorporation in the United Arab Emirates (UAE) has grown significantly. This is primarily due to geopolitical factors, but also to the large number of advantages that the UAE offers for businessmen who want to conduct business through this jurisdiction. To date, the general advantages of the UAE include, first of all, the absence of corporate income tax and personal income tax.
In 2023, the UAE still introduces taxation of company profits at a rate of 9% (the first AED 375,000 ≈ USD 102,000 are exempt), but in fact companies registered in the so-called free zones will still be exempt from its profit taxation. Companies that are tax residents of the UAE do not pay income tax in 2022. Also, since 2018, VAT has been introduced in the UAE and all companies, regardless of their location, are required to register for VAT, collect and pay it to the budget of the country if the taxable turnover of such a company exceeds AED 375,000 for the past 12 months.
There are currently about 40 free economic zones in the UAE, some of them are still under construction. A company registered in a freezone can operate both inside the UAE and outside the UAE, can work with companies from other freezones and with local companies (if the services are provided on the territory of your office), can hire employees, issue them resident visas and rent an office, receive a tax resident certificate. A company registered in the freezone, as a general rule, cannot rent an office outside the freezone where the company is registered, cannot work in the UAE outside the freezone (if services are required on the client’s territory outside the freezone), cannot trade and distribute products outside the freezone where the company is registered (trade can be conducted only within the freezone, trading on the local market is possible only through a local distributor company), cannot participate in public tenders.
Now one of the most promising freezones is actively developing and being built up in the UAE – Meydan Free Zone. This freezone is located in Dubai, just 15 minutes from Dubai International Airport (see location on the map). In addition to the prestigious location, another key feature of this freezone, unlike the neighboring DMCC, is the relatively small cost of incorporation of the company, as well as the absence of a requirement for the actual deposit of the authorized capital to the bank account (min. AED 100,000 ≈ USD 27,200).
There are 3 types of licenses available in this zone:
1. Media (for advertising, marketing, etc.)
2. Services and consultancy (allows you to provide consulting services)
3. Wholesale and retail (designed for import, export and trade of various goods)
The full list of possible activities allowed in the Meydan Free Zone can be downloaded here MFZ Activities. The procedure for registering a company in Meydan freezone takes about 10 working days and can be carried out without the arrival of the founders. However, the arrival of the founders in the UAE will still be required to obtain a resident visa and open a bank account. After the registration of the company, the owner is issued with the following documents of the company: certificate of registration, articles of association, share registry, share certificate, business license, lease agreement, establishment card.
The procedure for obtaining a visa through the Meydan freezone takes about 8-10 working days, after which it will be possible to start opening an account in one of the UAE banks. It should be noted that a resident’s visa is issued for a period of three years, after which the visa is issued again for the same period. To maintain the status of a resident of the UAE, it is necessary to enter the country at least once every 180 days, the duration of stay does not matter.
The process of opening a bank account in the UAE currently takes from 1 month. When opening an account, local banks require at least 80% of the company’s management to have resident visas, so obtaining such visas is mandatory if the company plans to open an account with a local bank.
Since this freezone is still being built up, it is possible to rent a real office in Dubai outside the formal boundaries of the zone. In conclusion, it should be noted that the zone has a requirement for the annual submission of audited financial statements.
Thus, due to its economic advantages and prestigious location, Meydan Free Zone is one of the most promising zones for attracting and developing startups, small and medium-sized businesses. More about special economic zones in other countries of the world can be found in our previous publications (see the article).
