You have several configuration types to pick from when incorporating a business in Dubai and the UAE. You can set up a mainland company or a free zone company if you’re trying to establish a business to trade from or within the UAE. However, you might establish a UAE Holding firm if you are trying to start a business in order to acquire real estate or retain shares in other corporate bodies. One of the most common reasons for the registration of a corporation in the United Arab Emirates is the formation of holding firms. That is because, for holding firms, the UAE provides a range of advantages: immunity from taxes (providing that the tax residency status is available), secure security of foreign properties, and the likelihood of entry to local exchanges.
What is a Holding Company?
A holding company is a group of businesses or firms who have or are technically linked under the same management system. Maximum security from economic uncertainty, future merger, and other external environmental threats are the core characteristics and benefits of holding firms. In addition, holding firms have an incentive to directly manage the funds available and efficiently disperse monetary wealth.
The primary aim of setting up a UAE holding firm is to own equity and/or manage the properties of a subsidiary company. The holding company’s shareholders can be natural individuals, although much of the time, other corporations have a significant interest in the incorporation of those organizations for the intent of owning one or more undertakings. The holding firm may generally participate in business operations, will not market or manufacture any products or will not offer any facilities.
Setting Up a Holding Company
The rules under company law should be upheld by any company based in the UAE. First, holding companies can set up a board of directors to assume care of the creation of legislation for the regulation and organisation of subsidiaries. The operations of the subsidiaries should be monitored by this board of management. In each subsidiary company, the holding companies’ shareholders should have a director. The corporation should make sure that the subsidiaries have the requisite resources to function efficiently. In terms of the threats that subsidiaries will take, such as foreign exchange and other market risks, the organization can set restrictions. In terms of negotiations and arrangements of the subsidiaries, the holding takes the decisions.
Types of Holding Companies in the UAE
We have two main types of holding companies here in the UAE:
- the free zone holding company, and
- the onshore holding company.
If you go for the holding company of the free zone, you will enjoy 100% foreign ownership. Foreign owners can have a local partner owning 51 percent of the business for onshore holding firms. Choosing the type of holding company you want to manage before registering a holding company is essential.
Benefits of Setting Up a Holding Company in the UAE
Setting up a holding company can be a great way to own property in the UAE – it allows you to reduce administration, hold assets in a secure and private manner, allow flexibility to plug into a trust or foundation, and make life easy for yourself. The UAE’s complete absence of corporate, capital gains and dividend taxes can be extended to those who set up a holding company – even if the individuals in charge of them are resident abroad. By housing assets under a UAE holding company, it’s possible for anyone to significantly reduce their tax liability and pay much less than if each asset was registered in an individual’s name. Let’s take a look at some more advantages of setting up a holding company in the UAE:
1. Gain UAE Residency Visa
Live in your own UAE property without worrying about visas. Owning a property in the UAE is easier than you might think. The government has introduced a new five-year tourist visa, 100 percent ownership of companies for non-Emiratis, and some people can potentially reside here for up to ten years on a single visa. This new visa is finally being made available for normal people, should they qualify.
2. Benefit from Different Ownership Options
Split your stock or hold 100% of the organization. Another huge attraction to owning a property through a holding firm is that it helps you to acquire equity or other properties of numerous firms. This ensures that it is necessary to use the investment firm both for landowners and for investing in other businesses. You have more versatility and more ownership choices in the investment decisions that you choose to make in the UAE. In comparison, personal sensitivity to danger will be reduced. This is since, not the individual, the assets are owned by the corporation. Therefore, you have an improved degree of protection against threats such as loan obligations and litigation.
3. Reduced Risks and Anonymity
The prospect of becoming a single director and managing a holding company in the UAE can be overwhelming on the surface, particularly if you are a person of high net worth who has a ton of assets invested in different companies. What if there’s something going wrong? Personally, will you be responsible for the damages? Often, you do not like to let the whole world know how much you have spent or make it widely clear that you are a listed shareholder (or what you or your family are ‘worth’). Holding firms are, again, a remedy to this issue.
4. Save on Taxes
Benefit from no taxes, particularly though you are residing overseas. One of the main attractions for entrepreneurs and investors in the UAE, particularly those purchasing property through a holding firm, is the massive tax cuts. Those that set up a holding corporation have a distinct advantage over private landowners, as well as gaining from no corporate, capital gains and dividend tax, as this arrangement will tap into a larger structure worldwide.
5. Easy banking
It can be particularly demanding for newcomers to open a corporate bank account in the UAE. If you have a citizenship permit and you possess a UAE business license by JAFZA, opening a corporate bank account could be much simpler. In addition, you can access funds at will from anywhere in the world through internet banking, providing more power of business finances anywhere you live. With the UAE becoming more common with ex-pats as a place to reside and function, in more ways than one, buying a property through a holding company makes good business sense.
Why Choose Riz and Mona Consultancy
When you are in the UAE market for business, you need to be careful in your whole approach because the region has special rules as other countries have. In fact, here laws are quite complex. For instance, if you are looking for a holding company license registration in the UAE, then you must find the right spot. In fact, if you want 100 percent ownership, then you should be choosing the free-zone. The laws are complex and certainly, it is not advisable to handle the legality of the company licensing process on your own. You should find the expert organization or consulting firm for the job and that should be us.