The demand for UAE residency has been gathering pace over the past few years. The latent demand for residency had a snowball effect after the government’s resounding success in combating the pandemic with proactive measures, ensuring minimum disruption to normal life. The country has now emerged as one of the preferred destinations for HNWIs seeking residency, ahead of Switzerland, Monaco, and Singapore.
A UAE residency may be obtained in one of the following ways:
- Incorporating an onshore, offshore, or free zone company: This option allows the shareholders and employees of a company to apply for residency status. Residency in the UAE by registration of a company is the most popular route as there is no investment requirement, the visa is issued for a longer period of time (3 years), and there’s the opportunity to conduct business in the UAE while enjoying the tax benefits.
- Purchase and ownership of a property: To fit the requirements of the residency visa, the property must be worth at least 1 million Dirhams, which amounts to approximately US$272.000. The visa is normally issued for 2 years and does not grant the right to work in the country.
- Golden Visa: In 2019, the UAE implemented a new system for long-term residence visas. The new system enables foreigners to live, work, and study in the UAE without the need for a national sponsor and permits 100 percent ownership of their business on UAE’s mainland. These visas will be issued for 5 or 10 years and will be renewed automatically.
Investors prefer to gain a UAE residency by incorporating a company in a suitable jurisdiction. There are three main business jurisdictions in the UAE – The Mainland, Free Zone, and Offshore. The choice of a jurisdiction for incorporating a business will depend on the business activity that the applicant wishes to pursue and the economics involved. The three jurisdictions are distinct and offer unique advantages to investors. However, the most popular of the three jurisdictions is the Free Zone.
Free Zone Companies
Companies incorporated in free zones are 100% foreign owned. In addition, they are cost-effective to incorporate and operate; enjoy a tax-free status; are exempt from VAT; and are not subject to customs duty. Free zone companies have access to world-class infrastructure and amenities, including furnished offices and well-fitted warehouses.
Business owners and employees are eligible for obtaining a UAE residence visa.
Some of the most sought-after free zones for residency and business incorporation are:
- Dubai World Trade Center FZ
- Jebel Ali FZ
- Dubai Airport FZ
- Dubai Multi Commodities Center
- Dubai Internet City
- Dubai Media City
- Dubai Knowledge Park
- Dubai Healthcare City
Offshore companies are registered with offshore jurisdiction authorities in Dubai, Ras Al Khaimah, and Ajman. Such companies are distinct legal entities and do not fall under the legal and business regime of UAE mainland or free zone authorities.
Offshore companies enjoy benefits similar to free zone companies but are deemed to be operating outside of the UAE mainland. The companies have restrictions in owning properties and cannot apply for UAE Residence Visa for the employees. It is an ideal option for investors to conduct international trading and enjoy the tax benefits and double-taxation avoidance treaties.
A mainland company in Dubai is registered under the UAE Department of Economic Development and there are multiple license types that a business can obtain after the formation is complete. The three types of licenses for onshore companies are Trade License, Industrial License, and Professional License.
An onshore or mainland business entity in Dubai is a company that is established anywhere within the geographical areas of Dubai. There is a mandatory requirement of a UAE national to hold at least 51% of the total equity of any commercial business registered as a Limited Liability Company (LLC), making the maximum foreign shareholding allowed for a foreign national to be 49%. As of June 1, 2021, the 51%/49% rule is no longer a requirement. But it won’t come into effect immediately. It will take up to six months from the publication of the official gazette to be formally rolled out. From this date, non-GCC entrepreneurs and business owners can now set up freely in the UAE without the need to hand over a stake to an Emirati agent or appoint Emiratis to board positions. However, local authorities must approve any ownership models, with industries of national importance.
The main benefits of a mainland company in the UAE include:
- The freedom to choose a premise in any area of Dubai
- The ability to conduct a wide range of business activities
- The freedom to trade internationally, including inside the UAE
- Residential visa for you, family members, and employees
- Access to skilled professionals
- Stable and transparent laws
With no income tax, property & capital gains tax, or net worth tax on individuals, the UAE is indeed a very attractive proposition as a residency jurisdiction. Moreover, the straightforward administrative requirements and low processing costs coupled with political stability, excellent accessibility, and warm weather are compelling reasons to make the UAE home.
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