On June 25th Creative Zone organised a webinar to educate people on gaining Dubai residency by setting up a business. As the UAE continues to remain a coveted place amongst foreign investors and global nomads to set up a regional base that has good connectivity, ease of doing business and favourable tax and fiscal structure. The process of setting up a business in the UAE requires a thorough knowledge of the system and understanding the business landscape. Creative Zone’s business set up advisors addressed the commonly asked questions and educated the participants about getting residency in the UAE through company formation. The panellists comprised Nilesh Ashar, Tax Partner, KPMG, Alistair Paine and Jamie Harvey, Business Setup Advisors, Creative Zone. The session was moderated by Lorenzo Jooris, CEO, Creative Zone.

HIGHLIGHTS

WHY DUBAI?

The UAE and Dubai, in particular, has always been one of the top cities that people chose to migrate. Connectivity will be key to the growth of all future megacities and is the reason for Dubai’s rise as one of six truly global cities in the world. The large coastline and the global aviation hub eases the transportation and connection of people from all around the globe to come together in one place. The country’s free economy is always open to foreign business and investment, and the government policies are extremely favourable for the business landscape and the SMEs. A range of support is offered by the government for the companies who are looking to set up a business in Dubai. Also, businesses operating in the free-zone have permission to be 100% foreign owners with minimum import duties.

The tax structure of the country is one of its most attractive features. There is no federal income tax and corporate tax is applied only to the banking and oil industry. VAT has been fixed at the nominal rate of 5%, making the UAE’s tax and fiscal landscape one of the best in the world. 

Tax Residency Certificate for investors launching a business vehicle in the UAE

One of the key questions that foreign investors ask while setting up a banking or trading vehicle in the country is whether they can obtain a Tax Residency Certificate? Yes, depending on nature and structure that Creative Zone will set up for the client, one can get a Tax Residency certificate. To be qualified for tax exemption one needs to have a residency visa that will allow them to get an Emirates ID, proving a person resides in the country. Next, one has two option for setting up a business- Mainland and Free Zone, acquiring a license in any of these two jurisdictions will allow you to open bank accounts and conduct business overseas, and generate local invoices for international transactions. 

What are the benefits of setting up in Free Zone and Mainland?

It will entirely depend on the nature of the business, whether one is conducting some business locally or is it only used for invoices. If the business is mostly conducted outside the country then getting a FreeZone license makes more sense alternatively Mainland license has increasingly become a popular choice ever since the traditional regulations have been lowered. The new FDI laws now allow 100% ownership by the expats.

Tax Benefits

The tax structure in the UAE is very straightforward, on an individual level, there is no personal/Income tax. There are also no corporate taxes on the profit that your company makes. Since the UAE Dirham is pegged with the American dollar, the fiscal environment is also very stable.

Apart from that UAE has a very strong double tax treaty with many countries including African nations. Where if the company is based in the UAE and has made profits in another country, the taxes withheld by the country can be lowered due to the double tax avoidance treaty.

How competitive is Dubai’s market when it comes to setting up a company.

The amount is determined by the jurisdiction but setting up a company in Dubai can start with as low as around 2000$ in Free Zones and around 5000$ for Mainland.

How many visas can one get by setting up a company in Dubai?

Creative Zone is a one-stop-shop when it comes to setting up in Dubai. The Creative Zone’s team will begin by taking the passports to start the visa process, then comes the medical and once the owner’s visa is processed they can sponsor their wives, parents, children even domestic help. The concierge department of Creative Zone takes care of all the paperwork and ensures that it is aligned with the UAE law, which essentially means that the Birth certificate and Marriage certificate are attested by the Government here and the country where one was born/married, the same then has to be translated into Arabic, all of this is done under one roof by Creative Zone. The process from start to end takes up about 36 days, however, the expat doesn’t need to be in the country for the entire duration they only need to be physically present for 7-8 working days till their visa is stamped.

For more queries please reach out to us by clicking here.

How will CZ help companies open a bank account since it’s one of the most tricky things 

Setting up a company is a very straightforward process, what is tricky is to open a bank account if you don’t know what exactly is to be done. Creative Zone’s concierge team’s main focus is also on opening company’s bank accounts, they maintain relationships with various bankers in the country and can advise which one will suit the company’s needs the best. They do this by acquiring some documents before engaging with the banks and understanding the nature of the business, its overview, where is the funding coming from etc. So, the concierge team will have a confirmation before opening an account.

How many days does one need to stay in the country to get a tax residency certification?

According to the new OECD law, one needs to stay in the UAE for 183 days in order to be qualified for tax residency certificate. Apart from that, they need to show a lease agreement and a bank account statement of the last six. Based on these documents the ministry of finance will issue a tax residency certificate that has to be renewed every year with the same documents. For the home or any other country, it is mostly 180-13 days threshold for a person to qualify as a non-resident and if the person has stayed in the UAE for more 183 days, his/her Global income will be taxed in the UAE(where there are not taxes) but if any income was generated outside the UAE it will be only that income which will be taxed.

How beneficial is the setting up of big Holdings, Special Purpose Vehicles, trusts etc?  

It is quite beneficial, the UAE has two regulated Free Zones- Dubai International Financial Center (DIFC) and Abu Dhabi Global Market (ADGM). These two Zones follow the English-welch common law and if you are someone who is looking to structure a trust or SPV in these areas then you can take advantage of the well-connected geographical location together with the tax benefits.

Difference between Mainland and Free Zone

A Mainland license allows one to carry out business at the onshore part of the city, most Mainland companies have a 49% and 51% ownership arrangement, where the larger portion percentage is owned by a local representative, in some even 100% and in others expats are allowed to own 100% of the business.

Free Zones are a kind of Special Economic Zone (SEZs) spread all across the UAE. There are more than 50 such zones and are dedicated to specialised industries like Shipping, logistics, Media etc.

Tourists will be required to present a recent Covid-19 negative certificate or undergo testing at Dubai airports.

Sources:

• Khaleej Times

The panel comprised Tariq Qureishy, CEO Xponential and MAD Group, Mohamed Al Banna, CEO, LEAD Ventures, Adel Mardini, CEO, Jetex and the session was moderated by Lorenzo Jooris, CEO, Creative Zone. The panellist’s sharp observations and industry insights were backed by years of experience in their respective industries and knowledge gained over the years.

While answering what’s to come in the near future, the panellists cohered a singular tone that before we go on thinking about our businesses and economies, this time has certainly taught us some forgotten core values i.e. trust, empathy and kindness. In the next six months businesses should put on their resilient mode and do everything they can including making hard choices and set out clear measures to take in the coming 12 months, instead of panicking and shutting down shops, fight one thing at a time and to always remember that this pandemic is only a season that will sooner or later end.

Tareq correctly pointed out that the COVID has unleashed more than just a physical pandemic, it has generated fear for our safety, fear of isolation and being lonely, there is surely the insecurity about one’s financial situation and then there is so much misinformation that is making rounds in the media that adds to people’s anxieties. So, there is really a need for people to take a step back in all this chaos and breathe first, as often it is our only choice. “Yes, many big companies will exit the market but at the same time several new spring up. It is upon us to decide how innovative we can be, a good pandemic should never go to waste”. Examples of many companies came up who evolved in the situation to stay agile, for instance, economical airlines have converted themselves into cargo, dating apps have altered their model and now they let people go on a virtual date. So it’s all about acting quickly and having the right attitude.

There is no denying that somethings will change forever, foremost being consumer behaviour, in our previous webinars we discussed how technology has made this time possible to survive and along with giving rise to many more ideas and concepts that are enabled only by technology.

Talking about how the UAE has done in dealing with the crisis, Mohamed praised the government in doing everything that was needed in terms of medical, financial and even mental assistance. The measures and messaging of the government has once again regained the trust of its residents and condoned the false rumours about the UAE being in danger etc. The country has always shown resilience and bounced back stronger and better.

As the aviation industry is one the most highly affected ones, Adel revealed that instead of 6000 units earlier they are now down to 600. But there is hope in the future as the oil prices have reduced leading to lowered prices for hiring private planes, people who earlier travelled business or first-class are now switching to chartered planes.

The session ended on the positive note that the only way forward is to have trust in oneself and our communities. It is the trust that will take off the flights and start the engines in factories once again.

The session addressed queries related to business setup in the UAE, mainland v/s free zone, license process, and the current business environment.

E-Commerce, an industry that is growing at an exponential rate remained one of the popular topics. Setting up an E-commerce business has not only become easier but is also encouraged by the government authorities by offering stimulus packages and easing many rules. To start an E-Commerce business one needs to get either get a Free zone or a Mainland license. The difference is if one has a free zone license then distribution, logistics, warehousing etc. has to be done through a third party if one needs the products/services to be available in the Mainland. If the products are delivered through the owner then he/she have to be registered under the Dubai Economic Department.

Creative Zone’s business setup advisors explained the difference between Mainland and Freezone busting some common myths. When deciding between Mainland and Freezone, the nature of the business, activities involved and scalability plans have to be taken into consideration otherwise one might end up paying a lot of fines and getting into unnecessary complexities.

While the Freezone is a popular option because of its to lower rates, the decision must be taken only after considering all the possibilities. The Mainland does need a local representative but in many businesses will ensure 100% ownership and gives flexibility and room for scaling the business.

When it comes to General Trading, it essentially means that one can trade into products without specifically declaring to the authorities, however, this is restricted for when one is dealing in controlled products like- Alcohol, cigarettes, pharmaceuticals, medical equipment, some type of cosmetics etc. Also when opening bank accounts for the general trading license one has to specify the products they are trading and the bank depending on the nature of trade activity will process accounts, loans, credits etc.

SMEs constitute a major percentage in the GDP and are considered extremely valuable by the government too. So small businesses like Salons, Pet Stores, even restaurants they need to acquire a Mainland License and though they will need a local representative 100% ownership will be retained by the business owner.

Some other Q&A were

Q) Is it possible to carry out a side business in the Mainland while on your employers’ visa?

R) Yes, provided you have a NOC from your employer.

Q) What is the option for freelancers, like photographers or someone in the media industry?

R) There is a freelance permit that is a viable option, it allows you to get a visa and open bank accounts in Dubai. However, the difference in prices between a freelance permit a regular trade license is not much plus having a trade license will give you the freedom to scale your business or employ more people later. So all these things should be accounted for before choosing. As freelance businesses are rapidly being pursued especially after COVID-19. 

Q) What is the difference between an E-Traders and E-commerce license

R) If you are buying goods and selling them then you should have a trading license, even if you are storing them, relabeling them one still needs a trading license. For E-Commerce, it is essential that trading takes place online and the products are directly sent from the manufacturer to the consumer.

For more Q&As and full video of the webinar please click below.

The webinar was especial also because all the four participating entities have joined their forces to provide a robust and an integrated platform to SMEs, Start-ups and solo entrepreneurs to operate better in today’s digital world. Statistics show that E-Commerce businesses increased by 49%  in the UAE last year, in 2020 with the pandemic disrupting the normal life the already developing technology will be pushed harder and faster and it is expected that the year of 2020 and beyond will undergo enormous changes in terms of consumer behaviour, nature of businesses and life in general. 

Khalil Alami, CEO of Telr corroborated that the current situation has been stimulator for his business as a lot more – people are now going online and need a payment accepting method.

Ben from DHL also presented his supporting views on the fact that this period is a very interesting time for start-ups and SMEs as there are plenty of opportunities in the field and if one can ensure the fundamentals right, they will surely succeed. Ben also explained that in the UAE’s roadmap there is a concrete plan to make the economy cashless and hence more transparent, there is however a lot of dependence on cash which has to be managed but the UAE’s infrastructure does support this vision and is continually evolving.

Roni Fares, talking about people starting on their own said that Humans are creative and have always evolved their skill sets, and the current situation could be a blessing in disguise. Soon people will become nomads who are walking & talking businesses themselves because of the tools, the skills and the world that is being compressed every day.

The ease of making payment has made lives easy for many businesses and individuals explained Khalil. To start with Telr all you need is a trade license and the company provides an entry level plan for small startups irrespective of what technology you want to use, it can be connected to shopify, most of the plug ins etc.

Doing their part in helping businesses operate in this time is DHL. The company through its smart analytics tells you which sales channel to select, which geographical areas are doing better by understanding the demographic structure better, how speedily accessible is the market, if free delivery can be possible etc. These factors help companies to make better choices, prepare their operations to deal with things in a more effective manner and attain success.

10 Steps to Obtaining a General Trade License in Dubai

Step 1: Trading Business Location

You have 3 location options to set up a trading company in Dubai: Mainland, Free Zones, or Offshore. So, the first step is to decide from which location you want to get a trade license.

Step 2: Company Structure

The next step is to choose an appropriate trade name and the legal structure for your trading company.

Step 3: Business Activities

Next, you need to decide on all the business activities that you wish to include in the business license (a maximum of 10 activities are allowed per license)

Step 4: Application

At this stage, you fill in the application and submit it for initial approval.

Step 5: Approvals

Based on the type of business activity, you need to get external approvals as required.

Step 6: Documentation

Once you get the initial approval, you need to arrange all the required documents, such as the Memorandum of Association (MOA) and all other approved documents from the relevant government authorities.

Step 7: Tenancy Contract

Once you decide on the business location, you need to get a tenancy contract attested by Ejari.

Step 8: Final Application to DED

The next step is to submit an application to the DED to obtain the final trading license. 

Step 9: License Fee Payment

Once the application is approved, you need to make the requisite payment for obtaining the license, including an issuance fee.

Step 10: Submission of Original Documents

To get a valid trading license from a free zone or offshore, the company needs to submit the original documents to the Commercial Registry at the Trade license and Commercial Registration Department (CRD). Once CRD checks and validates the documents, the company name is added to the Commercial Registry.

Then, the DED forwards the documents to the Federal Ministry of Economy to publish the documents. After publishing, the Ministry issues its approval letter. Once the licensing procedures are completed, the DED issues the original trade license and commercial registration certificates to the new company.

The whole licensing process takes around one week once you share the necessary documents with the DED. A general trade license is valid for one year. 

If you are looking to start a new trading business in Dubai, then seek help from professional business setup consultants like Creative Zone. We can help you obtain a general trading license in Dubai in the shortest possible time. Call us on 800 LICENSE (5423673) to speak to one of our Business Setup Consultants today!

Individual Sponsorship: 

• In individual sponsorship, an individual Emirati national sponsors your business and holds a 51% stake in your company.
• Individual sponsors must be UAE citizens aged above 21 years, male or female.
• An individual sponsor needn’t have any experience running a business in your chosen field. However, the sponsor should be either a professional, a business owner or a government employee.
• In exchange for a set annual fee, the local sponsor can hand over the full power of attorney and full control of the business and its day-to-day activities to the foreign investor.
• All earnings are held in the name of the company and not in the name of the local sponsor.
• Both commercial and industrial licenses require a local sponsor.

Corporate Sponsorship: 

• Corporate sponsorship is similar to individual sponsorship.
• The corporate sponsor is a UAE national company and not an individual UAE citizen.
• The corporate sponsor holds a 51% stake in the business.
• The corporate sponsor receives a set fee or profit share to let the foreign investor run the company with full control. Foreign entrepreneurs also maintain 100% of the profits from the business along with full control.
• The process of corporate sponsorship is less risky as it is completely clear and structured from start to finish. It provides entrepreneurs with more security and legal protection by ensuring agreements are reviewed by a first-tier legal counsel and terms set from day one.
• Dealing with individual sponsors can create ownership problems if the partner passes away or retires early. To mitigate this risk, you need ‘succession planning’ or a legally-binding plan in place. But with a corporate sponsor, you don’t need any succession planning. 
• Corporate sponsorship provides you with the support of an entire corporate team rather than just one individual.
• One of the biggest advantages of a corporate sponsor is that it will never interfere with the business.

Local Service Agents:

• Local service agents are required when professionals, such as doctors, engineers, and chartered accountants, set up their businesses in their areas of expertise.
• By partnering with a local service agent, foreign entrepreneurs can apply for a professional license and hold 100% ownership of their business. They also maintain the full power of business operations. Local Service Agents have no administrative powers.
• However, the local service agent acts as their representative in all administrative dealings with government departments. Local Service agent plays the role of signatory for fulfilling all government-related tasks.
• The local service agent does not hold any stake in the business.
• Local service agents are simply paid an annual fee for their services.

If you are looking for a local sponsor or a local service agent for your Dubai business, then contact Creative Zone. We can help you find the right local sponsor or agent for your business as per your requirement. Call +971 4407 0540 to schedule a free consultation with one of our business setup advisors today!

Highlights of The Session

Vusi began by sharing some key lessons that are relevant to everybody involved in some kind of business dealings. Number one is to realise the importance of your word, if you give your word to someone, stand by it no matter what. One’s reputation and credibility always precede them. He went on to answer questions on how to start, build, and scale a business together with addressing the propelling question of how can we move past from the COVID-19 impact on businesses.

“The most important thing to do right now is to just be Human, accept that there is nothing anyone can do to change the situation we all are in, it is a winter season that will pass and no one is immune to it”. He gave example of the iconic Richard Branson who is also facing the same hardships as his aviation empire is in a distressful situation. Companies need to focus on the next steps and prepare well to deal with some institutional changes that undoubtedly will be installed post-COVID. It is surely time to make hard choices but right-size the company, take salary cuts first yourself if you are the owner. But the most important advice that Vusi gave was that most of the businesses are right now playing in defense by protecting the current client base, shielding revenues and the core of the business, but what one must also do right now is to work on the offense and figure out how can they capture more market share in the coming months. For a company to thrive all the functions must be well regulated.

How do companies of a size of 3-4 people scale up to becoming a 50 or 100+ team asked one attendee. To this he very intelligently answered, “be clear on what you want to measure, what is the parameter of success, the number of employees or the revenue number and this is a developing mindset, having more people in a factory does not necessarily mean more revenue, the company WhatsApp was less than 50 people when they started, the measure of success has to be how much impact are you having, it can’t be things that are attached to ego”. Where is the office located, how are the interiors, a chauffeur-driven car all these things are superfluous. People only care about the bottom line- What are the numbers you are doing?

So one needs to first spend time assessing what is the right way to scale the business and what to measure. Measure customer satisfaction, measure market penetration, and more importantly customer’s share of wallet, which essentially means upselling your product to the existing customer. This according to him should become the measure of success instead of how many people are working for the company or how many offices do they have, if we measure the wrong stuff, we will do the wrong stuff. If we measure the real things they will give us the correct action. 

What is the difference between the self-employed, business owner, and entrepreneur? An entrepreneur is someone who can disappear from work for 90 days and things will continue to move. A business owner or a self-employed person cannot do that because they need to be there to manage their teams. A true entrepreneur accepts that mistakes will be made and invests in making effective processes and systems that manage people and creating that is probably one the most difficult thing to do.

The session also touched on the current political scenario in the US and rest of the world, and where are we headed, Vusi opined that people now want to be seen and recognised as who they are not as they had to be, people want a slice of the pie and rightfully so. He does expect similar risings in the time to come and businesses should be ready to deal with it and invest in building processes and systems NOW.

Creative Zone organised a webinar on setting up businesses in the current scenario. The session was moderated by Lorenzo Jooris, CEO, Creative Zone and was led by Paul Prendergast, Head of Revenue and Strategy and his team – Alistair Paine, Romell Gumbs, and Jamie Harvey. The session was opened by sharing the good news that the period of Ramadan, contrary to expectation was not a slump period for businesses. The news becomes especially good considering the ongoing events worldwide. The new norm of Work from Home is proving to be a success because for many businesses productivity and efficiency has increased and the new methods of communication have been well received by clients. 

Paul Prendergast began the session by giving a brief history of Creative Zone and how over the years the company has effectively become a full-service consultancy that provides 360-degree solutions to people looking to establish their business in the UAE. 

The importance of choosing the correct jurisdiction was highlighted by the speakers as there are so many options these days, it can be confusing to select the right one. Alistair explained, they advise clients by first doing thorough research about their business, understanding not only the business product but the model too, knowing who their clients are and how are they targeting them, understanding the marketing strategy and everything else. As setting up one’s business in a wrong area can cause one to lose heavy bucks but can also jeopardies any expansion plan that the company might have.

Jamie Harvey elaborated on the different kinds of jurisdiction and what works the best, he emphasised on the increasingly becoming popular- DED Mainland Coworking license, that is not only affordable but also allows taking advantage of some of the features of Mainland DED license. Free zones were always a popular choice especially amidst foreign companies looking to establish a branch in the UAE, Free Zones in the Northern Emirates, SHAMS, Fujairah Creative City offer great benefits to companies by easing the business process and providing world-class amenities.

The webinar also discussed the emerging commercial activities and how has COVID-19 impacted the nature of business. Romell clarified that certainly, the pandemic has affected the nature and the way people did business. Requests are mostly coming for setting up an E-Commerce, consultancy, and products that are specific to the current situation like manufacturing sanitizing equipment and other cleaning tools. The ventures are mainly started by people as a side business to supplement their income or by those who have recently lost their jobs but have plenty of industry experience, they mostly go for setting up a consultancy.

The team also stated that the DED Mainland license has increasingly become a top choice for people setting up a business in the UAE. The main reason for this is the reduced rules and regulation that earlier pushed away business owners. Now, starting a business in mainland Dubai has become relatively easy, affordable and rewarding.

The session was then opened for a Q&A session, the full video of which can be seen above.

Creative Zone conducted an important session on how leadership should be changing in these tumulus times that the pandemic has enforced on the world. The disruptions have created a need for a holistic transformation in leadership patterns, as companies will depend on its heads to revive the paused structures, mend the supply chain, restore the product line and be the guiding force for their teams.
The Panel included of Edward Matti, Managing Partner, CCM Consultancy, Reg Athwal, Founder, Chairman & Managing Director of RTS Global Partners, Tanya Lesley, High-Performance Coach and the session was moderated by Lorenzo Jooris, CEO, Creative Zone.

The panellists directed their discussions on how to enhance leadership style as this isolation period has completely altered the corporate culture and its structural formations. The session pointed out that this surplus time has helped bring past glitches to the surface and should be used as an opportunity to fix past flaws and strengthen foundations.

The webinar began by Reg explaining his view of the ‘New Normal’, he believed that the basic business structure has remained the same, people are doing business in the similar way, the operating methods are the same, the nature of work remains same as well. The only difference is that now reality is setting in and people are reflecting on their strategies, figuring out whether a particular course of action was the best for them and planning how to deal with things as they move forward. So yes, there have been setbacks in many businesses but it is also allowing people to reflect on their decisions and choices for which there was no time previously.

Tanya Lesley, who advises vast organisations and several SMEs on the best practices to increase productivity, opined that Communication has changed in a major way. There is a global call for leaders to navigate their organisations or teams in this period of crisis. According to her, “giving a positive mindset to their employees is the foremost factor that will help professionals in maintaining productivity and stability. It is a leaders responsibility to teach them how to think better, challenge them in positive ways and engage them. Crucial questions need to be asked like are they being the correct role model, because as they say we believe the message if we believe the messenger, are they being visible and can be approached easily”? The heads have to give their employees a sense of purpose and ensure they feel belonged. As this time has evoked a lot of anxiety and stress especially in working professionals.

Edward very sharply observed that corporates are now stressing on developing a ‘Value Culture’ instead of previously focusing just on targets, Sales and deadlines. Companies’ messaging has been amended to make them sound more humane and concerned which is a good change in the Corporate Culture. Companies are more focused on increasing engagement level with employees, customers and making sure they are emerging as a company that cares of their employees and provides them with a strong sense of community.

The webinar was then opened for a Q&A session, that addressed several pressing and critical questions about finances, administering cash-flow and managing teams.