Setting up Holding Company in Dubai

Recent Highlights

• The Corporate Tax Law will be effective from 1 June 2023 with a headline rate of 9%.
• Corporate Tax is not applicable on Freezone Companies.

What is the Holding Company?

A holding company is a parent company — Private Limited or Limited Company that is created to buy and control the ownership interests of other companies.

The companies that are owned or controlled by a holding company are called its subsidiaries.

Holding companies do not perform any other services or activities. They don’t manage the corporations in the group directly, nor do they administer assets or partake in any decision-making for the subsidiary companies.

Holding companies provide an effective way for your business to manage its assets while protecting you from liabilities. Starting a Dubai-based holding company is also relatively straightforward.

Legal Structures for Company in Dubai

Offshore Holding Company– First option is establishing an onshore or mainland holding company. The UAE law requires registering any holding company as a commercial business or activity. UAE’s Ministry of Economy (MoE) is the regulatory body for such establishments.

The legislation allows mainland holding company to conduct commercial and administrative activities through the subsidiary companies within the UAE and abroad without engaging in direct trading or commercial activities.

Freezones Holding Companies – The other option is to open a free zone Holding Company. The UAE government has established over 60 economic free zones across the major Emirates of UAE, including Dubai, Abu Dhabi, and Sharjah, to facilitate foreign investment and commerce.

A free zone allows to operate with greater flexibility and offers several incentives, such as generous tax exemptions, no currency restrictions, and the ability to repatriate 100% of your profits and principal investment.

The UAE government has also announced that the free zone businesses will continue to enjoy zero corporate taxation even after UAE’s new corporate tax regime comes into effect in 2023.

Benefits for Setting up Holding Company in Dubai

1. UAE Residency – Easily obtain UAE residency after purchasing property through holding company.
2. Tax Efficient- 0% tax on corporate profits, capital gains and dividends.
3. Complete business ownership to Foreign Nationals- 100% foreign ownership is allowed in Free Zones.
4. Availability of 20+ free zones in Dubai- The city offers 20 plus free zones to choose from. Starting a business in Dubai free zone is considered beneficial as businesspersons can have complete ownership of their company in a free zone.
5. Advanced Infrastructure– Dubai is on the way to a technologically powered future and becoming the world’s digital hub. The city has taken so many tech initiatives to enable the business to run from anywhere in the world as smoothly as running a physical office.
6. Accessibility of Funds– Since a holding company can open a corporate bank account in UAE, it helps it to access the funds from any part of the world with the internet banking services.
7. Human resource management- A holding company employ as many foreign nationals as possible and strategically deploy them into subsidiary companies to best utilize their skills.

Requirements for Holding Company

Every Dubai based company, holding or not, must follow the rules under the Company Law. Holding Companies must cover the following:

• Setting a management board that will be in charge of the creation of rules and regulations and organization of subsidiaries.
• The board will supervise the activities of the subsidiaries.
• The holding company shareholders must have a director in each subsidiary firm.
• The company must make sure that the subsidiaries have the much-needed capital to operate successfully.
• The company must set limits in terms of the risks subsidiaries can take such as foreign currency and other industry risks.
• The holding decides terms of arrangements and contracts of the subsidiaries.

FAQ’S

1.Can I open a holding company in Dubai if I am a foreigner?

Yes, you can open a holding company in Dubai even if you are a foreign citizen.

2.What is the minimum share capital for opening a holding company in Dubai?

There are no share capital requirements for setting up a Dubai holding company.

3.How long does it take to register a holding company in Dubai?

The holding company can be registered in a few weeks.