The different types of UAE company structures are:
- Free Zone Entities – allow 100% foreign ownership of the companies, and are exempt from corporate and personal taxes. These entities are not licensed to do business in the UAE (except for in the Free Zones. They are most commonly used to import/re-export or for industrial and/or manufacturing companies. Many service related companies also use the free zones as their base of operations.
- Onshore structures – Mandatory to have a nominated ‘local sponsor’ so that there is a liable person, in the UAE, whom is able to provide answers and direction where the foreign owner is unable or unwilling to. The company is formed with the local sponsor owning 51% of the shares, however the profits of the corporation need not be distributed in proportion to the shareholder holdings. The local sponsor is paid a yearly fixed fee to use his name.
- The professional license – requires the owner to be professionally qualified in the line of business contemplated. The owner is allowed to own 100% of the shares with the local sponsor only designated a ‘local service agent’. This entitles the ‘local service agent’ to a yearly fixed fee for his role as a sponsor.
- Representative office license – The company is allowed to engage in marketing and gathering information on behalf of a parent company. A ‘local service agent’ is required’ who is not obliged to be a shareholder of the company.
All companies registered in the UAE require a physical office.