HOW TO SET UP A HOLDING COMPANY IN DUBAI PART 2 – WHAT ARE SOME OF THE SPECIFIC REQUIREMENTS?

You can see part 1 of the series here.

The main cons of living in Dubai

1. Strict laws

Dubai is a strictly Muslim state. Therefore, non-Muslim immigrants should respect the country’s religious practices, especially during Ramadan.

For example, “modest dress” is recommended, and public displays of affection can be insulting and lead to arrest, even between married couples. Taking pictures without permission, eating or drinking in public, or using profanity can all get you in trouble.

However, there is a hidden pragmatism in the way Dubai treats non-Muslim cultures – a kind of unofficial tolerance that has made it an easier place to live than its more conservative neighboring Emirates. The state also does not officially approve of alcohol consumption – especially by Muslims, especially during the month of Ramadan – and visitors technically require a liquor license before they can buy alcohol.

Anyways, the luxury hotels, bars and restaurants make good money on the spendings of tourists and expats and in fact generate a significant tax revenue.

If you are ready to move to the UAE and start your own business, such as set up your holding company in Dubai, this article will be helpful for you. Below we will talk about the procedure of setting up a company in Dubai, the main benefits you will get.

Holding formation is one of the common reasons why companies are registered in the United Arab Emirates. This is because the UAE offers a number of advantages for holding companies: no taxes (if you have a tax resident status), reliable protection of international assets, the ability to enter local stock exchanges.

Based on these advantages, the goals of building holdings in the UAE can be different:

  • optimization and minimization of taxation;
  • protection of assets from encroachment;
  • ensuring the anonymity of the owner;
  • overcoming currency or antitrust restrictions;
  • streamlining the management of related enterprises, etc.

How a holding scheme works – an example

A holding is a collection of businesses or companies that have the same management structure or are legally related. The main feature and advantage of holding companies is maximum protection against economic instability, takeovers and other similar manifestations of the external environment. In addition, the holding allows full control over assets and efficient distribution of cash flows.

As an example, you can find the following structure for building a holding. First, a company is registered in the United Arab Emirates. Its task is to own shares (he does not conduct any economic activity), an account is opened for him in a bank in the UAE. The holding company owns one or several companies at the same time.

In the course of further economic activities of the subsidiaries of the holding, the profit generated in the subsidiaries can be transferred in the form of dividends to the account of the holding. At the same time, the holding can also carry out tasks for the redistribution of funds between companies in the group, as well as resolve issues of strategic management.

At the same time, thanks to the holding scheme, there are not only tax benefits, but also other advantages. For example, due to the merger of companies, the holding can centralize and optimize various business processors.

Well, in addition to the above, the holding company is the protection of assets, since instead of individuals, the companies in the group are owned by the holding. Moreover, if it is located abroad, then this gives an additional level of reliability.

Building a holding company in the UAE

Many entrepreneurs choose to build holdings in the UAE in order to increase business profitability, free withdrawal and investment of capital, optimize the tax burden, increase reputation, reduce financial risks and increase the ability to attract customers.

A holding company in the UAE is a business optimization tool that allows you to optimally manage your business, consolidate assets, ensure the concealment of beneficiaries, and freedom of capital movement.

A holding company in the UAE allows you to optimize tax costs by taking advantage of double taxation treaties.

In order to minimize tax deductions and legally maximize profits from doing international business, the international structure of the UAE holding is being built in a certain way. To this end, it is necessary that the provisions of double taxation treaties apply to the recipient of dividends, subsidiaries and the parent company.

In the event that there is no agreement on the avoidance of double taxation between the UAE and the country of registration of the company, you can choose to build a more complex holding structure based on several jurisdictions at once. In this case, the head office located in the UAE manages the transfer of assets and distributes financial flows in order to reduce risks and optimize tax deductions.

Holding in the UAE allows you to combine different areas of activity and simplify the management system. The holding can include an unlimited number of companies, each of which operates both within one country and outside this country. Holding in the United Arab Emirates allows a businessman to conduct different types of activities in the format of one company with a convenient and understandable management and control system in the UAE.

When a holding company uses a financing legal entity, it is established in the jurisdiction with the cheapest financial resources and the least taxation of interest income.

Within the Arab Emirates holding, you can use transactional schemes without any restrictions. Companies of the UAE holding can supply goods and provide services to other companies of the holding at any prices that are not tied to market prices. This allows you to reduce tax deductions for all companies of the holding.

Naturally, it is necessary to take into account the regulation of transfer pricing in the legislation of each specific country.

Holding in the United Arab Emirates allows you to effectively organize internal cash flows, mergers and acquisitions of assets. The United Arab Emirates ensure the efficient operation of holding structures on its territory. 

Pained by financial indecision? Want to invest with Adam?

Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 353.9 million answers views on Quora.com and a widely sold book on Amazon

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