There are many types of setup to choose from, when you are looking for business setup in UAE. However, if you are looking to start business in order to purchase real estate or hold the investment in other corporate entities, then you can start a holding company, as it will be the most suitable option for your business.
What is Holding Company?
A holding company act as a parent company that does not manufacture or sell anything of its own. The purpose of the company is to own the shares of other companies, control the stocks or membership interests in other companies to form a corporate group. The holding companies are benefited by selling and purchasing of assets, providing services, profits from dividends and shares of stocks.
When you have a holding company license, your business activity is listed as ‘activities of holding companies’. Under this license, you are only permitted to hold assets and stakes. This business activity excludes any active management, strategy and planning. It is possible to have a corporate bank account with a holding company; however, you are unable to sponsor resident and employment visas as the holder of a holding company license, if it is an offshore holding company.
Types of Holding company
You can set up different types of holding companies such as:
- The Onshore Holding Company
- The Free Zone Holding Company
Depending on the structure, the company has to appoint a director or board of director. Foreign investors can also register partnership as holding companies in UAE. Holding companies are also idyllic for preserving trademarks, patents and shares.
Formation of a holding company in UAE
Here are the few steps involved in registering the Holding company:
Selecting a Right Location:
It is so necessary to choose the right location for the company, as it will allow you to get the right clients quickly to boost the business plans. Research is required to ensure that you buy/rent the correct location.
It is suggested to have legally written agreements that can allow protecting your business when in legal troubles. As there are no official necessities as such. By establishing your business, you agree to obey with UAE Company Law and its guidelines regarding holding companies.
Choosing the right consultant:
It is advisable to work with company setup expert while preparing your application, as the consultants are experts who knows the rules and regulations of the business worlds and can help you with their expertise and experience they have. This will be helpful to go ahead with the business registration and setup the process quickly rather than getting yourself involved in the difficulties.
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Advantages of setting up your holding company
- No restrictions on capital repatriation
- No restriction on foreign employees
- 0% tax for on profits, capital or assets
- The leading fund domicile in the region
- Zero tax on personal income
- 0% corporate tax, no tax deduction to subsidiary profits
- Holding companies limit shareholder liability, as you will not be liable for the credits and compulsions of any subsidiaries
- It can give you the access for UAE banking system, as well as opening a corporate account in the UAE
The process of setting up the holding company in UAE looks very simple. However, it takes in depth knowledge of UAE’s legal rules and regulation. It is always advisable to take the assistance of business setup experts like Flying Colour, who can not only advice on process but also you can gain peace of mind that your application is free from errors, which will lead to delays and rejections.
This blog is written by Ms. Manali Chandegala, Partner Relation Executive at Flyingcolour Business Setup consultants in Dubai, VAT and Accounting Services, Dubai. If you are looking for any consultancy related to setting up a holding company in Dubai or anywhere across the UAE then please contact us at +971 4 4542366 or email us at info[at]flyingcolour[dot]com.
*Please Note: This article was published on 20th December, 2020. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent update or change.