It takes time, money and a deep understanding of the market with its current legislation to create a company. Many entrepreneurs want to buy a company in the UAE to ease the tax burden and expand their influence in the market. In this article, we will analyze the advantages of buying a company in the United Arab Emirates, show the non-obvious nuances of such transactions and the risks that can be encountered.
Why buy an offshore company in the UAE?
The Emirates is not the only offshore zone in the world, however, it is considered one of the most attractive for buying a company. Favorable economic and legislative conditions make this country the most popular choice for entrepreneurs.
Advantages of such offshore companies:
- Strong economy. The stability of the economy allows the country to withstand global crises — an important factor that significantly affects the choice of an offshore zone.
- A political arrangement. The Emirates do not get involved in other people’s conflicts and prefer to remain neutral.
- Financial institutions. A reliable banking service system creates an extremely convenient tool for opening an account and its maintenance.
- There is no double taxation. The Arab Emirates are signatories of agreements (including with the CIS countries) that exclude such troubles.
- The UAE is not included in the FATF blacklists. The FATF is an organization that monitors the movement of cash flows in offshore companies, checking transactions for the laundering of “dirty” money.
- There is an opportunity to become a founder of a company or a holder of its shares.
- The government has allowed foreign businessmen to buy offshore, acquire and register any commercial real estate in the name of the company.
- High reputation status. A company registered in the Emirates always has a higher trust limit. In addition to everything, this is already like a kind of “quality mark”, since scammers cannot exist in this country for a long time.
- Confidentiality. In this country, your data has a special status for protection by law. The IMF and other international organizations do not have any levers of pressure on the government.
- Additional privileges. For example, if you buy a company in the UAE, then you get the right to own a yacht or other water transport.
Important features of the purchase
There are some points that you should know before buying an offshore company. For some entrepreneurs, this zone may be inconvenient or unprofitable, since there is a ban on certain types of activities. For example, a foreign business cannot open its own bank or insurance company in the UAE. There is a ban on doing business within the country (but you can become a founder) if the activity does not concern consulting. In addition, the government requires the company to provide information about all beneficiaries.
Another important point to be aware of is that the Dubai management requires an audit from the annual shareholders’ meeting. All documentation must be maintained for a period of 10 years or more.
Despite these inconveniences, such access to the foreign market is one of the most profitable ways to reduce the amount of tax payments or protect yourself from raider attacks.
Risks of buying offshore companies
Buying someone else’s company is always associated with a number of risks that you should know about in advance. We will try to list the main problems, but you can protect yourself from sudden “pitfalls” only by actually studying the business before buying. So, the main risks:
- Financial risks. If you do not study accounting, with a thorough check of the accounts, then any debts will automatically pass to you after the purchase. Since the acquisition of the company, you become the owner, which means you will have to repay all its debts.
- Reputational risks. Debts can be closed, but the image is not so easy to fix. If the company was a participant in unfair transactions or acquired a reputation as an unreliable counterparty, then all this “joy” will pass to you.
- Structural risks. A ready—made business is an already formed structure, with its shareholders, directors, documentary turnover and authorized capital. It is difficult to rebuild it to meet the necessary requirements, so buying a company in the UAE is not always the most convenient option.
In order to avoid risky transactions, in-depth analysis, accounting and legal checks are required, as well as special attention when concluding contracts. It is better to double-check everything several times before making a deal. Even the subsequent name change requires a lot of time.
To check a business for the presence of risky circumstances, they most often turn to qualified consulting agencies that have serious experience working with the legislation of the United Arab Emirates. Their responsibilities include detailed analysis and comprehensive inspections.
How to buy an offshore company in the UAE
Buying a ready-made offshore is easier than registering it from scratch. But this does not mean that such a purchase is made easily and does not require outside help. In any case, you will need a licensed agent who will help with the registration of a legal legal address. With its help, you will understand all the nuances of legislation much faster.
What should be considered when buying an offshore:
- Features of the selected FEZ. For quick registration, it is better to choose the Ras Al Khaimah zone. As for working with real estate, it makes sense to buy a construction company in Dubai.
- Time to prove your worth. In order for a new legal entity to receive tax benefits, the ability to take out loans, admission to participate in tenders and all the advantages of its status as a resident, it is necessary to work for at least two years without participating in questionable transactions.
What are the stages of the purchase:
In total , the purchase of a business can be divided into six main stages:
- Preliminary analysis. Determine the type of activity that interests you, as well as which of the legal entities is most suitable for you.
- Find a reliable company. Here it is important to check for the presence of debts, to make an expert assessment of all documents on financial statements.
- Formalize the transfer of ownership. To do this, a complete package of documentation for re-registration is being prepared. A nominee director is appointed and the name change procedure is started.
- Immigration permit. After obtaining the appropriate admission, it is required to issue visas for residents, owners and staff.
- Bank accounts. Search for the best offer from banks, formation of documentation, creation of a company profile.
- Audit reports. If necessary, a tax resident certificate is issued.
These are mandatory steps that you will have to go through if you decide to buy a company in the UAE. It is extremely difficult to close all these points on your own, so it is better to turn to expert consulting for a ready-made solution.
What is the cost of companies
Prices for companies depend on the field of activity, equipment, real estate and many other parameters. A small kiosk in the mall will cost only 100,000 AED, which is equivalent to $28,000. Profitable restaurants average from 300,000 to 3,000,000 AED. A beauty salon can be bought from 300,000 to 800,000 AED. But these are only approximate prices.
The most popular areas of activity to buy:
- Cafes, restaurants, fast food outlets. This is especially true of Dubai, as it is a popular tourist city.
- Car services, car washes, car rental. One fleet of limousines can consistently bring substantial profits.
- Any services that serve tourists —excursions, animators, diving training.
- Beauty, health, sports. Beauty salons, gyms and fitness centers are in demand in the UAE.
- Small retail shops and large supermarkets.
- Everything related to real estate. This is especially true for the construction business.
It is better to buy small and medium-sized businesses ready-made. If we are talking about building a large company, it is best to create it from scratch. Thus, you will be able to decide for yourself what foundation to lay in your company.
Advantages of registering a new offshore company
The opening of a new offshore gives more space to regulate its activities and significantly reduces the risks of negative consequences of management by the previous owner. You will definitely have no debts, no reputational losses, no legal red tape with the re-registration of the business.
Most often, creating a new company is much faster and easier than buying a ready-made one. It takes about 5 days to fully open, and the purchase may take several months. To register from scratch, a minimum set of documents is required — a copy of the passport, a written confirmation of the existence of a bank account and the place of residence of the founders (a copy of the utility bill or something else). In addition, it is much cheaper to register an offshore company than to buy a company in the UAE.