If you are thinking of establishing a business in Dubai and working with local entities or other countries, then a Holding Company might come as a good idea. It offers several benefits, such as protection of assets, tax efficiency, limited liability, and much more.
When it comes to holding companies in UAE, there are a number of options you may consider, but this article will explain what all these companies are and how they operate, the criteria required to open a holding company in Dubai, and other important details.
The UAE holds a lot of potential for overseas investors. Among other things, it can serve the purpose of holding a car company that manufactures high-quality and safe vehicles. In this article, we explain all the details of a holding company’s operation in UAE, including what they are, their benefits to businesses and consumers, common types, costs involved in opening one, and much more.
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What is a Holding Company?
A unique kind of corporation is a holding company. It holds other companies’ assets and/or shares, but it does not engage in any business activity itself. This way, shareholders are protected from liability issues by isolating their assets from the liabilities of their subsidiaries.
A holding company is a business entity that holds the majority of the shares in another entity. In this way, investors and entrepreneurs can achieve complete ownership over an investment made by them through acquisitions or mergers. The concept of holding companies is used in many countries.
How Do Holding Companies Work In UAE?
In the UAE, holding companies create a legal structure for holding assets. They typically serve as a holding or investment company and control other companies. Holding companies can also own shares of publicly traded companies and subsidiaries that are not based in the UAE, but they cannot trade on those shares.
If you want to form a holding company in UAE, there is no paid-up capital requirement. With only $1 as minimum capital, it is possible to own one while setting up any type of business entity.
Types of Holding Companies in UAE
Onshore Holding Company
If you want to establish a commercial business in the UAE, you need to form an onshore or mainland holding company. The UAE’s Ministry of Economy (MoE) is the regulatory body for such establishments, and you must adhere to the UAE’s Companies’ Legislations.
Onshore Holding companies are an excellent way to create offshore companies that can operate worldwide. The legislation allows your 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.
Free Zone Holding Company
Open a free zone Holding Company; the UAE Economy is considered to be one of the best and most developed economies in the world. You can start a business with little investment or capital, as well as minimize taxes at the same time. A free zone Holding Company is perfect for any entrepreneur and business owner looking for an innovative place to set up shop.
The free zone Holding Company is a special type of legal entity which is primarily intended for entities operating in free zones. A Free Zone Holding Company can be set up by a natural person (individual or group) as well as by any UAE or foreign company. The purpose of such an entity is to reduce the risk of any losses from operational risks, particularly those related to purchasing and selling of goods, transportation, storage, and other infrastructure services.
Why Open a Holding Company in UAE?
There are several benefits to setting up a holding company in Dubai and other regions of the UAE. Here are a few examples:
- Limited liability
Limited liability can make all the difference if your business gets into trouble. We ensure that your subsidiary companies will be protected, so you don’t have to worry about losing all of your assets.
- Tax Efficiency with offshore status
To avail of this benefit, you need to first register the holding company in the UAE. Income earned by foreign companies will not be taxed in the country. You also gain double tax treaty benefits with more than 80 countries across Europe, Asia, and Latin America.
- Establishing Credit
Banks and other creditors are likely to be more willing to lend to you or give you credit if they see that your investment is worth more than the amount of debt you require. The value of the parent company’s assets will also form part of the overall financial strength of that entity, so it could be argued that by making an investment in the subsidiary, you’ve actually increased its overall value.
How to Open a Holding Company in UAE?
- Selecting the appropriate commercial activity for your holding company
- Getting permission from the appropriate agencies and authorities
- Depending on where you intend to set up your business, you must get a trade license from the applicable Emirate or free zone government.
- Registering with the free zone authorities or the Ministry of Economy (MOE)
- Opening a business bank account in the UAE
- Applying for visas, if required
Conclusion
Holding companies in the UAE are a great way to protect and manage assets and also offers many benefits such as lower risks, tax efficiency, flexibility, and greater diversification.
If you are creating a holding company in UAE, we can provide the necessary advice and support to help you succeed. business setup consultants in dubai’s team of industry-leading business consultants have extensive experience in Company formation in Dubai and across the UAE. We can help you create a strong foundation for your new venture, thus giving you access to unparalleled economic opportunities at your fingertips.
