Dubai, the commercial capital of the United Arab Emirates is often regarded as the ‘city of gold’ as it provides vast business opportunities and innovative commercial modules for enterprises from around the world. In a nutshell, international exposure and an investor-friendly government are the two important factors that motivate entrepreneurs to start a business in Dubai.
Joint Venture in Dubai is an agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51% but the profit and loss distribution is prescribed. In a joint venture, both the parties agree to co-operate with each other and term of the joint venture may be defined or open. The parties in the joint venture agreement generally agree to certain timelines and milestones and subject to milestones being achieved.
Benefits of a Joint Venture in Dubai
- No personal income and capital taxes
- No corporate taxation
- 100% repatriation of capital and profits
- No currency restrictions
- Competitive import duties (5% with many exemptions)
- Abundant and economic energy supply
- Competitive freight charges
Joint ventures as a corporate entity is one of the most preferred choice globally given the flexibility offered by the mechanism. This type of corporate entity in the UAE are recognized and regulated pursuant to the UAE Commercial Companies Law.
Procedure to Start a Joint Venture in Dubai
Once both the parties agree upon the joint venture in Dubai, they must register the agreement with the Department of Economic Development (DED). The steps to register your business are as follows.
- Register the company name of the joint venture with the DED. The name must not be similar to any established business name in the UAE
- Get the initial approval and the joint venture agreement drafted and submit it to the DED. And in order to obtain this approval, these are the documents required.
- The registration application
- Trade name reservation
- Copy after the applicants’ passports
- A no-objection letter issued by the local partner
- Copy after the director’s passport
- Approval for the type of activity to be undertaken
Foreign applicants must also submit the Dubai residence permit. Also, a resolution pass by the foreign company’s management board will be required
- Once the initial approval is done with, the company registration process must be carried out
- To complete the process, the application form with supporting documents must be submitted to the DED
- After authentication, the DED will approve the application and you can start with the venture
Documents Required to Start a Joint Venture in Dubai
- The initial approval
- The documents registered for the initial approval
- A copy of the office lease agreement
- A copy of the association agreement notarized by a public notary
One of the greatest advantages of starting a joint venture is no compulsion of licensing as the local partner will have a business license to carry out the activity. There are many reasons to invest in Dubai, and even if it is a foreign place for you, the local contribution coming from your partner is going to be extremely helpful by giving your company increased access to the new market. Hence, joint venture is the way to go as it is safe especially when you are entering a new market.
Business Setup Worldwide is a platform to help you start a business in Dubai and UAE. We provide you with all kinds of services right from company registration to visa and taxation. Contact us today- we’d be glad to assist you.