FAQ
ACCOUNTING
The first accounting period can last 18 months for the year N.
The other years (N+1, N+2, etc..) will last 12 months
In the UAE, you must invoice through an FTA accredited ERP. There are several of them and they are very easy to use.
If you have incorporated your company with the DMCC, your audit must be carried out by auditors accredited by this Freezone. The DMCC is the most stringent jurisdiction in terms of financial reporting. Failure to submit the financial audit will block the renewal of the licence, block future visas and is subject to penalties.
No. A partner’s current account cannot be negative, as this constitutes a criminal offence.
Yes, regardless of the company and regardless of the emirate. There is a VAT in the UAE, and the administration may decide to verify the veracity of the declarations made. This is called a TAX audit. Of course, the first demand of the administration will be the handing over of the accounting documents. For this reason, financial audit is mandatory everywhere in the UAE. It is a federal law.
In the Mainlands but an equivalent system exists in some freezones.
A current account can be remunerated up to 1% per month. The objective of this measure is to reward those who participate the most in the company’s cash flow. Indeed, it is common to see that the financial participation is very unequal among the shareholders. Often one shareholder accounts for the majority of the funds deployed.
The IFRS standard.
Finances
In order to raise funds, we will first have to submit the concept presentation (after signing an NDA, of course). Secondly, we will submit our market study, our financial file and finally our legal file (in which we will introduce a draft shareholder agreement). If the fundraising concerns a technological project, it is necessary to keep in mind that in many cases the investor will require the creation of an investment vehicle.
If you have an e-commerce company in the UAE, you must link your Gateway with an Emirates account whose IBAN begins with the letters A and E. Keep in mind that the Gateway can collect money in a large number of currencies, but in any case, it will only transfer dirhams to you. You must therefore be extremely careful about the exchange rates you are charged. Fortunately, there are ways around these problems.
You can claim free rent during the construction period. These are from 3 to 10 months. In addition, you can also expect zero-interest financing for your structure. Generally, the repayment period is 5 years and the amount does not cover more than 40% of the investment needs. This investment support is called a CAPEX. To be eligible for CAPEX, you must demonstrate to the mall management that your project is likely to significantly increase the number of visitors to the shopping centre. CAPEX is generally found in the financing of recreational projects, an attraction being, as its name suggests, likely to become one of the mall’s driving forces.
You can invoice and be paid in crypto-currency as long as the parties freely agree on the use of the said currency.
Whatever the financing you want, you can approach a European organization. This is often done in terms of letters of credit, factoring, or reverse factoring. It is important to note that UAE banks do not provide much working capital financing for local companies. Of course, in addition to financial institutions, working capital can be partially financed by the company’s suppliers, on the grounds that it is legitimate to ask them for a financial contribution to the marketing of products. The supplier credit will be used to finance the physical stock, the floating stock (the stock approaching in the containers) and finally the trade receivables. In import/export, the norm is to ask for 90 days. The rest of the working capital financing is a matter for the credit institutions.
The bank does not finance business start-ups, whatever the purpose of the financing. The difference between the Eastern and Western banking systems is reflected here. If you lack funds, the bank will advise you to raise funds from an investor. This is no longer external (bank) financing, but internal (investor) financing.
Its Gross Operating Income (GOI) and therefore its capacity to finance itself.
INTERNAL. I raise funds from an investor, so I don’t have to pay anything back, but I give up capital.
Taxation
Here is an interesting feature of the French General Tax Code (CGI). Contrary to other European countries, you will have to declare your capital gain on the transfer of assets only when you have proceeded to the “CASH OUT” of your cryptos.
You can register from AED 187500. From AED 375,000, you have one month to register with the FTA (Federal Tax Authority).
Yes, although it is unfortunately not widely known, there are penalties for not deregistering. De-registration must be carried out if the company invoices less than AED 375,000 over the last 12 months, smoothed.
Proving your domicile to the French authorities can be essential, particularly in the event of a tax audit. Ideally, you should present an Emirati TAX LOCATION CERTIFICATE. This document is issued by the Emirati Ministry of Finance and is valid with the French Treasury. To obtain it, you must meet the requirements of the Dubai MOF. The MOF is sovereign in granting or refusing the award of the MOF. There is a charge for this procedure.
I must declare my income generated in the UAE (dividends, capital gains, salaries and real estate income)
Your nationality, your physical presence, and especially the centre of your economic interests.
It represents 10% of the annual rent.
No, the authorities require that the tax be levied on the premises where the main business is located.
The 183-day rule outside French territory is a necessary but not sufficient condition to no longer be a French tax resident.
400,000 – (400,000-375,000) x 9% = AED 397,750. As a reminder, the first AED 375,000 is not taxable at 9%
Legal
In the Mainland, the quota is 9.43 square meters per visa. In other words, a company with 7 employees must have an office space of at least 70 square meters.
It is indeed possible and there are two ways to approach this. The first is to put a large part of the funds into the partner’s current account. In this way, the capital can be distributed in a way that is more favourable to the project owner. In addition to this accounting approach, there is a legal approach. This is known as a shareholder agreement. In any case, the investor must acknowledge in writing the value of your know-how,
The capital is non-disposable in some freezones if and only if the number of shareholders is less than ten, the number of shares less than 300 and the amount of capital less than or equal to AED 300,000. Apart from these criteria, the capital is cashable regardless of the administration in charge of the legal hosting of the new structure.
It is not always mandatory to register a BOR, but it is advisable. It is always useful to know that the administration has kept a copy of the decisions taken at the meeting. When opening a business bank account, the bank will require that the BOR empowering the GM to open the account is registered. Similarly, the administration will always require that a company takeover by another company is subject to a BOR stamped by the authorities legally hosting the parent company.
First of all, it is important to remember what defines a cessation of payments. In France as in the UAE, cessation of payment is the impossibility for the company to meet its immediately due liabilities with its available assets (Art L631-1 of the French Commercial Code). Declaring the cessation of payments to the court is an obligation aimed at protecting the creditors of the company in difficulty. In France, as in the UAE, failure to declare cessation of payment constitutes a criminal offence involving the General Manager. Once declared, the cessation of payments triggers a choice of three options (in France). Liquidation, takeover by assignment, or receivership. In the UAE, only liquidation and recovery by assignment are envisaged. The notion of legal protection (receivership with a tutorship and observation period does not exist in the UAE). What is noteworthy is that in terms of transfer, all the manoeuvres known in the West can be found in the UAE. Internal takeover by creditors, the notion of unsecured creditors, or “overconfidence”… In short, here is material to be used in court pleadings.
Laboratory analysis may be required by the administration. If this is the case, this additional procedure entails an additional cost in the legalisation of the product.
Only specific structures are allowed to hold real estate in the UAE. It is advisable to contact the RERA services each time a company is created to check the latest updates of the regulations.
You can put your ‘On hold’ visas for a maximum of one month while you get your new visa. (This is only valid if you do not change emirate)
Everything depends on the authority that legally hosts the company, but if the new shareholder is a legal entity, the documents required are likely to be the licence, the certificate of good standing, the corresponding Board Of Resolution, the memorandum of association, the shareholder certificate, the list of UBOs with their passports (Ultimate Beneficiary Owner). Of course, all these documents will have to be legalised in their country of origin as well as in the Emirates. In the case of a French company, the licence is represented by the Kbis, the MOA by the articles of association, the BOR by the minutes of the meeting. The certificate of good standing becomes a certificate of fiscal regularity and the share certificate must be the subject of a notarial deed (in the case of a Société Anonyme).
Yes, only if the employer obtains the written consent of the employee and undertakes to return the passport upon request.
4 weeks per year after one year of service.
Absence of more than 20 consecutive days in a year, or more than 7 consecutive days without informing the employer.
One month.
14 days.
There are three main delivery methods for import and export: FOB, CIF and DDP. FOB means FREE ON BOARD, i.e. the transfer of ownership of the goods takes place in the country of origin at the precise place indicated. (e.g. FOB port of harbour, FOB factory gate). CIF means COST INCLUDED FREIGHT. In this case, the supplier takes care of the transport and the transfer of the goods takes place at the place indicated in the note (e.g. CIF Dubai port). Finally DDP means that the product will be delivered to the port of the customer’s country and the goods will be cleared at the supplier’s expense. In the question above, the answer was “CIF JEBEL ALI”.
Yes, but I need a DFSA (Dubai Financial Security Authority) license.
Only for companies based in certain freezones. This is notably the case at the DIFC (Dubai International Financial Center)
Yes, if my import volume to the UAE is higher than my export volume from the UAE.
this notice is 14 days
