Holding Company In The U.A.E.: Key points you need to know

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September 18, 2023

Holding company

More and more business people want to go to the UAE because they see it as one of the best places to find great opportunities. With a thriving economy and a business-friendly environment, the UAE offers a multitude of avenues for investment and growth. One prominent option gaining traction in the region is the establishment of a holding company. The benefits of holding companies for investors in the UAE will be covered in this article.

What are holding companies?

A holding company is a type of business that owns the assets and/or stock of other companies. Instead of conducting business operations, it holds these subsidiary firms for managerial needs. Holding companies protect shareholders by separating their assets from subsidiary liabilities.

Dubai’s several holding company types include

  1. For a Dubai mainland holding company, you need a commercial license from the Department of Economic Development.
  2. Free Zone Holding Company

What are the Requirements for Establishing a Holding Company in Dubai?

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Establishing a company in Dubai involves several key requirements:
  • Establishment of a management team with responsibility for establishing policies and guidelines and supervising subsidiary businesses.
  • The board is responsible for overseeing subsidiary activity.
  • The appointment of directors from the controlling company for each subsidiary.
  • Adequate capital allocation to guarantee the successful operation of subsidiaries.
  • Setting limits on the risks subsidiary companies can undertake, including foreign currency and industry-related risks.
  • Determining the terms of agreements and contracts between the holding company and its subsidiaries.

Dubai holding companies can mainly own assets like properties, intellectual property, and subsidiary businesses. They do not engage directly in the production of goods or services or manage the assets they hold.

Advantages of a Holding businesses in the U.A.E.

  1. Limited Liability: Assets are shielded from legal actions against the business, providing protection in case of financial issues within subsidiary companies.
  2. Tax Efficiency: UAE holding companies enjoy tax savings, especially on income earned by foreign companies, which is not taxable in the UAE. Double tax treaties with over 80 countries further enhance tax benefits.
  3. Credit Establishment: Holding companies can secure loans more easily, leveraging the financial strength of their subsidiary businesses for investment in other assets.
  4. Governmental Support: The UAE government fosters a supportive business environment through tax exemptions, trade privileges, and various incentives for foreign investors.
  5. No Minimum Share Capital Requirement: The UAE imposes no minimum paid-up share capital, simplifying the business registration process and making it cost-effective.
  6. Diverse Company Structures: Companies can adopt various corporate structures based on their preferences and business types.
  7. Enhanced Privacy: UAE authorities do not demand complete disclosure of subsidiary operational details, ensuring a higher level of privacy compared to direct ownership of subsidiaries.

Conclusion: Establishing a company in the UAE, particularly in Dubai, presents a wealth of opportunities and advantages for entrepreneurs and investors. From asset protection to tax efficiency and governmental support, the UAE offers an enticing landscape for those seeking to thrive in the business world.

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