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Ras Al Khaimah 2017 | EXECUTIVE GUIDE | REVIEW: DOING BUSINESS

A quick guide to what makes Ras Al Khaimah a great place to do business and the essentials any investor should take into consideration before committing.

Since Ras Al Khaimah joined the UAE on February 10, 1972 under the leadership of Sheikh Saqr bin Mohammad Al Qasimi, the Emirate has become a true trading and industrial hub with an economy that continues to expand and thrive.

Tax

Ras Al Khaimah has no direct corporate income taxes, no sales taxes, and no wealth taxes. The only exception to this zero tax policy is the treatment of oil and gas exploration companies and branches of foreign banks, which are subject to tax, and branches of foreign banks that are taxed as well.

Companies

Ras Al Khaimah offers several options for company formation. The first is a limited liability company whereby foreign investors are entitled to conduct business through a limited liability company in the Emirate. It can be incorporated with a minimum of two and a maximum of 50 shareholders. A limited liability company requires a minimum 51% shareholding by UAE citizens. Profit and loss distribution can be allocated to favor the minority shareholder in ratios of up to 90/10. In order to establish a limited liability company, it is mandatory to show that capital has been deposited in a UAE bank.

The second option is a branch and representative office of a foreign commercial company. The activities of a representative office are restricted only to collecting information and marketing the activities of its parent company, but a branch office is allowed to perform contracts or conduct other activities in the name of its parent company. Such activities must be related to the objects of the parent company and mentioned in the branch office trade license.

The third option is a joint-venture company, which is a contractual agreement between a foreign party and a local party licensed to engage in an activity. The local party's participation in the joint venture must be at least 51%, but the profit and loss distribution can be allocated in favor of the minority shareholder. In this company structure, the foreign partner deals with third parties under the name of the local partner.
Another option is a public and private shareholding company, which is for when two or more individuals that carry out non-commercial or professional/artisan activities and may form professional partnerships. These types of businesses may be 100% foreign owned. However, public and private shareholding companies are obliged to appoint a UAE national agent.

One option that is available is the formation of a public joint stock company. This company must have a minimum capital of AED15 million and the number of shareholders must not be above nine. This company must be licensed by the Ministry of Economy and Commerce, and if the company conducts banking or investment activities, it must be approved by the central bank. An alternative to this is a private joint stock company. This company cannot have less than three shareholders, and all shareholders must subscribe to the full capital of at least AED2 million. The shares of a private joint stock company cannot be put up for public subscription.

One common option is the formation of a free zone company (FZCO), which is a limited liability company and can be registered by two or more shareholders. The minimum capital for setting up a FZCO is AED 250,000. Alternatively, a free zone establishment (FZE) is a separate legal entity with a sole business owner. A FZE can be owned either by a person or a corporate body and the minimum capital for setting up a FZE is AED150,000.
The final option is an international business company, and with this option there are no restrictions on the number of shareholders or directors of an international business company. Shareholders and directors are not obliged to hold an annual meeting or to file audited accounts. The International Business Companies (IBC) registry displays only the name of the company and the date of incorporation. International business companies are not authorized to conduct business activities in Ras Al Khaimah with the exception of accounting, audit, legal, and banking activities. International business companies cannot employ staff locally.