Dubai Just Launched a Virtual Company License. And It Costs US$233by Fintechnews Middle East 17. November 2019
Dubai has just launched the Dubai Virtual Commercial City (VCC), a program which enables entrepreneurs and freelancers who do not reside in the United Arab Emirates (UAE) to start a virtual company registered in Dubai.
As part of the program, the government has introduced the Virtual Company License, a special business permit for foreigners looking to register a company in Dubai.
The application process for the license can be done online, entirely remotely, and it only costs US$233 for a year-long permit. Dubai aims to attract at least 100,000 companies from across the globe.
Dubai’s Virtual Company License
The Virtual Company License is available to entrepreneurs who are not residing in the UAE and who conduct location-independent business activities globally.
There are, however, a list of specific requirements and limitations. For example, the license is only available to nationals or tax residents of a list of approved countries, and they must conduct business activities in the pre-defined sectors which focus on creative industries, technology and services.
It is important to note that a Virtual Company License does not automatically guarantee the right for physical access to the UAE, be it in the form of a business or visitor or resident visa to any of the company’s partners, directors or employees. Dubai government authorities, however, said they were working on a simplified visa process for the holders of Virtual Company License.
Also, virtual companies that have the legal form of a sole proprietorship are not subject to local ownership, director, auditor, or qualified business service provider requirement.
How to register a virtual company in Dubai
Entrepreneurs and businesspersons worldwide can register a virtual company and apply for the Virtual Company License through VFS Global. VFS Global is a tech services specialist for governments and diplomatic missions worldwide that’s headquartered in Dubai and with offices across 11 locations. Or they can opt to fill in the registration form online.
The online process is quite straightforward and only requires to share some personal information including contact information, residency address, tax residency, current occupation, and birth certificate information.
Applicants also need to specify whether or not they have acted as a manager or director for a company in the UAE in the past, as well as whether or not they have ever visited or lived in Dubai or the UAE before.
As part of the application process, applicants are required to provide accompanying documents including a copy of their passport (with more than three months till expiry), a proof of address (that can be either an utility bill or an official letter, no more than three months old), a proof of tax residency, and a recent photo on white background (no older than three months old as well).
Regarding the new company set-up, applicants have to choose an English trade name, and stipulate the sort of activity the business will be conducting. They will also need to choose a duration for the license. That can be either one, two or three years.
Company startup fees for sole proprietorship are AED 200 (US$54) to register the company name and AED 650 (US$176) per year for the Virtual Company License, for a total cost of AED 850 (US$233) for one year, AED 1,508 (US$411) for two years, and AED 2,161 ($589) for three years.
After filling up the form and sending out the required documents, applicants undergo a background check that take between one and 30 days. They then have an identification and validation visit. Finally, applicants proceed with the payment of their Virtual Company License.
Licenses are usually issued in around 30 to 35 days, and applicants can track their application status online, on the same portal, using their application ID and last name.
Licensed. What now?
Once applicants receive their Virtual Company License, their virtual companies automatically gain access to DubaiStore.com, an online marketplace which caters to all companies registered with Dubai Economy.
Furthermore, license holders can contact Dubai’s VCC by email, which will facilitate access to bank account opening services with participating banks.
However, banks will use their own discretion in opening and managing bank account services. Having a Virtual Company License does not guarantee a bank account for the license holder nor his company.
Owners of a registered virtual company have their personal information added to a public registry, which can be shared with the tax authorities of relevant jurisdictions upon request.
It’s important to note that tax registration with UAE’s Federal Tax Authority is required if the company’s revenue within the UAE exceeds US$100,000 per annum. Value added tax (VAT) in the UAE is 5%, and there is no income taxes on non-financial entities.
E-residents and remote workers
Dubai follows on the steps of jurisdictions such as Estonia and Lithuania, which have introduced special regimes that cater to the particular needs of startup entrepreneurs and remote workers.
Estonia launched its e-Residency program in 2014, allowing non-Estonians access to Estonian services such as company formation, banking, payment processing and taxation, and Lithuania is working on a similar program that would enable foreign nationals to obtain the status of e-resident starting January 2021.
In Asia, the Malaysia Digital Economy Corporation (MDEC) had been piloting a short-term work visa program for tech freelancers. The Digital Freelancer Programme is set to roll out before the end of 2019.
UAE central bank launches fintech office
In other news, the Central Bank of the UAE has announced that it will be establishing a new fintech office to implement a national fintech strategy and roadmap.
The news was broken at the Middle East Banking Forum on November 3, during which governor Mubarak Rashed Al Mansoori qualified fintech as “important for development,” adding that the regulator will “ensure that financial innovation continues in the UAE
banking sector, with the support and facilitation of the national authorities.”
The roadmap focuses on five key pillars, he said: research, advice and the application of fintech solutions to address the needs of the banking sector; a regulatory interface between market participants and regulatory functions of the central bank; knowledge sharing and the facilitation of joint projects among the authorities and stakeholders; meeting the needs of fintech companies in the UAE; and building a partnership model with key cross-border regulatory authorities and stakeholders.
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