Dubai has launched a virtual business license that will allow entrepreneurs, investors, and freelancers to do business in Dubai digitally without requiring residence in the emirate. The launch was announced by Dubai’s deputy ruler Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum yesterday.
The Virtual Company License is a joint initiative of Dubai Economy, Dubai International Financial Centre (DIFC), General Directorate of Residency & Foreigners’ Affairs (GDRFA), Smart Dubai, and the Supreme Legislation Committee.
The license, per statement, will enable freelancers and businesses worldwide to have access to a regulated ecommerce platform (apparently DubaiStore.com) and easily work with Dubai-based companies in accordance with the highest international legal standards.
The statement notes that the initiative is expected to attract more than 100,000 companies.
According to the website of Dubai Virtual Commercial City, it is available for businesses and freelancers operating in three sectors.
Computer programming, consultancy and related activities:
Computer Systems & Communication Equipment Software Design, Electronic Chips Programming, Web Design, Social Media Applications Development & Management, Cyber Security Architecture Public Networking Services, Cyber Risk Management Services Auditing, Reviewing and Testing Cyber Risks, Managed Cyber Security Services Provider, and Marketing Services Via Social Media.
Fashion Design, Jewelry Design, Design Services (interior design, garden design), Calligraphers & Painters, and Product Design.
Service activities related to printing and advertising:
Books Binding, Typesetting Services, Color Separation Services, Design & Artwork Services, Greeting Cards Production & Distribution Services, and Promotional Gifts Preparing.
Will the license holders also get a bank account?
Opening a business bank account in UAE is not easy even for the businesses/startups that are registered in country’s free zones. So it will obviously be more difficult for those with this virtual license. The website of Dubai Virtual Commercial City explains that the Vritual Company License does not guarantee a business bank account in the UAE, “Bank account opening will be at the discretion of commercial banks. However, we can facilitate access to account opening processes.”
What about visa(s)?
“A Virtual Company License does not automatically guarantee 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. However, Dubai Government authorities are working on a simplified visa process for the holders of Virtual Company License.”
The website has a map of both the eligible and ineligible countries. Many countries from the region including Oman, Egypt, Jordan, Algeria, and Iraq are in the ineligible list.
Some of the countries on the eligible list include: Saudi Arabia, Bahrain, Qatar, Morocco, Tunisia, Pakistan, India, Nigeria, Ghana, South Africa, China, Russia, United States, Canada, and most of the countries in Europe.
What about taxes?
“Tax registration with UAE’s Federal Tax Authority is required if the company’s revenue within the UAE exceeds USD 100,000 per annum. Tax registration is the obligation of the virtual companies. Value added tax (VAT) in the UAE is 5%, there is no income taxes on non-financial entities.”
The website also explains that the virtual companies remain subject to corporate, individual income and social taxation in the country of incorporation and/or residence, depending on the location of economic activities and international tax agreements and that they operate in a transparent manner including a full public registry of the names of owners which will be shared with the tax authorities of relevant jurisdictions upon request.
How to apply?
The applications can be submitted online on Dubai Virtual Commercial City or through VFS offices all over the world. The authorities involved will take up to 30 days for background check and then will have the business/individual complete rest of documentation before they’re given the license.
How much does it cost?
According to Khaleej Times, the license will cost $231 (AED 850) for one year, which includes a $54 (AED 200) startup fee for sole proprietorship and $177 (AED 650) for the license. The two-year license according to the report by Khaleej Time, will cost $411 (AED1,508) and three-year $589 (AED 2,161).
Update – October 1, 2019 – 1:50 PM GMT: The story was updated to include details about how much the license would cost.
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