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Any business house is sure to expand as it diversifies its activities; hence, the management of
assets and investments becomes all the more important for such organizations. This particularly
true in Dubai, wherein the investor base is diversified and affluent, requiring straightforward
solutions for most business ventures.
There have been many strategies over the years, but some of the most efficient to date are simply
based on the division of a business into clearly separate entities, all managed under a centralized
holding company.
In this blog, we are going to cover what holding companies are, their benefits, and why starting
a holding company in Dubai could be a smart move.
Key Takeaways
- Holding companies help manage diverse assets and subsidiaries, limiting liabilities and improving efficiency.
- Dubai’s strategic location and favorable tax laws make it an ideal hub for businesses of all sizes.
- Enjoy tax advantages like low corporate tax rates and exemptions on capital gains.
- Holding companies offer asset protection, streamlined operations, and easier succession planning.
- Simplified banking and credit access, plus shareholder benefits like UAE residence visas.
- Expert consultants can guide you through the setup process, ensuring fast and smooth company formation.
What Is a Holding Company ?
A holding company is a specialized business owning properties or other companies. Primarily, it
operates to supervise and control those businesses or assets within a group, hence wise to
manage diverse holdings while limiting liabilities.
As an example, think of a holding company as a parent company that can own a controlling
stake-upto 100% of its subsidiaries. It assumes control over the group but typically does not take
hands-on interference with the daily operations of companies that have been incorporated under
it.
Types of Holding Companies
There are two types of holding companies that exist in the UAE
- Onshore holding companies
- Free Zone Holding Companies (holding company in Dubai free zone with 100% foreign ownership
Depending on the form in which holding companies are organized, they require at least one
director. Additionally, foreign investors can register partnerships as holding companies in Dubai.
Who Can Benefit from Holding Companies?
The holding company is understood to be for the big corporations and the rich who want to save
their assets. Holders like this have advantages in abundance, but many small and medium-sized
enterprises also see numerous benefits in holding companies. It helps separate assets from the
trading entity as well as provides an oneness investment platform.
In a nutshell, holding companies offer an organized manner in which even the smallest and
largest business enterprises can guarantee that their subsidiaries are being managed effectively.
Why Set Up a Holding Company in Dubai ?
Starting a holding company in Dubai has numerous advantages. Here are some key reasons
1. Strategic Location
Dubai actually sits at a crossroads for Europe, Asia, and Africa making it perfectly suited for
gaining access to emerging markets and global trade routes. It will be particularly helpful for
businesses that operate in more than one country.
2. Favorable Corporate Laws
UAE corporate law offers attractive options for owning real estate and shares in other
companies, along with beneficial tax planning opportunities and asset security.
3. Asset Protection
It’s wise to create a holding company to segregate assets and limits liabilities. It is particularly
convenient when opening new products or new markets, keeping the existing assets acting as a
shield to the risks associated with new ventures.
4. Efficient Group Operations
A holding structure allows you to begin streamlining operations across your subsidiaries. This
means each company has its own HR teams, finance teams, marketing, and legal teams, while
the holding company comes up with a solution instead and manages these functions centrally.
This will lead to a big cost saving, benefiting all the subsidiaries.
5. Simplified Succession Planning
A holding structure makes it easier to transfer ownership of trading entities, whether to family
members or through a sale. You can keep ownership of your assets while passing on the
business.
6. Tax Benefits
The UAE has one of the lowest corporate tax rates in the world at 9% applicable only on profits
over AED 375,000. Holding companies also have exemptions on capital gains and dividends,
making them a tax-efficient option for asset management.
7. Simplified Banking
Many jurisdictions that allow holding companies also provide the opportunity for shareholders to
obtain a UAE residence visa. This can simplify the process of opening corporate bank accounts
and help secure loans, as banks consider the overall strength of all subsidiaries when extending
credit.
Requirements for Holding Companies in Dubai
If you wish to set up a holding company in Dubai, here are a few things which you must
remember:
- Management board appointment: There must be the appointment of a management
board for the formation of subsidiary management policies. - Oversight of subsidiary activities: The very same management board has to supervise the
subsidiary operations. - Director appointments: Each subsidiary within the holding structure must have appointed
directors. - Capital verification: Subsidiaries must have capital sufficient for their operations.
- Risk mitigation: Implement strategies to minimize risks faced by subsidiaries.
By meeting these requirements, Dubai holding companies can comply with legal and operational
standards.
How To Register a Holding Company in Dubai
Starting a holding company in the UAE involves a few key steps:
1. Systematic Planning and Research
The company needs to do research and planning according to the business goals and objectives.
This includes the type of industry, type of holding structure, acquisition of subsidiaries etc,
which must be decided before the registrations.
2. Select a Business Activity
The big reason why there are more formations is business activities entrepreneurs can engage in
across the many sectors that Dubai offers.
Examples of these activities include investment holding, property holding, intellectual property
holding, etc. All these are available for a company to choose what best suits them.
3. Choosing the Right Location
The right location in Dubai can bring you clients and increase sales. Dig into research to help
you find the best business place.
4.Understanding Registration Requirements
Starting a business in Dubai is fairly easy, you need to take care with legal agreements in order
to protect your interests.
5. Choosing the Right Business Consultants
The regulations in Dubai may not be fully understood by many foreign investors. Experts, like
those at Emifast, can assist you with the steps to begin your own holding company. They know
what you don’t and they can guide you through the nooks and crannies of business registration
and operations.
Why Choose Emifast for Your Holding Company ?
Emifast offers comprehensive support throughout the company formation process in Dubai. Our
experienced team can help you set up your holding company quickly, often within a few days.
This is significantly faster than other free zones or mainland options, which can take up to six
months.
Frequently Asked Questions
As you embark on forming a company in Dubai, you may have some questions. Here are
answers to some of the most common ones:
The UAE has two main types: Onshore holding companies and Free Zone holding companies.
Yes, holding companies must have a bank account and keep financial records.
Holding companies offer reduced financial risks, asset protection, tax benefits, and easier
regulations.
If the holding company does not belong to a VAT group, it must have taxable activities to
qualify for VAT registration.