Enterprise creation in Ras Al Khaimah

In this publication, we will intricately focus on the enterprise incorporation process in Ras Al Khaimah, dissecting the licit and economic facets that underscore this emirate as a distinctive and advantageous locus for entrepreneurship.

Overview of the commercial environment of Ras Al Khaimah

Ras Al Khaimah, globally recognized by the investment acronym "RAK," stands among the 7 emirates in the UAE, securing the fourth position in terms of size. Nestled in the northeastern territory of the country, a mere 45-minute transportation jaunt from Dubai, it shares borders with Oman and lies between the Persian Gulf to the west and the Hajar Mountains to the east. This strategic locale facilitates simple access to East Asian nations such as China, India, Iran, Pakistan, and the CIS.

Endowed with substantial reserves of natural resources, comprising limestone, clay, and gypsum, Ras Al Khaimah has become a central figure in the country's mining sector. With a bustling port and two international airports, it orchestrates seamless logistics, ensuring the global export of diverse commodities.

The economy of Ras Al Khaimah boasts a mosaic of diversified structural elements. Alongside traditional sectors like agriculture and fisheries, the emirate actively nurtures industrial production, the travel industry, and the service sector. Manufacturing entities in Ras Al Khaimah involve in the production of construction materials, pharmaceuticals, the food industry, and high-tech production.

Legal oversight of commerce in the UAE and Ras Al Khaimah

The enrollment and operation of enterprises in the United Arab Emirates fall under the governing acts geared towards fostering fairness, sustainability, and efficacy within the commercial sphere.

Overview of UAE legislation on company registration

• Federal Law No. 2 of 2015 on Commercial Companies

It stands as a cornerstone document overseeing the registry and operations of business organizations in the UAE. It categorizes different structures of entities, comprising state-owned enterprises, privately held joint-stock companies, and limited liability enterprises. Furthermore, this legislative act delineates criteria for initial authorized funding, levels of transnational investments, corporate governance structures, and yearly reporting.

• Federal Law No. 20 of 2018 on combating illicit financial activities

This law is targeted at fortifying control steps to combat the legitimization of revenue and the financing of terrorist acts. It imposes duties on enterprises to maintain detailed monetary paperwork and furnish them upon request by authorized bodies.

Peculiarities of the legislative framework on FEZs in Ras Al Khaimah

Emirate of RAK orchestrates its economic symphony through a melodic ensemble of national legislation, crafting specialized legal and economic realms within Free Economic Zones (FEZ) to entice multinational contributions and business proliferation. A specific feature of Ras Al Khaimah's licit tapestry regarding FEZ is its deviation from the national legislative norms of the UAE, extending exclusive privileges and vistas for entities within Ras Al Khaimah.

The Law on FEZ in Ras Al Khaimah lays the juridical foundations for the incorporation and operation of FEZ in this emirate. It exercises control over facets such as company formation, territory management, customs legislation, and tax privileges. At its core, the law focuses on cultivating an investment environment that beckons intercontinental finances, comprising the rare liberty of complete ownership of the company sans the requirement of a national co-founder—a departure from the usual rules in the UAE.

Resolutions and decrees from the officials of RAK are a regular emanation, enveloping FEZ operations. These documents provide additional directives on firm establishment in Ras Al Khaimah, accounting and reporting methods, as well as criteria for environmental safety and health within the special economic domain.

Within the legislative framework of RAK, peculiar certifying requirements are set for each category of activity in the FEZ. This spans from mundane business segments to more niche areas such as E-commerce and media.

Legislative provisions in Ras Al Khaimah grant enterprises in the FEZ considerable tax preferences, encompassing business tax and VAT stimuli, coupled with exemption from customs duties on re-exported products.

Enterprises enrollment sectors in Ras Al Khaimah

In Ras Al Khaimah, 3 distinct jurisdictions unfold like chapters in the commercial launch narrative:

• the mainland
• the offshore realm
• and FEZ

The permission to orchestrate entrepreneurial endeavors orchestrates itself based on the enterprise's geographic placement. Each option unveils its own kaleidoscope of possibilities and obligations, crafting a bespoke tale for every aspiring venture.

RAK mainland

Initiating an enterprise on the continental terrain of Ras Al Khaimah beckons investors with a plethora of perks. Amidst such upsides are unrestricted currency transactions, the absence of periodic audits, autonomy in delineating the sphere of functions.

Establishing an offshore enterprise in Ras Al Khaimah presents the option of acquiring visa permits for resident executives, staff, and their kin, constituting a substantial boon. Furthermore, domestic enterprises gain access to physical presence via the leasing of office spaces or work places in Flexi office/Flexi desk setups. The standards for office spaces for local entities vary in accordance with the type of certificate for specific business operations.

Creating an entity on the continental expanse of Ras Al Khaimah necessitates the presence of at least 1 local director with a controlling stake.

RAK offshore

A Ras Al Khaimah offshore entity operates beyond the confines of its originating country, increasing its reach internationally. Investors favor this locale for global business expansion, enjoying tax exemption on imports and permitting complete foreign ownership.

Furthermore, one of the merits of offshore entrepreneurship lies in its economic allure. The offshore expanse of Ras Al Khaimah offers lower costs compared to entrepreneurial landscapes in Dubai or Ajman. Currently, approximately 1900 firms hold offshore status here.

The process of crafting an offshore corporation in Ras Al Khaimah involves the incorporation of an International Business Company (IBC) within this emirate.

Unconstrained economic area Ras Al Khaimah

The evolution of commercial endeavors within the internal trade expanse of Ras Al Khaimah is economically enticing. The quantity of enterprises here stands a quarter below the business milieu in other emirates, rendering it a comparative haven for entrepreneurial pursuits.

FEZ in Ras Al Khaimah

The unconstrained economic domains in Ras Al Khaimah stand out as unique arenas for entrepreneurial vitality, adorned with distinctive features that captivate the attention of both transnational and domestic business visionaries. These domains unfurl a broad spectrum of upsides, comprising tax incentives, streamlined registration and management procedures, and the provision of targeted services and infrastructure.

Benefits of Ras Al Khaimah's economic special domains:

• Facilitated establishment and management steps: the enrollment of entities and the documentation procedure are significantly streamlined.
• Tax privileges: companies founded in the unrestricted economic domains of RAK enjoy tax advantages concerning profits and VAT.
• 100% control: intercontinental contributors have the right to wholly own their enterprises in Ras Al Khaimah, without the necessity of involving a regional co-investor.
• Repatriation of income and investments: no limitations on the movement of income and funds from the UAE.
• Exemption from customs obligations: no import taxes are enforced on inbound and re-exported commodities.

Initiating the enrollment of an enterprise in Ras Al Khaimah unfolds across 4 domains (free zones): RAK Maritime City, Investment Agency (RAKIA), Economic Zone (RAKEZ), Media Free Zone.

Unconstrained domain RAK Maritime City

Inaugurated in 2001, it sets its sights on the maritime sector, furnishing enterprises with specialized infrastructure and services. Operating on the 'all-in-one' concept, the zone streamlines administrative procedures, facilitating the rigors of registration and business management in Ras Al Khaimah. It beckons premier transcontinental corporations, drawn by a reliable business climate and expert support for maritime activities.

Ras Al Khaimah Investment Administration unconstrained domain or RAKIA

Initiated in 2015, RAKIA is geared towards crafting optimal conditions for foreign entrepreneurs. With a focus on simplifying company creation procedures and cost-effectiveness, RAKIA provides comprehensive support for contributors. The zone stands out thanks to its strategic location, top-notch infrastructure, and support from local authorities, making it a lucrative choice for diverse commercial segments.

Economic zone RAK or RAKEZ

Located in the center of Ras Al Khaimah, RAKEZ stands as a pivotal region for free trade, designed to catalyze foreign contributions. It paints broad horizons for fostering entrepreneurial endeavors through tax incentives, streamlined enrollment procedures, and a steadfast commercial climate. RAKEZ entices a myriad of business concepts, presenting adaptive structural options for global enterprises in Ras Al Khaimah.

RAK Media Free Zone

Launched in 2006, it emerges as a compelling alternative to DMC (Dubai Media City), purposefully tailored for media and advertising agencies. This zone provides cost-effective, world-class workspaces, streamlined procedures for obtaining media permits, and modern technical framework. RAK Media proves optimal for transcontinental entrepreneurs seeking to advance their footprint in the media and advertising industry in Ras Al Khaimah.

Additionally, within the free trade domain, 4 specialized business parks stand out:

• Commercial business park: encompassing investment firms or enterprises engaged in commercial activities.
• Tech park: designed for light industrial and technological enterprises.
• Industrial park: tailored to meet the needs of heavy industry sector enterprises.
• Educational park: RAK FTZ aims to attract leading global educational institutions and evolve into a key educational hub.

RAKEZ is the key international business center in Ras Al Khaimah

As a result of the strategic merger between 2 business domains, RAKIA and Ras Al Khaimah Unconstrained Trade Zone, in 2017, the special economic domain RAKEZ was officially established. This move aimed at creating a unified, robust economic hub with expanded services and opportunities for business initiatives.

Since its inception, RAKEZ has been continually evolving, attracting global and national firms due to its adaptive economic strategy and attractive entrepreneurial conditions. Today, this economic zone hosts over 14,500 enterprises from exceeding 100 countries, spanning across 50+ economic sectors, making RAKEZ one of the prominent economic centers in the region and a key nexus for the transcontinental trading community.

RAKEZ stands out among other unconstrained trade areas for its versatility and the diversity of available services. This is achieved via an extensive variety of licensing categories and a multiplicity of presented marketable formats. The district also offers extensive chances for undertakings in Ras Al Khaimah to expand, comprising access to various office spaces and land plots.

RAKEZ holds a major role in the trade-oriented increase of Ras Al Khaimah. It not only adds to the creation of new jobs and attracts international investments but also actively participates in diversifying the emirate's economy. The primary goal of RAKEZ is to reinforce the activities of small and medium-sized enterprises in Ras Al Khaimah and also stimulate innovative projects within organizations.

Kinds of companies available for establishment in Ras Al Khaimah

Ras Al Khaimah offers a spectrum of licit frameworks for enrolling enterprises, every endowed with distinctive characteristics and upsides. Let's scrutinize deeply the typical organizational legal forms in Ras Al Khaimah and their key features.

Limited Liability Association (LLC, Ltd)

An LLC in Ras Al Khaimah embodies a legitimate corporation with the responsibility of participants is confined to their contribution to the share funds. To establish this legal structure, a minimum of one individual is required to act as a CEO and oversee company management, along with two shareholders who will be the owners of the company's shares. The maximum number of shareholders is capped at 50. To create a Ltd, one must make a contribution to the share capital amounting to 1,000 AED (224 EUR) deposited into a UAE bank account, earmarked for utilization in business processes.

Public Joint Stock Company (PJSC)

PJSC – a business entity type with the ability to issue shares for public purchase. These organizations typically boast a larger authorized capital and stringent reporting requirements. Private Joint Stock Company (PrJSC) represents an equity-based organization, with shares not available for public acquisition. Within a closed joint-stock company, a minimum of three shareholders is required. The assets of such an organization are not publicly traded, making it suitable for executing large-scale projects requiring substantial investments.

Branch of a foreign entity

A foreign company branch provides international corporations with the opportunity to conduct business in Ras Al Khaimah while maintaining legal relationships with the parent company. The advantage of using this legal structure lies in complete foreign ownership.

In accordance with the provisions of the parent company, the branch will bear the responsibilities set by the parent enterprise. The establishment of a branch involves engaging a domestic representative. Both individuals and legal entities can fulfill this role.

Enterprise representative office

A representation is an establishment engaged in promoting the parent entity and its products, without independently conducting commercial activities.

International Trading Corporation (IBC)

At the beginning of 2007, the RAK Investment Department (RAKIA) initiated the IBC format. A global commercial entity operating under this model can have an unlimited number of founders or CEOs. Regular meetings and certified monetary reports are not mandatory for the incorporators and executives in this system. The registry only displays the entity trademark and the date of its opening in Ras Al Khaimah.

Unconstrained Trade Domain Enterprise (FZCO)

This form of business structure is often chosen by foreigners for incorporating a legitimate enterprise in RAK. Full ownership by foreign entities exempts them from the obligation to pay certain taxes and contributions. Therefore, these legal entities are exempt from corporate tax, capital gains tax, and other tax obligations.

Enterprises can be established by 2 or more shareholders. In FZCO, a minimum share capital of at least 250,000 AED is stipulated.The decision on the company structure depends on various factors, comprising the scale of operations, strategic goals, capital structure, and the desired level of liability. Federal Law No. 18 of 1993 on Corporate Operations ('Commercial Code') and local juridical acts regulate all types of legal entities in Ras Al Khaimah.

Algorithm of actions for creating an enterprise in Ras Al Khaimah

Opening a company in the Ras Al Khaimah Free Zone requires a few simple steps.

Step 1

Identifying the structure of enterprise and suitable corporate model

The initial step involves selecting the legitimate structure of the enterprise and its location, accompanied by the development of a comprehensive business plan. This plan outlines key aspects and types of activities the company will undertake in Ras Al Khaimah, comprising the management organization and the amount of the authorized capital.

Step 2

Establishment and official registration of the enterprise title

The second phase entails the selection and registering of the organization's trade name through the Ras Al Khaimah Foreign Corporate Center. This process necessitates conducting market analysis to choose a name that encapsulates the essence of the company's business focus, is memorable, and distinguishes itself from competitors. The chosen name must adhere to UAE legislation and cultural norms, with careful consideration given to avoiding expressions that may be deemed undesirable or prohibited by the Ras Al Khaimah Economic Zone (RAKEZ) guidelines. It is essential for the company's name to be viable in both English and Arabic, reflecting its legal structure. Reservation options are offered for company names in Ras Al Khaimah. Upon selecting a unique name, a request for approval is delivered to the Department of Economic Development (DED). Following verification for compliance with regulations and uniqueness, the name receives consent, and a corresponding permit is issued.

Step 3

Documentation and paperwork

The documents needed to start a company in RAK include:

1. Memorandum of Association, outlining the company's official appellation, nature of operations, founder particulars, and authorized capital.
2. Bylaws, describing the mechanisms of entity governance, stakeholder powers, and responsibilities.
3. Duplicates of identification documents for all founders and shareholders (for UAE residents).
4. Foreign founders must provide copies of visa papers or Emirates ID cards (if residing in the UAE).
5. Verification of residential address (e.g., utility bill).
6. A detailed business plan covering market analysis, financial strategy, marketing strategy, and operational strategy.
7. Some business sectors may require additional permits or licenses for lawful performance. A notarized copy of the lease agreement or a document confirming property ownership.

Before submitting paperwork to the national regulatory body (DED), foreign documents should be translated into Arabic and notarized.

Step 4

Evaluation of the company establishment request by the regulatory authority

After assembling and submitting all necessary documentation to the DED, the regulatory body assesses the application and determines whether to enlist the enterprise in the Ras Al Khaimah, UAE registry.

Step 5

Issuance of the Registry Inclusion Certificate

Following the successful enrollment of the company in Ras Al Khaimah, the founders receive a document confirming their inclusion in the registry, noted as the Certificate of Incorporation. It comprises the enterprise's identification number. This stage marks the conclusion, and it is at this moment that the company in Ras Al Khaimah attains its juridical status.

Establishing a legal address

All corporate enterprises in RAK are demanded to have an official legal address. This can be a property in a business district, a leased office space, or an address in an area with special economic conditions. After choosing a domain, the Inspection and Consumer Protection Department of the Ministry of Economy will inspect the facility and make a decision on its approval.

Within the boundaries of the RAKEZ domain, various options for office spaces are suggested to meet clients' conditions for licensing categories, the quantity of visa documents, the need for physical presence, and location.

Flexi desks and flexi offices are individual workspaces or individual areas in a high-class shared office environment in business centers. They include various types of licensing, such as service, trade, and general trading. Individual office spaces are offered in sizes ranging from 6.5 to 11.9 square meters, with the option to obtain trade, service, and general trading licenses.

Warehouse spaces, which integrate storage and office areas, offer insulated premises beginning at 150 square meters and are applicable to all license categories. Additionally, land plots are available for erecting structures with a minimum area of 2,500 square meters, facilitating the procurement of commercial, industrial, and general trading permits.

Business licensing procedures in Ras Al Khaimah

In Ras Al Khaimah, forming a legal entity requires acquiring the appropriate business license to ensure the lawful operation of the enterprise. The specific type of license needed varies based on the nature of the organization's activities.

Permissive license status	Description
Permit for industrial operations	Facilitates production operations including importing raw materials, processing, manufacturing, assembly, packaging and shipping of finished products.
Universal commerce license	Gives the right to carry out commercial activities, comprising import, storage, supply and export of goods for various purposes and categories.
Trading license	Provides the ability to conduct commercial activities with a product group, including import, warehousing, distribution and export.
Service license	Gives the right to offer services specified in the license (for example, consulting, marketing, insurance, etc.).
Certificate for Internet trading	Provides the possibility of online sales of services and goods.
Certificate for educational activities	The right to offer educational services, including vocational and management training.
Permit for media activities	The right to broadcast and publish media products, as well as to organize and conduct various events.
Professional/Individual certificate	Organizations that include only one founder and are focused on a narrow field of activity
Freelance license	Provides the possibility for freelancers to work on projects and deliver services as independent specialists.

For certain business sectors in RAK, it is necessary for the head of the enterprise to have appropriate training backed by a certificate authenticated by the UAE diplomatic mission in the issuing country. This usually implements to offering specialized services that require specific skills, such as:

• Financial analysis
• Architectural planning and consulting
• Aviation expertise
• Consultations on computer technology, and many others.

A business license is granted for a defined duration, typically spanning one year. Renewal is contingent upon the submission of audit reports during the renewal process.

The license request is delivered to the appropriate oversight body along with the required documents.

Establishing a corporate account and allocating the authorized capital

The next phase after confirming the name and getting the permit is to open a corporate bank account for the enterprise in RAK, and then deposit the authorized capital according to the presented details.

The entity may open an account in either a local financial institution or an international banking structure.

To establish a corporate account, the following documentation is necessary:

• Founding papers of the organization
• Certification permission
• Passports and resident visas of executives and stakeholders
• Papers confirming the official approval of the company's name.

The process of opening an account begins with submitting a questionnaire to the chosen bank along with all the mandatory documents. Most banking institutions require the personal presence of founders or directors during the opening of a checking account.

The initial amount of the authorized capital is 10,000 AED. This amount may vary determined by the specific form of company. The authorized capital can be nominated in a currency other than UAE dirhams, but this requires prior approval from the RAKEZ governing establishments.

The possibility of issuing shares of different varieties is also provided, but it requires prior authorization from the supervising institutions of the Emirate. Shares should be valued at 1,000 AED or a multiple of the nominal value.

Determination of tax rates for enterprises in the Ras Al Khaimah Economic Domain

Representative bureaus established in unrestricted zones in the UAE, including RAK, enjoy exemption from various fiscal responsibilities.

The enrollment process with the UAE National Tax Service and the assignment of a tax identification number take approximately 3 weeks.

Legal enterprises enrolled in RAK are mandated to submit VAT payment reports every quarter (or every month for larger enterprises with a turnover surpassing 150 million AED) and comply with the tax payment deadline, which falls within 28 days following the conclusion of the reporting period.

Audit and annual fiscal documentation

Every entity in Ras Al Khaimah is mandated to perform monetary transaction accounting. This financial auditing documentation must be maintained to accurately reflect the company's financial situation, comprising comprehensive details of assets and liabilities.

It is the responsibility of each firm to annually compile monetary reports for audit verification. These reports should accurately and comprehensively depict the pecuniary situation of the enterprise.

The standard financial year for enterprises in RAK concludes on December 31. The first financial year commences from the official incorporation date of the enterprise.

After the completion of the reporting time, firms have six months to prepare and deliver the audited monetary statements to the appropriate government bodies.Corporations holding a controlling shareholder stake (over 50%) in affiliated entities need to deliver a consolidated monetary report for all branches collectively.

Legislative oversight within the realm of labor practices and talent acquisition

In Ras Al Khaimah, similar to other emirates in the UAE, employment relationships are administered by Federal Employment Law No. 8, enacted in 1980. This law establishes key rights and obligations for employers and personnel, covering a broad spectrum of employment issues, with working conditions, business hours, rest periods, resolution of labor disputes, compensation.

In the unrestricted economic domain of RAK, akin to analogous jurisdictions, supplementary guidelines and stipulations are enforced, albeit with the foundational tenets of federal statutes remaining binding.

According to Federal Act No. 6 of 1973, which regulates the entry and residence of non-citizens, enterprises in RAK should adhere to protocols for the entry and stay of foreign citizens in the UAE. All employment agreements should be crafted in conformance to legislative norms, precisely defining the terms of employment. Additionally, employers are forced to partake in social welfare programs and contribute to pension funds for Emirati citizens.

Procedure for acquiring a residency permission

In the UAE, there is no permanent residency system. The immigration policy involves the issuance of long-term visa permits, essentially equivalent to permanent residency permits.

The criteria for qualifying for a long-term visa are as follows:

• Ownership of real estate within the Emirates (visa for entrepreneur-investors).
• An employment agreement with an enterprise based within the Emirates (visas for staff).

Steps for obtaining a visa (following the establishment of an entity in Ras Al Khaimah):

• Granting of the Establishment Card (immigration identification card for the enterprise) – this stage takes up to 10 days. This step is vital for subsequent applications for employee permits.
• Request for a long-term visa and acquiring the Entry Permit – duration from 7 to 14 days. An Entry Permit is needed for entry into the Emirates to process a long-term visa.
• Arrival in the Emirates to receive the long-term visa – often takes place within 5 working days. The candidate needs to undergo medical diagnostics at a medical facility (blood tests and chest X-ray), provide biometric data (fingerprinting and iris scanning). Once the visa is stamped in the passport, the applicant is allowed to leave the country.
• Obtaining the Emirates ID – a resident identity card. After a few days, you will get the identity card.

Main requirements:

Permanent residence is not mandatory, but the extended-duration visa is abolished if absent from the country for over 6 months.

The procedural framework delineated for acquiring resident status in the UAE is tailored to regularize the presence of non-citizens aspiring to involve in commercial operations within the legislative confines of the Emirates.

Establishing an enterprise in RAK is a reasonable choice for entity owners aiming to enhance their influence in the world arena. This emirate not just offers favorable tax conditions and a flexible governing framework but also offers availability of advanced infrastructure and logistics options.