Company Registration in Ras Al Khaimah- An Overview

Ras Al Khaimah is the northern emirate in the UAE. It is one of the seven emirates in the UAE with different forms of emerging opportunities. It is within close proximity to Dubai and reachable by different modes of transport. It has a large sea port and there are international airports to connect all parts of the world. Hence there are thriving investment opportunities in Ras Al Khaimah.

It is located close to the Arabian Gulf which makes ease of transport in the city. The port of Ras Al Khaimah is present in the city, making it easy for different forms of products to be shipped. Ras Al Khaimah is also known as ‘RAK’ which is a prominent name used by investors. It is located close to the Straits of Hormuz and has two international airports. Hence this commercial hub is accessible to billions of consumers.

All the emirates are known for their free zones. Similarly, RAK also has a free trade zone. This free trade zone is known as the Ras Al Khaimah Free Trade Zone which is an excellent alternative to Dubai for company registration. Different forms of companies as well as warehouses are present in this free trade zone. There is no form of tax levied on companies present in this free trade zone. This type of tax involves personal tax as well as capital gains tax.

The process of company registration in Ras Al Khaimah is quite straightforward when compared to other emirates. There is a minimum requirement of one shareholder and one director for the process of company incorporation in Ras Al Khaimah.

Hence investors would go for the process of company incorporation in Ras Al Khaimah, as it offers thriving opportunities for businesses to establish themselves.

Benefits of Company Registration in Ras Al Khaimah

The following are the benefits of company registration in RAK:

Free Trade Zone
All the emirates are known for their free zones. Similarly, RAK also has a free trade zone. This free trade zone is known as the Ras Al Khaimah Free Trade Zone which is an excellent alternative to Dubai for company registration. Different forms of companies as well as warehouses are present in this free trade zone. There is no form of tax levied on companies present in this free trade zone.
Location
Ras Al Khaimah is the north most emirate. This is present in the Arabian Gulf and the straits of Straits of Hormuz. There are two international airports i.e. Ras Al Khaimah International Airport and the Dubai International Airport. This would make it beneficial for different investors to travel. It also forms the hub for countries such as Africa, Europe and Asia. Hence different investors would want to do business in Ras Al Khaimah.
Taxation
RAK has entered into different forms of double taxation treaties with other countries. There are more than 90 such double taxation agreements with other countries. Hence investors in these countries would not be taxed twice for any investment carried out. The Ras Al Khaimah Free Trade Zone (RAKFTZ) is the area where the company registration process can occur smoothly. There is no tax present in this free trade zone. This would also include any personal tax or capital gains tax. The government of Ras Al Khaimah has entered into different agreements with Japan to collaborate to develop free trade zones.
Excellent Infrastructure
Ras Al Khaimah is considered as very strategic locations for business to establish. More than two sea ports are present in this emirate which makes transportation simple. In the Middle East, this location is one of the prime sea ports which receive oil and cargo goods.

Eligible Business Structures for Company Registration in Ras Al Khaimah

The following business structures are present in Ras Al Khaimah:

Company Limited By Shares
Usually this form of entity has limited liability. This would mean the liability of the shareholders and directors is limited to a particular amount. This type of entity would usually be used by international companies that want to limit their liability.
Company Limited by Guarantee
This type of entity is usually used to form associations or non-profit organisations. The liability of the members is limited to a specific form of guarantee.
Unlimited Company
This form of entity is one where the liability of the members is unlimited. This would mean that the directors and shareholders do not have limited liability.
Limited Liability Company
This type of entity is also known as an LLC. The liability of the members is limited to a particular extent. Foreigners have a limited amount of stake in Ras Al Khaimah Limited Liability Company. Only 49% stake is allowed to be owned by foreigners in this form of entity. However, they would be allowed to control the operations of the company. This company is governed by the provisions of the RAKICC Business Companies Regulations 2016. This is the most preferred type of business entity which is utilised in the process of company formation in Ras Al Khaimah. This company can be formed with minimum of 1 director and two shareholders. It is quite straightforward to incorporate this form of entity.
Free Zone Company
This form of company is usually utilised by foreigners to set up offices. There are different benefits of utilising this form of company. There is no form of tax levied on the company. Hence no form of corporate tax, capital gains or any other taxation would be levied on this type of company. The Federal Commercial Transactions Law No. 18 of 1993 (the “Commercial Code”) and local laws would regulate all forms of entities in Ras Al Khaimah. Foreign ownership is allowed for this type of company.
Branch Office
This is common type of entity which is utilised in Ras Al Khaimah. An advantage of utilising this form of entity is 100% foreign ownership. The branch office would come under the provisions of the parent company. Hence the liability of the branch office would come under the parent company. To form a branch office, a local representative must be appointed. This representative is known as a national service agent. The national service agent can either be an individual or a company.
Sole Trader Companies
Sole trader companies in Ras Al Khaimah can only be formed by nationals. Foreign individuals would not be allowed to form this type of company. The principle of limited liability is not applicable for a sole trader. Hence the sole trader would be liable for all transactions.

Procedure for Company Registration in Ras Al Khaimah

The following procedure has to be adopted by the applicant for company registration in RAK:

Select the type of Business Entity
First and foremost, the applicant must choose a suitable business. In this process the services, location and products must be thought of. After this process is carried out the applicant would have to consider the legal requirements for the business.
Determine the Legal Requirements
There are different forms of business entities present in RAK. Hence the applicant must decide the type of business and the corporate structure. For example, minimum capital is required for forming an LLC. Here the applicant should also determine the requirements related to location. There are different jurisdictions in RAK which include the RAK, Mainland, Free Zone, and Offshore
Consider Registering Trade Name of the Entity
In the next step, the applicant must register the trade name of the entity. This must be carried out in the RAK International Corporate Centre (RAKICC). The trade certificate would reveal a unique name of the company. This is required by the company to have some form of independence. Initial approval would be required before this process. First the initial approval must be secured by the applicant before going for the final approval. Initial approval would help the applicant secure the type of business license which is required for running the business. The trade name for company registration in Ras Al Khaimah can be carried out in the Department of Economic Development (DED). The DED is the main authority in RAK to carry out the process of company registration.
Secure Approvals
In the next step, the applicant would have to secure requisite approvals from various regulatory authorities. Securing approvals would also include obtaining the licenses. There are three types of licenses in Ras Al Khaimah which include general trade license, professional license and industrial license.
Business License
Once consent is obtained from the authorities, the applicant for company registration in Ras Al Khaimah can go ahead and secure the business license from the DED to carry out operations.

Compliances for Company Registration in Ras Al Khaimah

Economic Substance Requirements- In 2019 the government of Ras Al Khaimah passed the Economic Substance Requirements (ESR) along with the respective rules. As per these rules, companies which are incorporated in Ras Al Khaimah have to carry out activities which would generate income in UAE, rent an office space, and have staff in the UAE. All companies whether it is a branch office or head office or a locally incorporated company would have to abide by the above rules.
Companies as per the ESR 2020 rules have to comply and report that relevant activities are carried out. Such compliance must be carried out and submitted in the below portal. https://eservices.mof.gov.ae/Shared/
Failure in compliance with the above requirements would cause of penalty of AED 400,000.
Companies in the UAE do not have to pay corporate rate on the world wide income.
VAT rate payable would be 5%. This rate would be levied from 2018.
All LLC’s in UAE have to reserve 10% of annual profits until such reserves reach 50%.
Information on the directors and shareholders must be provided. Such information would be required for resident firms.
Tax is Free in the UAE only oil and gas companies would have to pay tax.
Excise is payable on drinks, carbonated drinks and other forms of excisable goods.
No Personal Tax is levied on residents and non residents.
Municipal Fees of 10% is charged on commercial offices.