An Overview Of Company Formation In RAK


The emirate of Ras Al Khaimah or RAK is actually the fourth largest of the seven emirates in the United Arab Emirates. While perhaps not as well known as Abu Dhabi or Dubai, this is a very economically attractive location and one that is considered to be one of the fastest growing areas of the world.

Companies from within the UAE as well as foreign companies are moving into RAK faster than into neighboring areas. It has a stable government with business-friendly policies as well as a growing import and export market that allow for easy supply chain management through the area.

RAK is different from the other emirates in that it has a low dependence on income from oil production. This is a more diverse area with growing sectors of the economy in agriculture, manufacturing, and processes as well as a very positive and expanding tourism industry. The emirate is actively encouraging the development of new businesses in all sectors, which has lead to an increased interest in company formation in RAK.

Reasons to Start a Business in RAK

For most investors from outside of the United Arab Emirates, the free zone is the key location for company formation in RAK. The free zone is designated as RAKFTZ (Free Trade Zone) and was originally formed in 2008.

The process for gaining residency in RAK are very simple, making it ideal for both the investors as well as employees. The paperwork is very simple and similar to any other type of residency visa application in any part of the world. There is a medical requirement as well as approval of the residency visa application before the permit will be granted.

Many people don’t realize that English is a very common language used in the RAKFTZ, making it easy for professionals as well as business owners to communicate. Additionally, and this is a very important benefit to choosing to establish the business in the RAKFTZ, it is possible to have 100% foreign ownership of the business.

In other Emirates and outside of the RAKFTZ there is a requirement that limits the amount of ownership of the company by the foreign investor. For example, in Abu Dhabi, there is a requirement for a 51% owner by a UAE national partner for any foreign owned business doing business outside of the designed free trade zones in that emirate.

Business Considerations

In addition to the economic possibilities, there are some very good business considerations in choosing company formation in RAK rather than in different regions in the Middle East.

Companies formed in other locations may require multiple shareholders and directors to be named to the company at the time of the application and approval. There are also no restrictions on the citizenship of the directors or stockholders. In the RAKFTZ it is possible to complete the application with just one shareholder and one director, with both having citizenship in different countries. Additionally, the application is a relatively confidential process, providing protection for the applicant and shareholders throughout this time period.

The RAKFTZ offers a well-developed banking and financial sector. The areas are known for following international regulations and standards when it comes to overseeing financial institutes, transactions, and banking practices. This provides confidence for both foreign as well as local investors that may not always be found in other areas of the Middle East. There is also no exchange controls to limit the business’s ability to work with suppliers and vendors from other countries.

The cost of incorporating a business in the RAKFTZ is low cost and, once established, the business will be operating in a tax-free environment. While the business will not be taxed, the added benefit is there will be no personal tax either, which makes it appealing to bringing in professionals from outside of the country. The emirate has in place double taxation treaties with over 50 countries around the world. This allows a very positive picture for companies in highly taxed countries and areas to move to an RAK offshore company without any financial loss through additional taxation.

One other critical factor to consider is the availability of a stable, trained and educated workforce. The emirate is home to a very robust population and, just an hour out of Dubai, it is not at all challenging to attract people from the UAE or other countries in the Middle East or internationally.

The Process

While setting up a company in the RAKFTZ is designed to be easy, it is not without potential challenges and problems. By working with a law firm experienced in assisting foreign investors in company formation in RAK these issues can be avoided, streamlining the process and allowing your business to be approved in just a matter of weeks from the date of application.

Necessary Information

The first step in the process will be to determine the type of legal entity for the business. These include free zone entities, non-free zone entities as well as branches. Knowing the specifics of each type of entity will be essential to determining the best option for your application.

In general, the free zone entity can include a limited liability establishment (FZE) or a limited liability company (FZ-LLC). There is a difference in the two with the FZE as a sole owner business while the LLC has two to five shareholders.

In the non-free zone entity category, there is an individual establishment, with one owner, and a limited liability company with two to fifty shareholders. Finally, the branch can be either a UAE-based company, including those in UAE free zones or a branch of a foreign company outside of the UAE.

There are also several different licensing types designated and required when completing company formation in RAK. These can include commercial, educational, e-commerce, general trade, professional (non-free zone entities), industrial, media, individual professional (free zone entities only) as services and tourism.
It will be essential to consider and choose the business license type carefully. It must represent the business practices and the main objective or products and services offered by the business.

The facilities selected will also need to be known at the time of the application. This may include shared types of business environments, dedicated offices, warehousing, industrial buildings or the option to choose land for development and construct the specific building or facilities required.

The company will also need to select a name and also register a trademark. There are some differences in this process than in other countries as the various emirates all manage their own respective free zones, which means more than one business in the UAE operating in one free zone may have the same name as another business operating in another free zone.

Additional requirements will include a business plan, the correct identification and verification paperwork for the business as well as proof of space within the RAKFTZ that is functioning as your corporate space.

An attorney will review all documentation and ensure all paperwork and verification information is complete and accurate for the company. It will also be important to understand any business operation restrictions or limitations in your business license area that may impact your business model or your business’s ability to legally operate in the RAKFTZ.


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