Company Acquisition Process in Dubai and Comparison with Starting a New Company

What Should We Pay Attention to During Company Takeover Processes in Dubai?

There are many important points to consider before acquiring an already active company in Dubai. Let’s review the key issues that should be checked before initiating the transfer process.

Does the Company You Will Acquire Have Any Tax Debt?

Check whether there is any outstanding debt to the tax authority or any other government body.

Review the UAE tax authority accounts and verify whether past declarations were submitted correctly and whether there are any tax penalties.

Check through the Federal Tax Authority (FTA) if the company you intend to acquire has any previous tax liabilities.

Are there any penalties for late VAT registration?

Has the VAT return not been submitted or is there any unpaid VAT liability?

Is there a corporate tax registration penalty?

Does the company have any corporate tax debt? Were the declarations submitted on the correct dates?

These checks will help you avoid potential tax-related issues in the future.

Does the Company Have Any Loan Debt?

Check whether the company has any outstanding loans with banks operating in the UAE and take necessary precautions.

The company’s credit status should be verified with all banks in the UAE that provide corporate loans. Has the company used services such as physical or virtual POS offered by banks or other financial institutions? Clarifying these issues is important.

Does the company have any outstanding loan debt with banks?

Has the company received physical or virtual POS services from banks or intermediary payment providers? Are these services still active?

Has the company used other banking services in the past?

What Is the Financial Status of the Company?

Review the company’s financial statements post-business operations and determine whether the company has any outstanding debts arising from transactions with other businesses or the government. If there is no audit report issued by a certified auditor (authorized local accountant), this report should be requested and reviewed.

Does the Company Have Any Previous or Ongoing Legal Cases?

Check with Dubai courts whether the company or its owner has faced any legal issues in the past or is involved in any ongoing litigation. If there are ongoing cases, their causes and possible outcomes should be evaluated.

Proper Drafting of the Company Transfer Agreement

It is important to prepare a transfer agreement stating that any tax debts, commercial liabilities, or potential legal problems of the company post-transfer will be the responsibility of the transferring party or entity. This agreement should be notarized for legal validity.

Each of the points mentioned above is crucial and contains potential risks. Therefore, having a thorough understanding of the company’s background is essential.

Establishing a New Company in Dubai

There are two options for establishing a new company in Dubai, United Arab Emirates.

These options are important depending on the type of activities you plan to conduct within your company. In Dubai, you can either establish a company in one of the free zones or on the mainland. Among many reasons to choose between these options, the most critical one is whether your company will operate within the UAE and offer services/products directly to end users. In that case, setting up a mainland company is mandatory. For other types of activities, many free zones are available.

What Are the Risks of Establishing a New Company in Dubai?

When setting up a company in Dubai, it is essential that experts accurately determine whether your business activity is suitable for a free zone or requires a mainland license.

After making this decision, ensuring that your company fulfills all necessary legal obligations and implementing them correctly will help you avoid various tax penalties and legal issues. Therefore, completing these processes with the right consultant will be beneficial.

Advantages and Disadvantages of Acquiring an Existing Company vs. Establishing a New One

Establishing a new company offers a clean start and full control, but it may also involve time and cost burdens due to building operations from scratch. On the other hand, acquiring an existing company provides benefits such as a fast start, an existing customer base, and established operations, but may also come with drawbacks like outstanding debts, legal risks, and lack of transparency. For this reason, evaluating both options based on your strategic goals is crucial.

Comparison of Acquiring vs. Establishing a Company

Below is a comparison table for company acquisition and new company formation in Dubai.

At World Company Setup, we only handle the acquisition of companies whose tax and banking processes we have monitored, minimizing the risk for both the seller and the buyer of the company.

For more detailed information about the processes, please contact us.