In the past, Singabiz® wrote several articles about companies in Singapore and in the UAE. But which company is better to use in 2026? What are the benefits of each of them, where are the pitfalls and what are the differences? The first idea you can find in this article.
UAE
The usual form of company in the UAE (unless you wish to be present also on the local market) is the FZCO or Free-Zone Company. There are many different free zones in Dubai. Where to install your company, mainly depends on which licenses the one or another free zone does offer to its customers and which price level they practice.
What are the benefits of a company in the UAE?
There are quite a few of them. First of all, you have a company outside of the EU/ Europe and you can use it for your business according to the registered business activities/ licenses.
Further, your FZCO can be the sponsor of your own visa for UAE. In other words, via your company you can get your visa. If your partner (wife, spouse, friend) would like to get the visa as well, it is possible that your FZCO sponsors multiple people. Important: your company can sponsor only adults who can have employment contracts with your company. If you have children, it’s not the company anymore who is the sponsor for their visa, it’s you personally in the next step.
Even though companies in UAE do not function completely tax-free since a couple of years. But the corporate taxes are still pretty low at 9%. And there are definitely ways to lower the tax burden significantly.
Which kind of pitfalls do you need to pay attention to?
As mentioned above, the UAE companies (does not matter whether FZCO or mainland companies) have to file their tax declarations. These declarations and the appropriate accounts are made by tax consultants certified for UAE. This causes higher running costs than it was the case still a couple of years ago.
Setting up payment options with payment providers, like Paypal, Stripe etc., might be an issue.
Your FZCO functions via your free zone. Even such small requests (for example, from a bank or immigration authority) like a salary certificate are issued by your free zone, not by yourself as the director of the company. It is a bit disappointing, slowing down the process and causing additional costs where actually there shouldn’t be any.
Some European countries, like Germany, cancelled their Double Taxation Agreements (DTA) with UAE. In other words, if you still have your personal residency in one of such countries, you have no protection of your personal earnings or a reduction of the total tax burden which could be normally ensured by DTA. In such cases, some workaround might be necessary (like foundations in Liechtenstein). Liechtenstein has the DTA with UAE and with Germany. But a foundation would make sense from a certain level of revenue only.
Even in case of existing DTA, some countries build in conditions preventing their citizens from benefiting from favorable conditions in the UAE.
If you sponsor your local residency visa via your company, pay attention not to stay outside of UAE for more than 180 days. Your visa would expire in this case. Before you can re-enter UAE, you would need to apply for re-activation of your visa first. Else, your entry can be refused at the immigration.
For whom does an FZCO make sense?
If you work mainly with European clients and ship products to the EU, Dubai might be not the right option for you (s. above: issues with payment providers). By switching an intermediary for EU payments, like setting up a Swiss GmbH on top, could help to circumvent certain issues. However, it would increase the overall running costs of your business.
If you would like to live in UAE and get a sponsored visa, an FZCO can be a good option. Especially, because it does not require higher investments, like golden visa with property purchases. Though, the golden visa via property investments can also have its own advantages. For example, the rule of 180 days outside of UAE does not apply to golden visa.
The personal salary is still tax free in UAE. If your FZCO pays a salary to yourself, your salary on the personal level remains tax free, and this payment reduces the revenues and the tax burden of your FZCO accordingly.
If you live the lifestyle of digital nomads and do not have any tax residency anywhere in the world or if your tax residency is in a country with territorial taxation, an FZCO can be also beneficial for you. Revenues coming from FZCO would not be taxed in your country in this case and the whole benefits of your FZCO could be fully tax-free in the ideal case.
Singapore
The most common company form in Singapore is Pte. Ltd. or Private Limited. Incorporations in Singapore mainly follow the Commonwealth approach and require a Corporate Secretary, a registered address and – contrary to many other countries, like UK, Ireland, Hong Kong etc. – need a local Nominee Director as well.
What are the benefits of a company in Singapore?
Singapore is worldwide among top destinations for company formation. It is caused by a very business-friendly environment, low taxes, regular tax rebates and many other positive aspects.
Contrary to the situation with the UAE, Singapore has working DTA with many countries in the world.
There is also a possibility of setting up a non-resident company, even though we do not recommend it in most cases. A non-resident company cannot benefit from existing DTA, but is completely tax-free in Singapore (conditions apply).
Pitfalls in Singapore (or wrong information):
Every now and then you can find information in social media, saying that because of the Nominee Director the company does not fully belong to you. That’s wrong! A Nominee director does not hold any company shares, you are the only owner. But the Nominee Director is definitely an additional cost factor as it causes 4-digit annual costs.
As in the most countries, if you wish to open a local bank account for your business, you have to come over to Singapore for a personal bank appointment (KYC).
For whom does a Pte. Ltd. make sense?
If you have always dreamed to live in Singapore, you surely could apply for an Employment Pass (EP) or a Personal Employment Pass (PEP) being director of your Pte. Ltd. It is possible, but the process is much more cumbersome than in the UAE.
Pte. Ltd. can be a suitable option for digital nomads, even if you have European clients. The financial system in Singapore is perfectly developed and well connected.
Also, persons living as digital nomads or in countries with territorial taxation can benefit from a Pte. Ltd. perfectly well. But even if you still reside in the EU, a Pte. Ltd., eventually with a holding company in Europe, can still be a good setup for you.
Cost comparison between companies in UAE and Singapore
For the incorporation of an FZCO in UAE and the annual maintenance (like renewal of the business licenses) you should count (depending on the free zone and the number of business activities) with the costs from ca. 4.000-4.500 EUR and can reach 5-digit amounts depending on the free zone and your business activities. In these costs, the visa costs are not yet included for an “apple-to-apple” comparison.
Accounting and tax filing services are not included neither, but they would be irrelevant for comparison reasons, as they are rather similar in the UAE and Singapore.
As mentioned, in the UAE the above amount can easily become higher depending on whether you need any certificates regarding your company, any letters etc. Every additional service is charged on top.
The full costs in Singapore for the incorporation and annual maintenance (which include the registered office, corporate secretary and the nominee director) would range between 5.000 and 6.000 EUR. Taking into account additional costs in the UAE, the end amount in the UAE approaches the similar range and can even be higher.
In general view, Singapore wins the comparison due to multiple reasons:
– better DTA;
– more transparency regarding costs;
– resident or non-resident company possible without any uplifts;
– better banking conditions overall.
But it is surely a very individual decision. And Singabiz® is glad to accompany you in your journey in one of these countries which can make more or less sense for you individually, depending on your business, your target markets and your personal setup. Feel free to book a consultation to discuss your case and to prepare an appropriate setup for you. You can also write us an e-mail with your desired set-up and a Singabiz® representative will be glad to get in touch with you for further discussion and evaluation.
