The legality of opening a bank account abroad
Jan 27, 2021 11:34 AM EST
If you plan to expand your business or relocate to another country, a bank account is definitely something that you are going to need at your new location. However, the banking laws differ from country to country, sometimes even from province to province, and may depend on your citizenship as well. There are certain legal and administrative considerations you have to be aware of when opening a bank account in a country other than your home country.
United Arab Emirates - the emerging hub
The small Gulf country of United Arab Emirates quickly became a global hub for international trade, finances, and economics. The bustling and multicultural cities Dubai and Abu Dhabi are famous for the number of international companies which are located there. Today, every reputable international company has a branch in the UAE. It provides perfect opportunities for attracting the best-in-class talent from all over the world and networking with other successful companies. No matter if you plan to open a startup here, or a branch of a multinational company, the UAE is the country that welcomes everyone. The business climate is favorable and foreign investments are appreciated.
If you want to relocate your company or open a branch in the UAE, make sure to prepare all the necessary documents for opening the local bank account.
Opening the business bank account in the UAE
Company bank account opening in UAE can be a daunting task. The local and international regulations are complex, and you need to demonstrate the stability of your business and serious intentions to operate in the UAE. Transparency and compliance with the law are paramount when it comes to running a business in the UAE. There are some general guidelines for that, but you also have to consider the local laws and practices.
As you already might know, all banks operate under one important principle, which is "know-your-client" (KYC). For business bank accounts, it is more than just identifying and verifying the customer. The bank will need to consider the potential risks, especially in the areas of money laundering and terrorism financing. And you, as a client, have a burden of proof that your business is legitimate.
The UAE has dozens of banks you can choose from. Some of the banks are locally incorporated, while some of them are the branches of foreign banks in the UAE. There are different types of banks as well, so make sure to research which one would suit your needs the best. The documentation they require is generally standard, but as a rule of thumb, it depends on bank policy. Some of the banks require a minimum monthly average balance, so it also an important factor you need to consider.
Tentative list of the documents
Here is the general overview of the documents you are going to need to open a bank account in the UAE. Please have in mind that this list is not exhaustive and that you might need additional documentation. In order to run the business in the UAE, you need to obtain a trade license first, and of course, to officially register. Hence, the bank will require the certificate of incorporation, trade license, share certificates, memorandum, and articles of association. The bank will also require the documents proving business activity information (contracts, invoices, financial statements, etc), business plans and financial projections, information about managers, clients, and shareholders. Usually, passports, visas, and residence permits of directors, signatories, managers, and other responsible persons are required, too.
Think about the taxes
The UAE does not have income taxes for individuals, which promotes hiring and ensures a high standard of living. Generally, the corporate taxes and fees are non-existing. However, the taxation rules of the UAE are complex as in every other country, and your obligations towards the state depend on the exact location (the emirate or a free zone), industry, and other factors. Even if you do not have to pay anything, there will be forms that you will have to fill accurately and diligently.
If you are a resident of the United States of America (for tax purposes), then you will have to consider and fulfill your obligations under the IRS requirements as well. Our advice is, of course, to hire a local tax expert who will guide you through the process and make sure you are compliant with all laws. Moreover, they can save your time by providing the necessary documentation for you, so consider that service as a useful investment that will make your start in the UAE easier.