UAE-A-different-concept-of-international-jurisdiction

Report
UAE: A Different concept of
international jurisdiction
Globalserve Seminar
November 2013
By Phani Schiza Antoniou
UAE- SOME FACTS
• UAE OR ‘The Emirates ‘
•Situated in the southeast of the Arabian Penisula on Persian Gulf
•Federation of seven emirates since 1971
•Dubai, Abu Dhabi, Ajman, Fujairah, Ras Al Khaimah, Sarjah, Umm
Al Quwain
•Legal system is founded upon civil law principles and Islamic
Shari’a law, the latter constituting the guiding principle and source
of law
8.19 million population out of which 15% only are locals
•Non Oil Sector contributes 71% to GDP
WHY UAE?
• Strategic Location :closest proximity to top European and Asian markets:
Access to 2.2 Billion Consumers
• World-class free zones: State of the art infrastructure
•100% foreign ownership of business
• 100 per cent repatriation of capital and profits
• Easily accessible raw materials, cheap energy sources
• Zero corporate profit taxes and personal income taxes, with zero taxation with
the exemption of foreign banks and oil exporting cos
• No minimum capital requirement to establish a limited liability company.
• Advantageous Tax Treaties with 71 Countries
• Stable Political Environment
•Strong Banking Sector
• World Bank ranked UAE 23rd for Doing Business in 2013
•Confidentiality
Types of Company registration
•There are 3 main options for registration of company in
UAE :
•Mainland company – (LLC) Limited Liability Company
But if the scope of the activities in the UAE is limited
then
• branch of foreign company or
• Representative office can be considered
•Freezone company –onshore FZE or FZC
• IBC company- offshore
Mainland company registration
LLC; Limited Liability company
Shareholders: minimum 2 maximum 50
Gives access to the local market
Maximum foreign participation allowed 49%
Local partners UAE nationals with minimum 51% participation
Need office space/ warehouse
Residence permit is issued
Employee VISAs are eligible
No taxation
No foreign exchange restrictions
Apply benefits of double tax treaties
Branch and Representative Office
If the scope of the activities in the UAE is limited then consider:
Branch of Foreign company :
Needs local sponsor
May not carry out any commercial activity in its own name
May negotiate and enter into contracts on behalf of parent
company
Support activities are allowed
If goods are supplied must come directly from parent
Representative Office
May undertake marketing and promotional activities on
behalf of their parent company
Not permitted to trade
Free-Zone onshore company
Registration
100% foreign ownership
Established at the Free Trade Zones; 40 Free zones
Could do business with companies within the free-zone or outside the
country
Can do business locally only through a local distributor being a
company registered in the mainland
There are free-zones which provide license with and without taking
any genuine office space/warehouse – flexi desk offices
Different licenses are issued in accordance with line of business such
as trading , consultancy/services , manufacturing
Residence permit issued
Employee VISAs are eligible to apply
No taxation
No foreign exchange restrictions
Application of double tax treaty benefits
What are the Free Trade Zones?
The Establishment of the Free Trade Zones ( FTZs) in
the UAE has been one of the most significant and
promising initiatives taken to attract foreign investment
An independent free zone authority governs each FTZ
Only Jafza Free trade zone ( of Dubai) and RAK ( of Ras
Al Khaimah) offer apart from free zone companies , also
international business cos ( IBCs) – offshore
Offshore company formation
Do business only outside UAE
100% foreign participation
Can have tax free bank account in UAE
No employee VISAs are eligible to apply
No restrictions on foreign exchange
No taxation
Can aquire immovable property in the emirate where
the free trade zone is i.e the Jafsa IBC can acquire real
estate in Dubai and the RAK IBC can acquire property in
Ras al Khaimah
Offshore company formationcorporate issues
Limited liability company by shares
Shareholders: 1-15
There is no public register of shareholders and directors although it is held
at the registered office but it is not open to public
Shareholders do not need to visit UAE to sign the incorporation documents
Registered agent is needed for the incorporation
No minimum capital is required but it has to be mentioned on the M&A
Bearer shares not allowed
Capital in AED or US$
Minimum one director and secretary; it can be the same and legal entity
No annual reports are needed to be filed
Change of shareholders and directors is accompanied by the resolution of
members, execution of instruments , consents and amendment of M&A,
while original M&A has to be returned; transfer of shares has to be approved
by the registrar and proper instrument of transfer executed to be delivered at
the Registrar
UAE OFFSHORE COMPANIES
Offshore
Jebel Ali
Offshore (JAFZA)
Must for Dubai
Property
Ownership
Corporate
Directors are not
allowed
Ras Al Khaimah
Free Trade Zone
(RAK)
International Co
Corporate
Directors are
allowed
UAE ONSHORE COMPANIES
Onshore
Mainland
Free Zones
Limited Liability
Company (LLC)
Professional
License
Branch
Setup
Over 40 Free Zones
to Choose From
Foreign Partner
cannot own
more than 49%
100% Foreign
Owned but
Limited Sectors
100% owned by
Parent Co
100% Foreign
Ownership
UAE RESIDENCY
• Fastest and Easiest way to become UAE Resident By obtaining “UAE
Investor Visa”
• Setup a free zone company
–
–
–
–
–
–
–
100% foreign ownership
No paid up share capital
No corporate tax
Travel to and from the UAE is easier
No personal income tax in the UAE
The UAE is an OECD “white listed” jurisdiction
Renewal Residency Visa every 3 years
COMPARISON
RAK
OFFSHORE
&
RAK
COMPARISON
ONSHORE
RAK OFFSHORE
RAK ONSHORE
Director
Legal entities allowed
1
Yes
1
yes
Secretary compulsory but can
be same as director
Yes
Yes
Registered agent needed
Yes
Yes
Shareholder :
Minimum shareholders
No minimum capital
Legal entities allowed
1
Yes
Yes
1
Yes
Yes
√
√
Yes
Yes
2 days but
2 days but
No
No
Limited liability companies
Confidentiality
Company register not
available for public inspection
Time for registration
Tax
COMPARISON
RAK
OFFSHORE
&
RAK
COMPARISON
ONSHORE
RAK OFFSHORE
RAK ONSHORE
Outside UAE only
In Freezone and through
UAE local distributor in UAE
Establishment
No
No
Employees
No
Min 1
Keep records only
Yes
No
Yes
No except Jebel ali
offshore ( Jafza) but
corporate directors not
allowed
Yes
Operations
Annual accounts
Employee VISA
Ownership property
Double Tax Treaty with Ukraine
•Dividend: 5/15% . 5% applies if min 10% shareholding
•Interest : 3%
•Royalty: 0/10%
•The 0% rate applies to royalties paid for a copyright of scientific work, a patent,
trademark, design or model, plan, secret formula or process, or for information
(know-how) concerning industrial, commercial or scientific experience. The 10%
rate applies to royalties paid in respect of literature and art works, including
cinematographic movies and films for radio or TV broadcasting.
Double Tax Treaty with Russia
Ratified 7/6/2013 and is expected to enter into force as of 2014
But limited scope of application
Covers the UAE and 7 emirates governments, the Central Bank
of UAE, Investment Authorities of Abu Dhabi and of Emirates, any
financial institution or investment entity , establishment, agency or
any other body wholly owned by the government of UAE
 WHT on dividends/interest is zero, is paid to an entity as above
described
Contains exchange of information clause
Limitation of benefits clause i.e tax treaty benefits may be
denied if proven that the only reason was tax
Facilitates inflow of investments into Russia ( note that currently
UAE investors in Russia pay 20% tax on repatriated profits, 15% on
profits from interest and 20% on Capital gains
USES
As Holding into Ukraine
For trading or for services internationally and in the
region
For Asset protection being the last shareholder in a
structure
Property investment in UAE

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