CS Shikha Mehra
Incorporation procedure in UAE is a simple step by step process and does not require endless visits to a lawyer at every juncture of company formation. The procedures for incorporation in UAE are recognized to be a legal one and it includes the registration of company name and licensing of business activity.
The basic requirement for all business activity in Dubai is one of the following three categories of licences:
1. Commercial licences covering all kinds of trading activity;
2. Professional licences covering professions, services, craftsmen and artisans;
3. Industrial licences for establishing industrial or manufacturing.
Fifty-one per cent participation by UAE nationals is the general requirement for all UAE established companies except:
BUSINESS INCORPORATION TYPES:
1. Limited Liability Company: The most common form of business in the UAE. Dubai requires a share capital of AED. 300,000 (Rs. 51,81,000/-) ( 1 AED = Rs.17.27/-) but this varies by Emirate, by Free Zone, and by activity. e.g. The new procedures for incorporation in UAE for Real Estate brokers who wish to rent out property in their own name is to now give a bank guarantee of around AED 1 million.
An UAE national, ‘Sponsor’ must own 51% of the shares of this company – even though he may not invest any funds into the venture. An agreement with him can be reached about the profit sharing percentage or the fee he will be entitled to instead.
2. Joint Venture: These companies are basically formed to share the profits or losses of another venture which will be run by one or more of the partners. This maybe a written or verbal contract and need not be notarized.
3. Professional Company: These are partnership companies between members of the same profession to supply a professional service e.g. accounting, educational services, medical and so on.
4. Sole Proprietorship firm to Practice a Profession: For a foreign professional investor, the procedures for incorporation in UAE allow him / her to form such a firm without any UAE national being a ‘partner’. However, a UAE national must be taken on as a fee based ‘Service Agent’ instead of a ‘Sponsor’ to sign important documents such as applications for visas and practicing licenses.
FREE ZONE INCORPORATIONS
Free Zones offer the following incentives to the investors.
1. 100% foreign ownership
2. No corporate taxation for 50 years; renewable for an additional 50 years.
3. Freedom to repatriate capital and income
4. No personal income tax.
5. Full exemption from import duties.
6. No currency restrictions.
7. No bureaucratic red-tapism.
8. No recruitment problems.
9. Modern efficient communication.
10. State of the art infrastructure.
11. Abundant energy
LIST OF FREE ZONES :
There are more than 38 Free Zones operating in UAE.
1) Abu Dhabi Airport Free Zone (ADAFZ)
2) ADPC – Khalifa Port and Industrial Zone (KPIZ)
3) Umm Al Quwain Free Trade Zone (UAQFTZ)
4) Ajman Free Zone (AFZ)
5) Dubai Academic City
6) Dubai Airport Free Zone (DAFZ)
7) Dubai Biotechnology & Research Park (DuBiotech)
8) Dubai Car and Automotive City Free Zone (DUCAMZ)
9) Dubai Gold and Diamond Park
10) Dubai Healthcare City
11) Dubai Industrial City (DIC)
12) Dubai International Academic City
13) Dubai International Financial Centre (DIFC)
14) Dubai Internet City
15) Dubai Knowledge Village
16) Dubai Logistics City
17) Dubai Media City
18) Dubai Multi Commodities Centre (DMCC Free Zone)
19) Dubai Outsource Zone
20) Dubai Silicon Oasis
21) Dubai Studio City
22) Dubai Techno Park
23) Dubai Technology and Media Free Zone
24) Economic Zones World
25) Fujairah Creative City
26) Fujairah Free Zone
27) Hamriyah Free Zone
28) Higher Corporation for Specialized Economic Zones
29) Industrial City of Abu Dhabi
30) International Media Production Zone
31) Jebel Ali Free Zone
32) Jumeirah Lakes Towers Free Zone
33) RAK Investment Authority Free Zone
34) Ras Al Khaimah Free Trade Zone
35) Ras Al Khaimah Media Free Zone
36) Sharjah Airport International Free Zone
38) U.S.A. Regional Trade Center (USARTC) Free Zone
FREE ZONES UNDER CONSTRUCTION
1) Dubai Maritime City
2) Dubai Carpet Free Zone
3) Dubai Auto Parts City
4) Heavy Equipment and Trucks Zone
5) Mohammad Bin Rashid Technology Park
6) Dubai Flower Center
7) Dubai Textile Village
8) International Humanitarian City
9) Dubai International Arbitration Center
PROCEDURE OF INCORPORATING COMPANY IN FREE ZONE
1. Determine the free zone license type.
2. Confirm the activities.
3. Legal structure of the company.
4. Confirm the business facilities required.
5. Verify the fees and other charges.
6. Submit the application form and other documents.
7. Secure the preliminary approvals.
8. Payment of the fees.
9. Sign the agreements and other legal documents.
10. Receive your business license and other certificates or documents.
Offshore companies can feature in most financial planning scenarios when trying to mitigate tax exposure and/or with regards to passing assets on to beneficiaries freely in the event of death. Sometimes referred as Special Purpose Vehicles (SPV), there is an array of scenarios where an offshore company becomes invaluable and this article relates to their uses when buying property.
The offshore possibility has basically been set up to cater for companies who need to have a regional “tax relief-invoicing-facility” – There is no minimum capital required and also no need to set up an actual office facility. The off-shore regulations have been issued according to international standards and the company will have to register minimum 2 directors, keep financial records and issue an annual financial report audited by a professional auditing company approved by JAFZA/RAKFTZ.
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018