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DUBAI

BACKGROUND
The United Arab Emirates (UAE) comprises seven members: Abu Dhabi (the capital
City), Dubai, Sharjah, Ajman, Umm Al Qaiwain, Ras Al Khaima and Fujeirha. The
total area of the country is approximately 83,600 square kilometers located on the
Eastern coast of the Arabian peninsula in the South West corner of the Arabian Gulf.
Dubai is the second largest Emirate and is situated on the banks of the Dubai Creek, a
natural inlet from the Gulf which divides the city into the Deira district to its North
and Bur Dubai on its South. The city ranks as the UAEs most important port and
commercial center.
The Supreme Council of the UAE, comprising the rulers of the seven Emirates is the
highest federal authority. It is responsible for general policy matters involving
communications, education, defense, foreign affairs and development and for
ratifying federal laws. The UAE became a member of the United Nations and the
Arab league in 1971. It is a member of the International Monetary Fund (IMF), the
Organization of Petroleum Exporting Countries (OPEC), World Trade Organization
and other international and Arab organizations.
The official language is Arabic, although English, Urdu and Hindi are widely spoken
and understood. Arabic and English are the official business languages.
The non-oil sector of the economy currently contributes some 80% of the total
produced domestic products of Dubai and is continuing to expand in importance.
This long trading tradition earned Dubai the reputation within the Middle East as the
City of Merchants remains an important consideration for foreign companies
looking at opportunities in the region today.
The UAE has concluded advantageous tax treaties with China Luxembourg, Czech
Republic, Egypt, Finland, France, Germany, India, Indonesia, Italy, Malaysia,
Netherlands (air transport), Pakistan, Poland, Romania, Singapore, Sri Lanka (air
transport), Switzerland (air transport), UK (transport). It should be noted that the
UAE is not on the OECD, UN or EU blacklists so this jurisdiction may be extremely
useful for tax planning purposes.
REGISTRATION IN DUBAI
There are a number of different ways of creating an establishment in Dubai. Which is
most suitable will depend upon the function to be carried out by that establishment. A
branch or representative office will be suitable where there is no requirement to
actually conduct sales or manufacturing only to provide information and negotiate
sales. A free zone registration will be most suitable to manufacture or sell outside of
Dubai. An LLC will be most suitable where the entity is to make sales within the

region but it should be noted that 100% foreign ownership of such an entity is not
permitted. Details on these three difference possibilities follow.
1.

BRANCH OR REPRESENTATIVE OFFICE

Foreign companies may establish a branch or representative (rep) office in the UAE.
Branches and rep offices may, subject to obtaining the necessary licences, carry out
promotional activities and facilitate contracts but cannot sell or manufacture goods
locally. They must appoint a UAE resident as a service agent whose role is to assist
with obtaining visas and residence permits for staff and facilitate the registration and
licensing application. Normally the local agent will be paid an agreed lump sum
which is subject to negotiation but will normally be a minimum of US$7,500 per
annum and may be considerably larger than this depending on the standing of the
local involved.
The simplest and usual procedure for creating a branch is to register an offshore
company in the UAE. We normally recommend establishing the offshore company in
BVI as the local departments are very familiar with BVI documentation. It will be
necessary to provide a copy of the Certificate of Incorporation, Memorandum &
Articles of Association and a power of attorney all of which have to be legalized by
the UAE Consulate. Costs will vary as documents may have to be translated so the
charges would depend on the number of pages etc.
2.

REGISTERING IN THE FREE ZONES

The usual method of establishing a business in Dubai is by registration in one of the


free zones. Two of the most popular are the Jebel Ali Free Zone (JAFZ) and the
Sharjah International Airport Free Zone (SAIF). The normal procedure is to register
an offshore company in one of the zones and the following benefits apply:

100% foreign ownership


100% repatriation of capital and profits
No currency restrictions
No corporate or personal income taxes
Abundant and inexpensive energy
Modern efficient communications
Excellent support services from local authorities

Once a company has been accepted into the free zone it will typically operate under
one or more of four difference licenses being commercial license, general trading
license, industrial license and service license. Free zone establishments do not require
a local sponsor.
3.

DUBAI INTERNET CITY (DIC)

A recent development in Dubai has been the creation of Dubai Internet City (DIC)
which is the worlds first free trade zone for IT, E-business and media companies. It
is the perfect hub for New Economy industry established IT Companies, multimedia businesses, telcos, Internet start-ups, services Companies, remote services
providers, incubators, venture capitalists etc. The activities of the Company should be
related to e-commence and web technology.

The free zone incentives that are being offered are as follows:

100% Foreign Ownership


50 year guaranteed tax-breaks (corporate and income)
50 year renewable leases
One Stop Shop services (all dealings with government organizations will be
dealt with through the Dubai Internet Citys one-stop-shop concept, doing
away with bureaucracy)
Flexible labor laws that will ensure that industry needs for part-time and
temporary labor are met
BVI COMPANY REGISTERED IN DUBAI
Characteristics of a BVI company registered as a branch, representative office or free
zone registered company:TAXATION

IBCs pay no taxes in BVI and Dubai is a tax free state so no


tax consequences would follow the Dubai registration.

SHAREHOLDERS A minimum of one shareholder is required and corporate


shareholders are permitted. Whilst bearer shares may be
issued, these must be retained by a licensed custodian. No
details of the shareholders appear on the public file either in
BVI or Dubai.
DIRECTORS

A minimum of one director is required and corporate directors


are permitted. Details of the directors do not appear on the
public file in BVI but would appear on public record in Dubai

ANNUAL
REPORTING

No annual return or accounts need be filed either in BVI or


Dubai.

TIMESCALE

Incorporation can be achieved in BVI within 48 hours or


clients may prefer to choose a ready made company.
Registration of the company in Dubai will take between 6 to
12 weeks.

RESTRICTIONS
ON NAME AND
ACTIVITY

Names must indicate that the company is limited. Certain


words such as:- Assurance, Bank, Building Society, Fund,
Insurance. Royal and Trust cannot be used without a license or
special authorisation.

LOCAL
REQUIREMENTS

As a matter of local company law, the company MUST


maintain a registered office address both within BVI and
Dubai and must also appoint a BVI registered agent. We
would generally provide these services as part of our
domiciliary services.

SECRECY

There are no specific statutory provisions governing secrecy in


either BVI or Dubai.

4.

LIMITED LIABILITY COMPANY (LLC)

This type of company allows for a joint venture between national and foreign partners.
Non-national partners are permitted to hold shares not exceeding 49% of the capital,
with the national partner holding the remaining 51%. The law provides that the initial
share capital should be a minimum of Dirhams 300,000. The shares of such
companies are not open for subscription by the public. Despite the split in
shareholdings, profits may be divided in other ratios agreed upon taking into
consideration efforts of non national partners in management, provision of technology
or expertise. Management of the company may be undertaken by the expatriate
partner.
The very nature of the type of registrations available in the UAE makes it impossible
to give a standard schedule of requirements, as each registration is unique and
processed on a case-by-case basis.

While every effort has been made to ensure the details contained herein are correct and upto-date, Zetland Fiduciary Group does not accept any legal or other responsibilities for any
error or omissions. The information contained herein regarding organizations, companies,
securities, funds, laws, ordinances, rules, regulations, jurisdictions, private placements,
biographies, etc. is for reference purposes only, is not intended nor should be construed as
investment or other advice, and is provided by the Zetland Fiduciary Group as a
complimentary service. Many sources were used in compiling this information and due
diligence must be exercised and additional research should be conducted before acting on
any information contained herein.