UAE: A Different concept of international jurisdiction

Globalserve Moscow SeminarSeptember 2013

By Phani Schiza Antoniou

• 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 jupon civil law principles and Islamic Shari’a law, the latter constituting the guiding principle and source of law8.19 million population out of which 15% only are locals•Non Oil Sector contribbutes 71% to GDP

UAE- SOME FACTS

• Strategic Location -closest proximity to top European and Asian markets: Access to 2.2 Billion Consumers

• World-class free zones -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.• No minimum capital requirement to establish a limited liability company.• Advantageous Tax Treaties with 71 Countries • Stable Political Environment • World Bank ranked UAE 23rd for Doing Business in 2013•Offshore location with zero taxation with the exemption of foreign banks and oil exporting cos

WHY UAE?

•There are 3 main options for registration of company in UAE :

•Mainland company registration •Freezone onshore •Offshore company

Types of Company registration

Gives access to the local marketMaximum foreign participation allowed 49%Local partners UAE nationals with minimum 51% participationNeed office space/ warehouseResidence permit is issued Employee VISAs are eligibleNo taxation No foreign exchange restrictions

1. Mainland company registration

100% foreign ownership Could do business with companies within the free-zone or outside the countryCan do business locally only through a local distributor being a company registered in the mainlandThere are free-zones which provide license with and without taking any genuine office space/warehouse Residence permit issuedEmployee VISAs are eligible to applyNo taxation No foreign exchange restrictions

2. Free-Zone onshore company Registration

Do business only outside UAECan have tax free bank account in UAE No employee VISAs are eligible to applyNo restrictions on foreign exchangeNo taxation

3. Offshore company formation

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

Limited Liability Company (LLC)

Foreign Partner cannot own

more than 49%

Professional License

100% Foreign Owned but

Limited Sectors

Branch Setup

100% owned by Parent Co

Free Zones

Over 40 Free Zones to Choose From

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 ONSHORE

Director Legal entities allowed

1Yes

1yes

Secretary compulsory but can be same as director

Yes Yes

Registered agent needed Yes Yes

Shareholder :Minimum shareholdersNo minimum capitalLegal entities allowed

1Yes

Yes

1YesYes

Limited liability companies √ √

ConfidentialityCompany register not available for public inspection

Yes Yes

Time for registration 2 days but 2 days but

Tax No No

COMPARISON RAK OFFSHORE & RAK ONSHORE

COMPARISON

RAK OFFSHORE RAK ONSHORE

Operations Outside UAE only In Freezone and through UAE local distributor in UAE

Establishment No No

Employees No Min 1

Annual accounts Keep records only Yes

Employee VISA No Yes

Ownership property No except Jebel ali offshore ( Jafza) but

corporate directors not allowed

Yes

COMPARISON RAK OFFSHORE & RAK ONSHORE

Ratified 7/6/2013 and is expected to enter into force as of 2014But limited scope of applicationCovers 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 describedContains exchange of information clauseLimitation of benefits clause i.e. tax treaty benefits may be denied if proven that the only reason was taxFacilitates 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

Double Tax Treaty with Russia

For trading or for services internationally and in the region For Asset protection being the last shareholder in a structureProperty investment in UAE

USES