Although
Dubai is a 'no-tax' jurisdiction, ownership
restrictions on companies in the normal economy
mean that the Jebel Ali
Free Zone, Dubai Investment Park, Dubai Internet
City, the Dubai International Finance Centre
(DIFC), which opened in 2003, the
Dubai Airport Free Zone, and Dubai Media City
are the key locations offering an 'offshore'
option to foreign operators. Operations inside
the Free Zone (JAFZ) can be carried out under
various different types of license, but most
often a foreign company will use a a 'Free
Zone Establishment'.
Dubai Forms of Offshore
Operation
Companies
approved for operation in Jebel Ali Free
Zone are granted one of the following
types of licences, renewable annually
for as long as the company holds a valid
lease from the Free Zone Authority:
A
General Trading Licence allows the holder
to import, distribute and store all
items as per Jafza rules and regulations.
A
Trading Licence allows the holder to
import, export, distribute and store
items specified on the licence.
An
Industrial Licence allows the holder
to import raw materials, carry out the
manufacture of specified products and
export the finished product to anycountry.
A
Service Licence allows the holder to
carry out the services specified in
the licence within the Free Zone. The
type of service must conform to the
parent company's licence, issued by
the Economic Department or Municipality
of the relevant Emirate in the UAE.
A
National Industrial Licence is designed
for manufacturing companies with an
ownership or shareholding of at least
51% AGCC (Arabian Gulf Co-operation
Council).
A
Free Zone Establishment - or FZE - is an
establishment formed and registered in Jebel
Ali and regulated solely by the Free Zone
Authority.
Such
establishments must have a capital of at least
Dh 1 million and liability will be limited
to the amount of paid-up capital. A FZE need
only have a single shareholder and is an independent
legal entity.
Any
company, organisation or individual wishing
to form a Free Zone Establishment must submit
a completed application form to the FZE Department
of the Free Zone Authority. A decision on
whether permission has been granted will be
given within 30 days of receipt of the application
and any other information and documentation
required.
If
permission is granted, the Authority will
record all relevant details in the FZE Register
and issue a Certificate of Formation. This
will specify the date of registration after
which the FZE will be free to conduct any
such business as is permitted in its Special
Licence.
The
Dubai Internet City
is regulated by a law passed in 2000, and
is formally known as Dubai Technology, Electronic
Commerce and Media Free Zone. The privileges
offered to its occupants are very similar
to those applying in Jebel Ali. In line with
Dubai's liberal economic policies and regulations,
Dubai Internet City offers foreign companies
100% tax-free ownership, 100% repatriation
of capital and profits, no currency restrictions,
easy registration and licensing, stringent
cyber regulations, protection of intellectual
property.
The
Dubai International Financial Centre (DIFC)
was launched in 2003 and began operations
in late 2004. lt was intended to fill a significant
gap in the market for international Shariah
banking, fund management and life assurance.
The proposed regulatory framework was published
for industry consultation in June, 2003. Philip
Thorpe, chief executive of the DIFC Regulatory
Authority, explained that: 'We have...made
good use of our freedom to create a single,
logical framework - in contrast to older-established
jurisdictions, who often have to make (do)
and mend within existing frameworks which
may gradually become more complex and less
relevant.'
In
July, 2003, the UAE Federal Cabinet approved
a Federal Decree allowing the DIFC a large
degree of sovereignty. In addition to confirming
the appointment of General Sheikh Mohammed
bin Rashid Al Maktoum, UAE Defence Minister
and then-Crown Prince of Dubai (now Ruler)
as the President of the DIFC, the decree officially
created the DIFC Financial Services Authority,
the DIFC Judicial Establishments and the DIFC
Registrar of Companies.
The
DIFC has a separate set of laws called the
Commercial Code, comprising a comprehensive
set of regulations like company law, legislation
on property rights, including laws on security
and collateral, title to goods and securities,
commercial transactions and contracts, and
insolvency.
In
January, 2004, the Dubai Financial Services
Authority (DFSA) announced that 12 new laws
relating to operations within the Dubai International
Finance Centre (DIFC) were now in place. Chief
executive officer of the DFSA, Philip Thorpe
explained that:
"The
12 new laws have been drafted by the DFSA
to world-class standards, using the best examples
of legislation from around the globe. They
are clear and concise, and will provide certainty
as to the rights and obligations of the financial
institutions and other companies who will
operate in or from the DIFC."
The
laws (to which the DFSA has provided access
on its website) are:
Regulatory
Law;
Companies Law;
Law on the Application of Civil and Commercial
Laws in the DIFC;
Law Relating to the application of DIFC Laws;
Limited Liability Partnership Law;
Contract Law;
Insolvency Law;
Arbitration Law;
Data Protection Law;
Commercial Court Law;
General Partnership Law; and
Markets Law.
In
June 2005, five new laws dealing with legal
obligations, employment and security interests
in relation to the Dubai International Financial
Centre were enacted.
The
new legislation comprised:
Employment
Law No. 4 of 2005. This law provides for minimum
employment practices comparable to established
international standards, so as to promote
fair treatment of employees and employers;
Law
of Obligations No. 5 of 2005. This law creates
a framework for claimants to seek recovery
for non-contractual claims and sets out the
rules as to when obligations arise and how
disputes involving them are resolved;
Implied
Terms in Contract and Unfair Terms Law No.
6 of 2005. This law provides for fairness
and certainty in contracts governed by the
laws of the DIFC by providing terms and conditions
not normally included in contracts and assures
the necessary framework for their enforcement;
Law
of Damages and Remedies No. 7 of 2005. This
law creates the structures necessary to assure
the recovery of damages and other forms of
relief to claimants within the DIFC; and
Law
of Security No. 9 of 2005. This law defines
various forms of security interests as collateral
for repayment of debts and prescribes the
process for their perfection and enforcement.
Then
in November 2005, the DIFC Trust Law 2005, which
provides a comprehensive framework for the creation
of trusts in the DIFC, was enacted. Consisting
of ten major sections, the legal framework encompassed
matters such as choice of governing law, place
of administration, creation, validity and modification
of a DIFC trust, office of trustee, and duties
and powers of trustees.
The
Trust Law, DIFC Law No. 11 of 2005 followed
closely the enactment in September of the Personal
Property Law No. 9 of 2005, which defines the
rights and obligations of parties in relation
to property other than real estate (land and
buildings) located in the DIFC, and the Law
Relating to the Application of DIFC Laws (Amended
and Restated) No. 10 of 2005.
In
2006, both the Companies Law and the Limited
Partnerships Law were amended.
Amongst
the incentives offered to companies operating
within the Jebel Ali Free Zone, the DIC and
the DIFC are:
Corporate
Income Tax: No corporate income
tax on profits. The exemption is for a period
of 15 years with a guarantee of an extension
for a further 15 years in the event that
corporate income tax is introduced in Dubai.
Currently only banks and oil companies are
assessed to corporate income tax in Dubai.
The key difference with companies operating
in JAFZ is the guarantee of exemption in
the event that corporate income tax is imposed
by the Government.
Withholding
Taxes: No withholding taxes.
Import
Duty: Exemption from all import
duties on goods imported into the free trade
zones. For all other imports, duties
have been largely standardised at 5%.
Dubai
Taxation of Foreign Employees of Offshore Operations
No
personal income tax is deducted from wages and
salaries paid to employees or on other income
earned. See Domestic
Personal Taxes for the general principles
of individual taxation (or lack of it) in Dubai,
which also apply to the resident employees of
offshore entities.
Citizens
of GCC countries (Gulf Cooperation Council:
Saudi Arabia, Kuwait, Bahrain, Qatar and the
Sultanate of Oman) and British nationals with
the right of abode in the UK do not need visas
to enter the UAE. GCC nationals can stay more
or less as long as they like. Britons can stay
for a month and can then apply for a visa for
a further two months.
The
Dubai Naturalization & Residency Department
(DNRD) issues different types of visas which
are listed below.
1)
96 hour visa:
Issued
upon arrival at the airport
Airline
sponsored only
Applicants
should have onward booking
Should
have a minimum of 8 hour transit break
2)
Visit visa:
2.1 In case of Personal sponsorship:
Fees:
Dhs 100
Entry
permit application form with completed typed
data
Original
Marriage certificate and copy of it, in
case of wife sponsorship
Salary
Certificate; The monthly salary should not
be less than Dhs. 4000 in case of wife
sponsorship,
and Dhs. 6000 in case of first relatives
sponsorship.
Copy
of the Sponsor passport
Copy
of the Sponsored passport.
2.2
In case of Establishments sponsorship:
Fees:
Dhs 100
Entry
permit application form with completed typed
data
Establishment
card and copy thereof
Copy
of the Sponsored passport.
2.3
Renewal:
Fees:
Dhs 100
Original
Entry Permit.
2.4
Extension:
Fees:
Dhs. 500
Original
Entry permit
Extension
application form
Original
sponsored passport.
3
- Transit visa
Fees:
Dhs. 120
Establishment
card
Entry
Permit Application form
Copy
of Sponsored passport.
4
- Tourist visa
Fees:
Dhs. 100
Establishment
card
Statement
of tourists data
A
Multiple Visit Visa can be granted after a normal
visa has been issued and used, and are an option
for business visitors who are frequent visitors
to the UAE and who have a relationship with
a reputable company in the UAE. Valid for six
months from date of issue, each visit must not
exceed 30 days in total. This visa costs Dh1000.
The visitor must enter the UAE on a visit visa
and obtain the multiple entry visa while in
the country.
A
Residence Visa stamped on a passport proves
the legal residence of an expatriate in the
country. This visa is given to workers who have
obtained work permits or for relatives living
with them permanently, and additional documentation
is required.
In
June, 2004, the Dubai government unveiled plans
to enshrine in law rules governing foreign freehold
ownership of property. Deputy director general
of the Dubai Chamber of Commerce and Industry
(DCCI), Ahmed Abdul Rahman Al Banna explained
that:
"At
present there is no federal law to govern foreign
freehold ownership of property in Dubai," although
he added that as an internim measure "major
property developers have got together to offer
guarantees to investors on freehold ownership,
which has been endorsed by the Dubai government."
The
DCCI deputy director general went on to announce
that: "As part of our commitment to regulate
the real estate sector, the Dubai government
will issue a new property law which will address
some of the key issues including legalising
foreign freehold ownership of properties."
In
March 2006, the long-awaited Dubai property
law was issued, but Law No.7 of 2006 stipulated
that freehold is limited to UAE and GCC citizens
and companies wholly owned by them, as well
as public shareholding companies. However, the
law also stipulated that upon approval of Dubai's
ruler, non-UAE nationals may be given the right
to own properties in some parts of Dubai.
In
August 2006, the Dubai International Financial
Centre Authority (DIFCA) published draft legislation
that will allow foreign freehold ownership of
property in the DIFC.
The
laws published included the DIFC Real Property
Law 2006 and the Strata Title Law 2006. The
Real Property Law guarantees ownership of freehold
land and interest in land within the DIFC. It
will allow for foreign companies and individuals
to hold freehold ownership of real estate within
the Dubai International Financial Centre.
The
Strata Title Law establishes a system of guaranteed
freehold title to units in buildings in the
DIFC. It is based on the system originally developed
in Australia, which is now in use in many countries
around the world, including Singapore.
Consultation
on the proposed laws ended in September 2006,
and both laws were enacted in June 2007.
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