Tuesday, 25 March 2014

UAE set to approve new companies law soon

The president of the United Arab Emirates is expected soon to approve a long-awaited new law covering the operations of companies in the country, a step towards attracting fresh foreign investment, the economy minister said on Monday.
"The companies law is with the government to be ratified by the President - we are expecting that soon," Sultan bin Saeed al-Mansouri told reporters.
The new law, which has been years in the making, contains dozens of articles seeking to make limited liability and joint stock companies simpler to manage and more attractive to investors, while strengthening corporate governance in areas such as companies making loans to their directors.
The law would provide for companies' documentation to be made publicly available, a step towards a more transparent corporate environment in the UAE.

One article, contained in a version of the law given preliminary approval last year, would reduce the minimum free float in initial public offers of shares to 30 percent from 55 percent, the ratio which currently applies on theUAE's two main stock exchanges.
The minimum ratio deters some corporate founders who want to maintain majority ownership, and has been criticised as one factor encouraging UAE companies to list their shares in overseas markets such as Londonrather than domestically. Officials have not confirmed that the article lowering the ratio will be included in the final version approved by the president.
The law will certainly be less radical than some investors had hoped; last year the consultative Federal National Council rejected an article that would have eased tight controls on foreign ownership of companies, citing security fears and threats to local businesses.
The article would have given the UAE cabinet the power to let foreign parties own stakes of up to 100 percent in companies outside free zones. Currently, foreigners can generally only hold stakes of up to 49 percent in businesses located outside free zones.
Last year, the economy minister said the article liberalising foreign ownership would be included in a draft foreign investment law. That bill has now been finalised by a ministerial legal committee and is awaiting approval of the FNC, Mansouri said on Monday.
Meanwhile a law on small and medium-sized enterprises, which the cabinet hopes will boost the growth of SMEs and encourage UAE citizens to establish companies, is on its way, Mansouri said: "The SMEs law has been ratified by the President. That should be out soon."
The law is expected to include provisions encouraging government agencies to provide support to SMEs.
The UAE expects to attract 8.6 billion euros ($11.9 billion)in foreign direct investment into its non-oil sector in 2014, 20 percent more than last year, Mansouri said.
The second biggest Arab economy is investing billions of dollars in industry, tourism, real estate and infrastructure to wean its economy off its reliance on oil exports.
But after an initial increase, the share of non-oil activities has remained at around 68 percent, little changed over the last five years, the latest official data shows.

Vithul V Murali
Dubai Mobile : +971 50 55 73 538
Skype : Vithul.murali

Tuesday, 11 March 2014

Offshore Company formation, a complete guide

Expanding and shifting your business activity through a UAE Offshore Company set up

The Emirate of Ras Al Khaimah (RAK) has launched an offshore facility - The second in the UAE.

The International Business Companies (IBC) Registry allows foreign investors to register offshore companies as RAK Offshore, a division of RAK Investment Authority (RAKIA) without the need to establish a physical presence in the UAE.

Companies are usually incorporated within 24 hours. Any non-resident individual or corporate entity can register a company.

Many jurisdictions are considered only as tax havens. The United Arab Emirates is a 'real' country with a 'real economy' with a population of approximately 4 million. It has an established history of international trade, finance and business, and today it is one of the fastest growing countries in the world with one of the highest standards of living.

The choice of a suitable jurisdiction is an important decision and requires careful considerations. Important aspects to be examined and which RAK offers may be outlined as follows:

Political and economic stability of the jurisdiction

• The availability of a modern and flexible legislative framework
• Simple incorporation and filing requirements
• The availability of Double Taxation Avoidance Agreement (DTAA)
• State of the art banking system
• State of the art telecommunication facilities


UAE is not a dependent or 'overseas' territory of another country
Pressure has been put on traditional low tax jurisdictions by the Commission of the European Community (EU) in conjunction with the Organization for Economic Cooperation and Development (OECD). The UK parliament has converted British Dependent Territories to British 'Overseas' Territories (in 1998). The UK government may apply greater control over its tax haven progeny (ie Bermuda, BVI, Caymans, Gibraltar, Turks & Caicos)

UAE has Double Taxation Avoidance Agreements (DTAA) with a number of countries
Double taxation agreements prevent individuals and corporations from being susceptible to paying tax on the same item during the same time period. These agreements determine which of the two states concerned should levy tax in a particular situation: Austria, Belarus, Belgium, Canada, China, Czech Rep., Egypt, Finland, France, Germany, India, Indonesia, Italy, Lebanon, Malaysia, Malta, Morocco, New Zealand, Pakistan, Poland, Romania, Singapore, Sudan, Thailand, Tunisia, Turkey, Ukraine.

UAE is not a member of the Organization for Economic Cooperation and Development (OECD)
No foreign exchange of information.

UAE is not on the OECD 'blacklist' of tax havens (nor the FATF blacklist)

UAE is not a member of the EU, and is not subject to EU regulation

Main activities of UAE OFFSHORE COMPANY

• General Trading
• Consulting and Advisory Services
• Holding Company (Buy/Hold/Sell stakes of companies)
• Investments and Joint Investments Company
• Property Owning
• International services
• Professional Services
• Shipping and ship management companies
• Commission Agents Company – Intermediary Brokers (IB's)

Fiscal & Regulatory benefits of UAE OFFSHORE COMPANY

• 100% income tax exemption
• 100% corporate tax exemption
• 100% capital and profit repatriation
• 100% ownership in Free Zones
• No Import or Export taxes
• No capital gains tax
• No Value-added tax
• No Withholding tax
• Proximity to entire Gulf and global markets


• It does not need to have physical offices in the UAE.
• It may not carry on business within the UAE.
• It may not obtain UAE Residency Visa.
• It may have non UAE resident as director or shareholder.
• It may have UAE resident as director or shareholder.
• It may have corporate shareholder/corporate director
• It does not require the shareholder/director to be physically present in the UAE for incorporation
• It may own real estate in the UAE, with prior authorization from RAK Investment Authority.
• It may not do banking and insurance business without special license.
• It may maintain bank accounts and deposits in the UAE or worldwide.
• It is not obliged to maintain its books and records.
• It may hold shares in other UAE and worldwide companies.
• It may own yachts registered in the UAE.

In Brief 
RAK Offshore is the first comprehensive offshore centre in the Gulf region.
Time Zone
Between Europe and Asia. Open on Sundays.
International Business Companies
First centre in the Middle East to offer IBC registration.
Not offered yet.
Offshore Banking
Authorized to open bank account with UAE banks.

You can register International Business Companies bearing the status of 'Limited' or 'Ltd.' at RAK Offshore.

Middle East and the Gulf

Thanks to geographical proximity and cultural similarities, RAK Offshore is an attractive location for businesses from countries in the Gulf and the Middle East. These countries already have strong business links with the United Arab Emirates. RAK Offshore is also likely to benefit from the fact that some countries in the region suffer from political unrest and/or asset protection issues.

Russia & CIS Countries

Confidentiality and financial privacy coupled with issues such as political uncertainty, weak currencies, taxes, severe foreign exchange controls and asset protection in Russia and CIS countries make RAK Offshore a viable option for businesses from these regions who seek an offshore location.

Europe, India & Other Countries

Companies in this region have a favorable image of the UAE as a business centre. Add to that their interest in investing in the booming economies and financial markets of the GCC and it is not hard to see why RAK Offshore is a perfect offshore location for these companies. 
Statutory description of private limited company
International Business Company (IBC).
Governing corporate legislation
RAK Investment Authority (RAKIA) is the governing body and the companies is regulated under RAK Offshore Regulations 2006.
Time-scale for incorporation
24 hours. There is a time difference of +4 hours to GMT.
Availability of ready-made companies
The regulations governing availability of names
Generally the nature of the company has to be indicated through the words "Limited" or "Ltd.".
Minimum and maximum number of shareholders
A company may be formed with minimum of one shareholder and there is no limitation as of maximum.
Statutory minimum paid-up capital requirements
Capital is required for the incorporation of an offshore company but there is no minimum capital requirement.
Classes of share available
Share capital may be divided into different classes. Bearer shares are not allowed. Shares may be issued fully, partly or nil paid.
Denomination of share capital
AE Dirham and US Dollar can be used as the denomination for the capital. Any foreign currency is acceptable but prior consent has to be approved by the RAK Authority.
Annual Costs
As per request.
Residency requirement on shareholders or shareholders' meetings
No requirement for a local resident to be a Shareholder, only proof of residence is required to be submitted.
Information published relating to shares and shareholders
The company must keep a copy of the share register at the registered office address. This is available for inspection by the members and is not publicly available. The company may voluntarily file at the Registrar the copies of the register of members.
Minimum and maximum number of directors
Sole directors are permissible. There is no statutory limitation for maximum number of directors permitted, although the articles may impose a limit.
Are corporate directors or corporate shareholders permitted?
Yes. Corporate entities are even permitted to hold shares in a RAK Offshore companies.
Nationality and residency requirements of directors
The director can be a resident or any foreign citizen but is required to submit the proof of residence and other relevant documents.
Nature of the powers of the directors
The directors have all the powers of the company that are not reserved to the members under the Regulation or in the memorandum and articles.
Directors' meetings
The directors may meet at such times and places within or outside the UAE as the directors may determine to be necessary or desirable.
Telephone and other electronic meetings are allowed. Subject to a requirement in the memorandum and articles the director shall be given reasonable notice of meetings of directors, although this rule is subject to a waiver of notice.
The presence of a director at a meeting shall be deemed to constitute a waiver on his part. The quorum of a meeting of directors is fixed by the memorandum and articles but where no quorum is fixed, a meeting of directors is properly constituted if one half of the total number of directors is present in person or by alternate.
Information published relating to directors
There is no public register of directors, although the company may voluntarily file its register of directors with the Registrar.
Must accounts be prepared by the directors?
A company incorporated under the Regulation shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the company.
Must such accounts be filed with the financial authorities?
Must such accounts be audited, and if so by whom?
No. They may be audited by persons approved by the directors.
Must the company have a registered presence in the territory of incorporation?
Yes. The company must at all times have a registered office and registered agent within Ras Al Khaimah. The registered office must be maintained either by the company or its registered agent.
What records must be maintained in the territory and are they available for public inspection?
A copy of the share register and the register of directors and an imprint of the common seal must be kept at the registered agent's address. Other records such as minutes of meetings of directors, members and copies of all resolutions may be kept at such places as the directors determine, but copies must be kept at the registered agent's address.
These are not available for public inspection, other than by members or directors. If copies of these registers and documents are kept other than by the registered agent, the registered agent must be notified of the location of the original.
If the company fails to comply with these provisions it is liable to a fine.
Can the company make secured loans?
Can the company make unsecured loans?
What are the limits placed on the company's borrowing powers?
None. There are no debt/equity ratios under the law.
Is there a register of company charges?
A company may maintain at its registered office a register charges and other encumbrances. This is not mandatory. Similarly, a public register may be maintained at the option of the company.
Company seal
A company must have a common seal.
Re-domiciliation provisions
A company incorporated under the laws of a foreign jurisdiction may continue its existence as a company registered under the Act. Similarly, RAK Offshore business companies may transfer their domicile to foreign territories that permit such procedures.

Vithul V Murali
Dubai Mobile : +971 50 55 73 538

Email : Vithul@a2zconsultus.com
Skype : Vithul.murali

Thursday, 6 March 2014

Advantages of Free Zone Companies in UAE | Business setup | Company formation | Free Zone Formation | Offshore formation |

Type of Entity:

A UAE Free Zone Company can be established in the following ways:

A branch of an existing company

Foreign Branch - A foreign affiliate that is legally a part of a firm residing outside of the UAE
Local Branch - A domestic affiliate that is legally a part of a firm residing in the UAE

A new establishment

Free Zone Company - A new business entity which is owned by 2 – 5 partners
Free Zone Establishment - A new business entity with a sole business owner

Such companies can be owned 100% by foreign investor with no involvement of local partner or sponsor.

A UAE Free Zone company offers the following incentives to investors:

• 100% foreign ownership.
• No corporate taxation for 50 years – a concession that's renewable.
• Freedom to repatriate capital and income in totality
• No personal income tax.
• Full exemption from import duties.
• No currency restrictions 
• No bureaucratic red-tape.
• No recruitment problems.
• Modern efficient communication
• State of the art infrastructure.
• Abundant energy.
• Attractive working environment.
• Owned premises on leased land can be mortgaged.

Types of Licenses:

Industrial License

Activities allowed: Import raw materials, manufacturing, processing, assembling, packaging, and exporting finished products.

Commercial License

Activities allowed: Import, export, distribution, consolidation, storage or warehousing of items specified on the License. Maximum limit is seven similar product lines.

Consulting and Service License

Activities allowed: Offering consulting services in management, finance, investment, legal issues, labor relations, economics (including feasibility studies), industrial development, marketing, and related subjects. Other services include logistical support such as: restaurants or food outlets, catering services, travel agencies, leisure and social activities, insurance, cargo & freight forwarding, accounting, and audition services. 

Commercial - General Trading License

A General Trading License can be obtained under a Commercial License, which allows for more than seven product lines.

Vithul V Murali
Dubai Mobile : +971 50 55 73 538

Email : Vithul@a2zconsultus.com
Skype : Vithul.murali 

Offshore Company in UAE within 48 Hours | Business setup | Company formation | Free Zone Formation | Offshore formation |

As a Registered Agent of the Government Authorities we will be responsible for submitting the incorporation documents to the Registrar. The applicant does not need to be physically present for the incorporation. Our registered office address can be used as the UAE Offshore Company registered address. 

     Application/Request Form
     Documents (see below)

Individual Shareholder and Individual Director

    Request Form (in original);
    Passport Copy of each director and shareholder;
    Bank Reference Letter (recent -less than a year, in original and in English) of each director and shareholder;
    Utility Bill/Proof of Residence (in original) of each director and shareholder.

Individual Shareholder and Corporate Director

Request Form (in original);
For Individual Shareholder:

    Passport Copy of each individual shareholder;
    Bank Reference Letter (recent -less than a year, in original and in English) of each individual shareholder;
    Utility Bill/Proof of Residence (in original) of each individual shareholder;

For Corporate Director:
    Board Resolution regarding acceptance to act as a director of the new company (in original);
    Copy of License or Incorporation Certificate of the parental company issued by the Chamber of Commerce or any other  body;
     c) Copy of the MOA of the parental company;
     d) Passport copy of the directors and shareholders;
     e) Bank Reference Letters (recent -less than a year, in original and in English) for the directors and shareholders.

Individual Director and Corporate Shareholder 

-- Request Form (in original);
-- For Individual Director:
     a) Passport Copy of each individual director;
     b) Bank Reference Letter (recent -less than a year, in original and in English) of each individual director;
     c) Utility Bill/Proof of Residence (in original)of each individual director;
-- For Corporate Shareholder:
     a) Board Resolution from the parental company in its letterhead for appointment of shareholders and directors (in original);
     b) Copy of License or Incorporation Certificate of the parental company issued by the Chamber of Commerce or any other official body;
     c) Copy of the MOA of the parental company (copy);
     d) Passport copy of the directors and shareholders;
     e) Bank Reference Letters (recent -less than a year, in original and in English) for the directors and shareholders;

• Corporate Director and Corporate Shareholder

-- Request Form (in original);
-- Board Resolution from the parental company in its letterhead for appointment of shareholders and directors respectively (in original);
-- Board Resolution regarding acceptance to act as a director of the new company (in original);
-- Copy of License or Incorporation Certificate of the parental company issued by the Chamber of Commerce or any other body;
-- Copy of the MOA of the parental company;
-- Passport copy of the directors and shareholders;
-- Bank Reference Letters (in original and in English) for the directors and shareholders 

Vithul V Murali
Dubai Mobile : +971 50 55 73 538
Skype : Vithul.murali

Wednesday, 5 March 2014

Decision Needs to be taken Before Registering a Business in Dubai | Business setup | Company formation | Free Zone Formation | Offshore formation |

While Dubai was always favorably seen as an investment destination, the interest amongst foreign entrepreneurs in entering the Dubai market seems to be rising and a number of foreign companies apply for setting up a business in the country each year. There are a number of advantages when it comes to doing business in Dubai, but there are a few important decisions to be taken as well that could create problems or ease things for the company in the future. Some of these decisions are as follows:

1) Foreign entrepreneurs should decide whether they want to register a Dubai Limited Liability Company or an offshore company. They may also choose to register a branch office in Dubai. The pros and cons of each type of company vary significantly and would also depend upon the business activity in the country. While most foreign companies would register a Dubai Limited Liability Company, this comes with a rider that at least 51 per cent of the shares must be owned by local Dubai residents. The foreign company or entrepreneur must spend a significant amount of time trying to engage the best suited partners for their Dubai business. Without providing minimum 51 per cent stake to the Dubai based partners, foreign companies cannot go ahead with company registration in the country.

2) If the foreign entrepreneur would like to retain 100 per cent ownership in their Dubai Company, then they have the choice of registering their business in one of the many free zones in the country. However, this comes with several riders as well. The two most important of these are the fact that companies registered in a free zone in Dubai are mainly export oriented companies and are not allowed to have full access to the Dubai market. At the same time, your company needs to be in the same business activity as the purpose for which that particular free zone was created. Unfortunately if the foreign entrepreneur wants to cater to the local population of Dubai and United Arab Emirates, they have no choice but to incorporate a standard Dubai LLC and give away 51 per cent shares to local Dubai based partners.

3) While it is mandatory for providing majority stake to Dubai residents, the profit and loss treatment of the company can be different from the percentage of shares held. Foreign entrepreneurs must decide upon this and negotiate with their Dubai partners before company registration.

Vithul V Murali MBA
Al Zaeim Corporate Services
Dubai Mobile : +971 50 55 73 538
Email  : vithul@a2zconsultus.com
Skype : Vithul.murali

Tuesday, 4 March 2014

Double Tax Avoidance Agreement (DTAA) - | Offshore Company Set Up | Business Set Up in Dubai | Company Formation in Dubai |

Since the UAE has no taxes, accordingly double taxation prevention treaties are aimed at making the UAE a more attractive territory in which to operate. Generally, under these treaties profits generated from shares, dividends, interest, royalties and fees are taxable only in the state where the income is earned according to mutually agreed terms and conditions. 

• To protect UAE investors from direct or indirect double taxation. 

• Investments to be taxed in the country of residence other than that country of source. 

• The U.A.E signed several bilateral agreements for avoidance and prevention of double taxation with most of its major trade partners.


• Reduced Dividends Tax 
• Exempting Deposits from Tax 
• Exempting Capital gains from Tax 
• Exempting national air carriers and shipping companies working in international traffic from taxes and fees 
• Exempting Government Sector Establishments from Taxes on Dividends, Interest and Capital Gains 
• The Significance of the Tax Agreements to the Foreign Investor and the Investment funds 
• Impact of the Tax Agreements on attracting Foreign Investments and capital Movements

List of Double Taxation Avoidance Agreements: 

India (Protocole)
18Malaysia17/06/199643Bosnia & Herzegovia30/04/2007
20New Zealand04/05/200445Mauritius20/06/2007

Vithul V Murali MBA
Al Zaeim Corporate Services
Dubai Mobile : +971 50 55 73 538
Email  : Vithul@a2zconsultus.com
Skype : Vithul.murali

Saturday, 1 March 2014

Rights Of FZE's and FZC's in UAE | Business Setup in Dubai | Company Formation | Free Zone Registration |

Rights of FZE's and FZC's 

One hundred per cent foreign ownership and full repatriation of profits and capital is 
·         Exemption from corporate and income taxes for a determined period, regardless of 
               Subsequent changes to local laws.  
·         Goods may be imported into the free zone, free of duty.  
·         It is relatively straightforward to set up a company in a free zone. The first step is to 
               complete a questionnaire issued by the relevant FZA. Once the questionnaire has been 
               onsidered by the FZA the company will be required to provide the FZA with information on 
               Individual shareholders are required to provide a personal profile which may include a 
               business background, specimen signatures, domicile and address.  
Corporate shareholders are required to provide:  
·         certificate ofregistration or good standing;  
·         memorandum and articles of association;  
·         board resolution authorizing the incorporation of the FZE or FZC;  
·         Powers of attorney in favor of the FZE/FZC managers; and e audited financial statements 
              for the last two financial years.  

·         Companies operating within the free zone are generally entitled to employ who they wish. 
However, various administrative requirements must be complied with such as providing the FZA 
with certain details of the license holder’s employees.  
·         While rates of pay are not specifically regulated, a minimum salary is stipulated in the JAFZ. 
Overtime rates are regulated by the FZA and shift working must be notified to the FZA.  
·         Working hours are regulated and these are shortened during the Holy Month of Ramadan. 
The shortened hours apply to all employees, regardless of religion. 
·         Employee numbers are restricted according to various criteria, including office area and 
machinery installation.

Vithul V Murali
Al Zaeim Corporate Services
Dubai Mobile : +971 50 55 73 538
Email  : Vithul@a2zconsultus.com
Skype : Vithul.murali