First Offshore UAE Offshore Company Setup Blueprint Copyright: First Offshore David Bostock 2009-2010
Contents The UAE - business hub of the future... 4 Why choose The Emirates?... 4 So what does this mean?... 5 So what is the difference?... 5 Choose your NEW jurisdiction with care...... 5 Safety and security... 5 Useful information... 6 Private account holders... 6 Offshore Account Holders... 6 OFFSHORE FORMATION... 8 IMPORTANT NOTICE... 9 STANDARD LEGAL REQUIREMENTS & SUPPORTING DOCUMENTS:... 10 Double Tax Treaties... 12 Doing Business in the UAE... 14 The Global Market... 14 The Business Environment... 14 Among the benefits are:... 15 UAE Business Climate... 15 Taxation... 16 Currency and Exchange rate... 16 Licensing... 16 Businesses categories that require approval from Ministries:... 17 Ownership Requirements... 17 Procedures governing the operations of foreign business interests.... 17 Legal Structures for Business... 18 Everything about Free zones in UAE... 19 What is a Free Zone... 19 Free Zone Incentives... 19 Free Zone License Types... 19 2 The UAE - business hub of the future First Offshore
Industrial license:... 19 Consulting and Service license:... 20 Commercial General Trading license:... 20 Limited Liability Companies... 20 Professional Firms... 21 Branches and Representative Offices of Foreign Commercial Companies... 21 About First Offshore... 24 3 The UAE - business hub of the future First Offshore
The UAE - business hub of the future Since the inception of offshore company formations in early 2003, the UAE has rapidly emerged as the business hub of choice in the Middle East region and is proving itself to be well placed to being one of the most dynamic and fastest growing business and International Financial Centers worldwide. Given the UAE s continued stance on ZERO tax s and duty exemptions, there is little wonder why more and more individuals and International Companies are now choosing the Emirates as, not only their business head quarters, but also in many cases their primary choice of residence too. In early 2003, Jebel Ali Free Zone Authority (JAFZA,) Dubai s foreign ownership Free Trade Zone, became the first location in the UAE to provide offshore company formations. In February 2007 Ras Al Khaimah Investment Authority (RAKIA,) located in the most Northerly region of the Emirates, expanded their already thriving Free Zone to include offshore business formations, often known as International Business Companies (IBC s.) Due to the excellent operational service methods adapted by RAKOFFSHORE, the offshore incorporation division of RAKIA, coupled with the clear documentation process and lower incorporation fees, RAKOFFSHORE has stepped into the driving seat of offshore formation within the UAE. Why choose The Emirates? There is a very significant difference between the safe haven of The Emirates and other worldwide tax shelters. The Emirates and other GCC countries of The Middle East are tax free jurisdictions by nature and NOT by design. 4 The UAE - business hub of the future First Offshore
So what does this mean? The Emirates, in its very nature, has always been a tax free country; A jurisdiction that: Has NO TAX. NO corporation taxes. NO capital gains taxes. NO VAT. NO personal taxes. NO death duty taxes. In short; it is, and has always been, a country WITHOUT tax!! So what is the difference? Other jurisdictions around the globe have become tax havens by design. Over the years governments have allowed various locations within their sovereignty to offer tax havens, as a form of shelter, therefore offering a facility for wealthy individuals or corporate clients to move their finances away from tax authorities. An army of pin striped, suited lawyers or city accountants would work to protect their clients from the payment of taxes, by moving their interests to tax havens, designed for this purpose. Choose your NEW jurisdiction with care... Always be mindful when choosing your new tax haven, as many jurisdictions have now been redesigned and do not offer the security that they once provided please consult FIRST Offshore for further information: info@firstoffshore.com Safety and security In the G20 Summit held in February 2009, there has been a crackdown on non cooperative tax havens, forcing major companies to look for safer, yet more pragmatic locations to carry out their future business operations. It is important to note that, in accordance with the latest international best business practices, the UAE is NOT black or 5 The UAE - business hub of the future First Offshore
gray listed from any international organization such as the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF.) Useful information Private account holders With reference to a private joint account holder in the UAE and in the unlikely event that either of the two joint owners unexpected demise, the joint account, under Sharia Law, would be frozen. The account can remain frozen for a period of 18 months or longer until probate, which gives reference to their estate, by way of a written WILL, is read. If no wishes are recorded within the WILL, it is likely the estate, overseas property, bank account or any other asset, including the vehicles, will be distributed in accordance of Sharia Law. In either case, with or without a WILL, the bank account may be frozen for 18 months or more. This would also apply to a single-personal bank account holder. Offshore Account Holders With reference to an Offshore Account with multiple Shareholders, holding a joint account and in the unlikely event of the sudden demise of a Shareholder or joint account holder, there are two [2] possible solutions: a) A WILL was previously filed. In this case, the surviving Shareholder or partner could have the WILL read by probate. OR b) A WILL was NOT previously filed. 6 Useful information First Offshore
In accordance with the regulations, the share will be distributed automatically between the remaining shareholders. In each event (a) and (b) accounts would not be frozen business could continue AND assets remain part of the Company. As professionally licensed government agents, we are able to handle your corporate application and document process with ease. Through years of experience, local knowledge and direct contact with the authorities, we have a distinct advantage by being able to provide the best service, the most up to date information and the most cost effective solutions. Often we are asked how do we proceed? or what documents are required?. Therefore, as a useful guide we provide all our clients with all the necessary help, offering step by step instructions through every stage of incorporation, from start to finish. What is more, once incorporation is complete, we continue to offer our support whenever and wherever you need it. 7 Useful information First Offshore
OFFSHORE FORMATION PARTICULARS RAKIA JAFZA Minimal Number of Directors 1 (One) 2 (Two) Corporate Director (s) Allowed Not Allowed Nature of Shares Registered Registered Minimum Capital AED 1.00* AED 1.00* Legalization Process of POA & Corporate Documents Apostille Legalization & Superlegalization mandatory Sufficient Time Scales (upon receipt of full documentation) 1-2days 2-3days The Registrar may require that the capital is in accordance with the company s objective 8 Useful information First Offshore
IMPORTANT NOTICE ALL ORIGINAL documents must be viewed by an Arab Embassy and the Ministry of Foreign Affairs in the country where the original documents were produced. Copies will be taken stamped and sealed as ORIGINAL COPIES. This is also known as Legalization. SERVICES FEES (Amount in USD) Incorporation Fee - RAKIA - JAFZA 3,250.00 4,500.00 Yearly Renewal Fee (from year two onwards, inclusive of government fees, Agent s Fee) - RAKIA - JAFZA 1,999.00 2,499.00 Optional: Nominee Shareholder (annual) Nominee Director (annual) Nominee Secretary (annual) Bank Account Opening Fee (one-time) 500.00 500.00 500.00 500.00 9 Useful information First Offshore
STANDARD LEGAL REQUIREMENTS & SUPPORTING DOCUMENTS: 1. One Person an individual 2. More than One Person multiple ownership 3. Owned by a Corporate Body another corporate entity owner 1. ONE PERSON COMPANY AN INDIVIDUAL Up to date clear Passport Copy if you have visited the U.A.E. recently, please provide the entry stamp page too. Proof of Residence Utility Bill, Telephone Bill, Bank Statement, Driving License C.V. (Resume) Most up to date Bank Reference Letter 2. MORE THAN ONE PERSON MULTIPLE OWNERSHIP The same is required as above. Every Shareholder and Director must provide the above mentioned documents 4. OWNED BY A CORPORATE BODY ANOTHER CORPORATED ENTITY OWNER Certificate of Incorporation of the existing company - [notarized and attested/apostilled] Certificate of Good Standing of the existing company - [notarized and attested/apostilled] Memorandum and Articles of Association - [notarized and attested/apostilled] 10 Useful information First Offshore
Board Resolution Calling for the establishment of an IBC or Offshore formation - [notarized and attested/apostilled] Power of Attorney - [notarized and attested/apostilled] 11 Useful information First Offshore
Double Tax Treaties The UAE maintains a comprehensive network of Double Tax treaties with the countries listed below. A UAE offshore company qualifies as a tax resident according to the Ministry of Finance s current practice. 1. Algeria 2. Armenia 3. Austria 4. Azerbaijan 5. Belarus 6. Belgium 7. Bosnia & Herzegovina 8. Bulgaria 9. Canada 10. China 11. Czech Republic 12. Egypt 13. Finland 14. France 15. Germany 16. India 17. Indonesia 18. Italy 19. Korea 20. Lebanon 21. Luxembourg 22. Malaysia 12 Double Tax Treaties First Offshore
23. Malta 24. Mauritius 25. Mongolia 26. Morocco 27. Mozambique 28. Netherlands 29. New Zealand 30. Pakistan 31. Philippines 32. Poland 33. Romania 34. Seychelles 35. Singapore 36. Spain 37. Sri Lanka 38. Sudan 39. Syria 40. Tajikstan 41. Thailand 42. Tunisia 43. Turkey 44. Tukmenista 45. Ukraine 46. Uzbekistan 47. Yemen 13 Double Tax Treaties First Offshore
BUSINESS GUIDE FOR THE FORMATION OF A COMPANY IN U.A.E. Doing Business in the UAE The Global Market The UAE is fast becoming a leading International trading hub; it offers access to a global market of outstanding potential for overseas Companies. Key advantages characteristics are: A growing market - Dubai s imports have more than doubled since 1989; regional economic growth and liberalization is set to boost demand; A prosperous market - strategic location at the heart of one of the world s richest regions; A diversified market - wide import requirements; opportunities for suppliers of most products; An accessible market - served by more than 175 shipping lines and 90 airlines; An open market - no exchange controls, quotas or trade barriers. The Business Environment The UAE offers incoming businesses all the advantages of a highly developed economy. 14 Doing Business in the UAE First Offshore
The infrastructure and services are rapidly expanding and match some of the highest International standards, facilitating efficiency, quality and service. Among the benefits are: Free enterprise system. New Driverless Metro system. Floating bridges. Highly developed transport infrastructure. State-of-the-art telecommunications. Sophisticated financial and services sector. Top international exhibition and conference venue. High quality office and residential accommodation. Reliable power, utilities etc. First class hotels, hospitals, schools, shops etc. Cosmopolitan lifestyle. Extremely safe environment. UAE Business Climate Doing business in the UAE is very attractive due to the following reasons No personal income and capital taxes No corporate taxation 100% repatriation of capital and profits No currency restrictions Competitive import duties (5% with many exemptions). Modern efficient communication facilities 15 Doing Business in the UAE First Offshore
Abundant and inexpensive energy supply Simple staff recruitment procedures Competitive freight charges Competitive real estate costs. Easy access to both sea and airports. Taxation There is NO corporate tax, personal tax, capital gains tax or VAT in the UAE. The only exceptions to this are oil producing Companies and branches of foreign banks. Direct taxation is against the traditions of the UAE and it is highly unlikely that it will be introduced in the near future. Currency and Exchange rate There are no exchange controls in the UAE and its currency, the UAE Dirham, is freely convertible. The Dirham is linked to the US dollar, the currency by which oil prices are measured. The exchange rate has remained at Dh 3.673 = US$ 1 Licensing The basic requirement for all business activity in the UAE is one of the following three categories of licenses: Commercial licenses covering all kinds of trading activity; Professional licenses covering professions, services and artisans; Industrial licenses for industrial or manufacturing activity. 16 Doing Business in the UAE First Offshore
Businesses categories that require approval from Ministries: Banks and financial institutions from the Central Bank of the UAE. Manufacturing from the Ministry of Finance and Industry. Pharmaceutical and medical products from the Ministry of Health Branch of foreign Company from the ministry of Economy and Commerce. Ownership Requirements Fifty-one per cent participation by UAE Nationals is the general requirement for all UAE established Companies except: Where the law requires 100% local ownership; In the Free Trade Zones where 100% foreign ownership is permitted; In activities open to 100% AGCC ownership; Where wholly owned AGCC Companies enter into partnership with UAE nationals; In respect of foreign Companies registering branches or a representative office in Dubai; In professional or artisan Companies where 100% foreign ownership is permitted. Procedures governing the operations of foreign business interests. In practice, all the Emirates follow the same general system, whereby foreign Companies operated in one of three ways: with a local sponsor, through a partnership 17 Doing Business in the UAE First Offshore
with a UAE National or Company, or through a private limited Company or public shareholding Company incorporated by Ruler's decree. Since 1984, steps have been taken to introduce a codified Companies Law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the "Commercial Companies Law" - and its by-laws have been issued. Legal Structures for Business In broad terms the provisions of the Law are as follows: The Federal Law stipulates a total local equity of not less than 51% in any commercial Company and defines seven categories of business organization which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of Companies. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the Commercial Companies Law - and its by-laws govern the operations of foreign business. The Seven Categories of Business Organization defined by the Law are: General partnership Company Partnership-en-commendams Joint venture Company Public shareholding Company Private shareholding Company Limited liability Company Share partnership Company 18 Doing Business in the UAE First Offshore
Free Zone In the UAE Everything about Free zones in UAE What is a Free Zone Free Trade Zones have been set up with the specific purpose of facilitating investment. The procedures for investing in the zones are relatively simple. Companies operating in the Free Zones are treated as being offshore or outside the UAE for legal purposes. Free Zones are suitable for Companies intending to use the UAE as a regional manufacturing or distribution base, with the bulk of their business outside the UAE. Free Zone Incentives 100% foreign ownership; Exemption from all import duties; 100% repatriation of capital and profits; Freedom from corporate taxation for 50 year; Inexpensive energy; Efficient recruitment procedures ensuring the availability of a skilled and experienced workforce; A high level of administrative support. Free Zone License Types Industrial license: Activities allowed import raw materials, manufacturing, processing, assembling, packing and exporting finished products. 19 Everything about Free zones in UAE First Offshore
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, labour 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. Limited Liability Companies A Limited Liability Company can be formed by a minimum of two and a maximum of 50 persons whose Liability is Limited to their shares in the Company s capital. Most Companies with expatriate partners have opted for this form of Company. In Dubai, the minimum capital is currently Dh. 300,000 (US$ 82,000), contributed in cash. While foreign equity in the Company may not exceed 49%, profit and loss distribution can be mutually agreed. Responsibility for the management of a Limited 20 Everything about Free zones in UAE First Offshore
Liability Company can be vested in the foreign or national partners or a third party. Professional Firms In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil Companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licenses, visas, labour cards, etc Branches and Representative Offices of Foreign Commercial Companies The Commercial Companies Law also covers the formation and regulation of branches and representative offices of Foreign Companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed. Only UAE Nationals or Companies 100% owned by UAE nationals may be appointed as local service agents. Local agents - also sometimes referred to as sponsors - are not involved in the operations of the Company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature. 21 Everything about Free zones in UAE First Offshore
To establish a branch or representative office in Dubai the following documents are required: Company registration certificate Board of directors resolution for establishing a branch True copy of company s memorandum / articles of association Power of Attorney to the representative Financial statements for the last two years Local service agency agreement Details of local service agent Company profile 22 Everything about Free zones in UAE First Offshore
Things to consider in choosing the most appropriate type of company for you: OFFSHORE FREE ZONE LLC 100% Foreign Ownership 100% Tax Free Status Virtual Office Available Flexi-desk Available Office Facility Required Employment Visas Available Banking Privacy Audited Accounts Required International Bank Account Confidentiality of Records x x x 23 Everything about Free zones in UAE First Offshore
About First Offshore FIRST OFFSHORE became one of the very first to be licensed by the Government of Dubai to act as an official Registered Agent and to provide Offshore Company formation, management and related services. FIRST Offshore only provide the tax havens of The Emirates because it is by far the most confidential and secure Offshore location today. Many of our new clients have moved their Offshore interests to Dubai from other jurisdictions because they were concerned by recent legislation and changes in the European and American laws, which seriously eroded their confidentiality and security. As the United Arab Emirates does not fall under the same restrictive laws, it has emerged as a front runner in the Offshore world. Due to the huge success of the Dubai (Jebel Ali) tax haven, more recently in 2007, the most Northerly Emirate of Ras Al Khaimah (RAK) became only the second tax free jurisdiction to offer Offshore formation. RAKOI FZE, the sister Company of FIRST Offshore became the very first to obtain a Company service providers license in 2007 with the government of Ras Al Khaimah and is a leading provider of Offshore and Free Zone licenses in this fast emerging Emirate. Our two companies, FIRST OFFSHORE and RAKOI FZE provides variety of services notably consisting of the following: Offshore Formation Freezone & LLC Companies Legal Services Property Investment Family Wealth Protection & TRUST 24 About First Offshore First Offshore
FIRST Offshore Al Barsha Dubai P.O. Box 450676 U.A.E. Tel No Fax No Mobile Email Websitee 00 971 4 430 4463 00 971 4 430 1548 00 971 50 873 6196 david@firstoffshore.com lisa@ @firstoffshore.com hilda@firstoffshore.com www..firstoffshore.com 25 About First Offshore First Offshore