In the UAE, economic activity is regulated by individual emirates as well as the Federal Government. In Dubai, the authorities have deliberately sought to create an environment which is well ordered without being unduly restrictive. As a result, Dubai offers businessmen operating conditions that are among the most liberal and attractive in the region.
Dubai is considered heaven for foreign and non-resident investors. It has a completely independent financial system where there are no taxes imposed in any way to the consumers which has increased their confidence in these markets and they are therefore willing to invest readily.
The simple and transparent nature of the Dubai market has also added to its glory and has made Dubai the most promising market for foreign businessmen. The government's support in reduction of unethical practices along with the simultaneous betterment in the framework of law has increased the reliability of consumers in the market.
Incorporation procedure in UAE is a simple step by step process and does not require endless visits to a lawyer at every juncture of company formation. The procedures for incorporation in UAE are recognized to be a legal one and it includes the registration of company name and licensing of business activity.
LicensingThe basic requirement for all business activity in Dubai is one of the following three categories of licences:
More detailed procedures apply to businesses engaged in oil or gas production and related industries.
Practising some trade activities (e.g. jewellery and insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai.
In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry.
Ownership RequirementsFifty-one per cent participation by UAE nationals is the general requirement for all UAE established companies except:
Business incorporation Types:
Free Zone IncorporationsFree Zones offer the following incentives to the investors.
1. 100% foreign ownership
2. No corporate taxation for 50 years; renewable for an additional 50 years.
3. Freedom to repatriate capital and income
4. No personal income tax.
5. Full exemption from import duties.
6. No currency restrictions.
7. No bureaucratic red-tapism.
8. No recruitment problems.
9. Modern efficient communication.
10. State of the art infrastructure.
11. Abundant energy
Offshore Company:Offshore companies can feature in most financial planning scenarios when trying to mitigate tax exposure and/or with regards to passing assets on to beneficiaries freely in the event of death. Sometimes referred as Special Purpose Vehicles (SPV), there is an array of scenarios where an offshore company becomes invaluable and this article relates to their uses when buying property.
The offshore possibility has basically been set up to cater for companies who need to have a regional "tax relief-invoicing-facility" - There is no minimum capital required and also no need to set up an actual office facility. The off-shore regulations have been issued according to international standards and the company will have to register minimum 2 directors, keep financial records and issue an annual financial report audited by a professional auditing company approved by JAFZA/RAKFTZ.
Generally husband and wife can be appointed Directors of the entity and in the event of death the surviving spouse will absorb the offshore company equity. This can be affected either by using specialist Trustees or indeed an undated share transfer letter. Additional Directors can be appointed at anytime so children could be included in due course as a means of passing on the assets in your offshore company.
If you have established your offshore company to team up with other investors so you can collectively increase your position in the property market, then there are a number of measures to ensure the interests of all Directors are met. This can be done through a double-option agreement whereby in the event of death an insurance policy pays out the value of the deceased shares. Conversely, if each property is bought under a separate entity then the proceeds from the sale would be passed to the deceased's estate or the surviving Directors can offer to purchase the value of the remaining shares.
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