Dubai Companies and Dubai Trusts

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General Introductory and Offshore Tax Information

Dubai offshore business entities are designed to meet the growing needs of investors and corporations within the region, as international investors search for new markets and consumer bases. As a result, despite the extent of the Dubai International Financial Center (DIFC), a complex housed on a 110 acre free zone offering a wide range of corporate services, expressions of interest to do business in Dubai flow in from hundreds of major financial institutions from across the globe.

Dubai does not consider itself a tax haven, and rather compares its corporate landscape and stature to that of Tokyo, New York, London and Hong Kong. As a rapidly emerging market, Dubai comfortably positions itself amongst other offshore jurisdictions which do not have the traditional offshore tax haven set up, in which all companies – domestic, foreign and non-resident or offshore compete on what is commonly referred to as a level playing field, as they operate under the same laws and, most importantly, the same fiscal regime.

The magnitude of the DIFC is such that the center was created to accelerate the demand for financial assets within the region, thereby being able to stimulate the repatriation of the $1 trillion in assets that are administered and invested in jurisdictions outside the region; increase the region’s capacity for insurance and reinsurance business due to the fact that around 65% of yearly premiums are reinsured outside the region; create a fund for pensions that would accommodate Islamic groups spanning over Western Europe and East Asia including USA; and help maneuver more than 90 regional privatization projects while assisting private companies with initial public offerings so as enable the market to become more liberal and deregulated.

In Dubai terms, zero taxation signifies no personal and corporate taxes pursuant to the Dubai Law No. 9, 2004. Dubai companies and entities that are registered in the DIFC enjoy these benefits for 50 years, and can continue to enjoy this tax treatment after that period has passed. DIFC companies are also excused from local as well as municipal authority levies and taxes. Sectors within the center include capital markets, reinsurance and captives, banking and brokerage, wealth management, ancillary services and Islamic finance. Licenses are issued to Dubai companies for ventures in these areas, there are no foreign exchange controls or restrictions on foreign ownership of Dubai companies and capital can be repatriated free from any charges. Foreign companies and entities registered, not incorporated (formed), in Dubai are known as Recognised Companies.

Dubai Offshore Business Entities:

  • Dubai International Company
  • Dubai Special Purpose Company (SPC)
  • Dubai Single Family Office (SFO)
  • Dubai Limited Liability Partnership (LLP)
  • Dubai Limited Partnership (LP)
  • Dubai General Partnership
  • Dubai International Banking

Dubai International Company

Main Features:

  • Legislation – Companies Law 2009; repealing and replacing the DIFC Companies Law 2006
  • 3 types of Dubai companies legislated under the Act include companies limited by shares, recognized companies and limited liability companies
  • Dubai companies are independent legal entities separate from their owners
  • Main formation documents include the Articles of Incorporation, prepared by the company and the Certificate of Incorporation, issued by the Registrar
  • Articles can be adopted based by the standard format given by the DIFC (companies limited by shares and limited liability companies)
  • Dubai companies that do not adopt the standard Articles are required to prepare their Article compliant with the set regulations
  • Articles can be amended and company name can be changed
  • Every member or shareholder required to receive a copy of the Articles
  • Must have no less that 2 directors
  • Secretary required and may not be a director
  • Registered office must be situate in the DIFC from where main business activities are undertaken
  • Registered office able to be situate outside DIFC strictly upon consent of the DIFC
  • Required to keep records and register of shareholders; share certificates to be issued upon issuance of shares
  • Bearer shares are allowed
  • Meetings to be held annually
  • Accounts to be prepared for each financial year and able to be submitted upon request of the DIFC
  • Foreign companies may continue (redomicile) to the DIFC whilst Dubai companies are able to transfer or migrate to a foreign jurisdiction
  • Recognized Companies
  • Are usually foreign companies permitted to do business or to be registered in Dubai
  • Must appoint an agent or representative in Dubai for service of process

Dubai Special Purpose Company (SPC)

Main Features:

  • Legislation – Special Purpose Company (DFIC)
  • Able to undertake only exempted activities
  • Able to be used by an Investment Company, the trustee of an Investment Trust or an Investment Partnership for holding property
  • Unable to engage in financial services without prior approval from the financial center
  • Unable to be the general partner of an investment partnership, cannot serve as trustee to an investment trust and cannot be an investment company
  • Established with a share capital of no less than US$100
  • Unable to be established with only 1 director, minimum of 2 directors
  • Unable to have more than 3 shareholders
  • All shareholders are nominees
  • Shares are held in trust for private reasons
  • Uses the Standard Articles established by the financial center; articles can be tailored to suit the considerations of the members
  • Registered in 2 places, the Special Purpose Companies Register and the Register of Companies and Recognized Companies
  • Able to be administered by a Corporate Service Provider (or its subsidiary), which is also secretary of the company
  • Assets can be managed by a third party asset management company
  • Keeps a registered office in the financial center
  • No need to hold a commercial license
  • No requirement to hold annual meeting or to file yearly accounts
  • At the end of the year must state whether changes were made to Articles, shareholders, name, business activities, any particulars of registered office

Dubai Single Family Office (SFO)

Main Features:

  • Legislation – Single Family Office Regulation (DFIC)
  • Are situate in the financial center
  • Includes partnerships and bodies corporate
  • Offers services to only a Single Family (services to a family trust, family partnership, family company)
  • Minimum liquid assets of USD10 million required for single family
  • Assets that can be realized within 180 are deemed investable and or liquid
  • Companies or entities owned by families are controlled by an SFO if the SFO holds no less than 75% of voting control or if control is maintained direct or indirectly over the family business with the power to remove or appoint what is measured to be equal to 75% of the family company or entity’s board of directors or managers
  • Services may be charged on a fixed price or on commission based on profits
  • An individual or group considered a family member
  • SFOs or its members can be the directors of a family business or entity setup outside the financial center
  • SFOs able to manage and control in and from within the financial center
  • Authorized Representative must be appointed by SFO (similar to registered or resident agent of an offshore company)
  • Returns filed every year through the authorized representative

Dubai Limited Liability Partnership (LLP)

Main Features

  • Cannot be established by less than 2 partners
  • Main formation documents are the Limited Liability Partnership Agreement and Certificate of Incorporation
  • Able to be established by a body corporate
  • Name reservation possible for up to 3 months
  • No obligation to keep registered office in the financial center, but must submit details to the authorities
  • Keeps register of members
  • Must submit any changes made to partnership
  • Required to appoint an auditor in accordance with the Companies Law, 2004, Part 2
  • Relieved from filing annual accounts under certain conditions
  • Recognized (foreign) limited liability partnerships must have a registered office in the financial center

Dubai Limited Partnership (LP)

Main Features:

  • Limited Partnership Law 2006
  • Collective Investments Law 2006 applies to Dubai LPs and Recognized LPs
  • Main formation documents are the Partnership Agreement, drawn up by the partners and the Certificate of Registration, issued by the Registrar
  • No maximum number of partners
  • At least one general partner and one limited partner
  • General partners may be natural and or legal persons
  • No partner shall assume both general and limited partnership
  • General partners can become limited partners and limited partners can become general partners
  • All business activities to be undertaken within the DIFC
  • Foreign LPs may continue to Dubai, Dubai LPs may transfer out of Dubai
  • Foreign LPs registered to do business in Dubai must designate a registered office from where notices are collected

Dubai General Partnership

Main Features:

  • Legislation – General Partnership Law, DIFC Law No. 11, 2004
  • Must establish registered office in financial center
  • Main formation documents include Partnership Agreement and Certificate of Registration
  • Partners may be natural or legal persons
  • Business names must be unique and cannot include words like bank, trust or insurance
  • Keeps a register of partners
  • Partners have unlimited liability
  • Recognised General Partnership
  • Refers to a foreign genera partnership; i.e., a general partnership registered abroad and registered to do business in the financial center

Dubai International Banking

Main Features:

  • Operating licenses are only issued for private banking in the financial center
  • Banking services focus primarily on high net worth individuals whose accounts are over USD 1 million
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