Date added: : 29.02.2016

Dubai boasts the tallest building in the world, the largest shopping centers, in addition, Dubai has built 300 artificial islands that resemble a world map from a bird's eye view. Now Dubai faces even more ambitious tasks.

The UAE government proclaimed a national innovation strategy, with the aim of becoming one of the most innovative states by 2021. Mostly, innovations lead to higher productivity growth and stimulate economic development.

The heart of Dubai is the area of the World Trade Center that has become a new free economic zone. One of the oldest buildings in Dubai - the World Trade Center building - is located there. Over 400 conferences and exhibitions take place there annually. These figures confirm the fact that Dubai has become an international center for the MICE industry (industry of meetings, awards, conferences and exhibitions). The transformation of the World Trade Center area into free economic zone opens new opportunities for the organizers of international conferences, attracts global business associations and congress organizers to accommodate permanent missions in the heart of Dubai, since now they can do this without the participation of local intermediaries.

This is an ideal place for international companies and their employees, since it is located in a tax-free zone: the income not only of companies but also the income of employees is not taxed - they are exempt from personal income tax, which usually varies from 30 to 50% in other countries.

For organizations providing accompanying services to the financial sector, the neighborhood of the World Trade Center area with the Dubai International Financial Center (DIFC) makes it an ideal place to place offices, most likely with rental rates lower than in the DIFC. Creation of free economic zone in the center of Dubai shows that the state is entirely committed to the concept of free economic zones and that it will continue to create a business-friendly environment and attract foreign investors.

In the UAE, there are more than 30 free economic zones in which foreigners can own 100% of the company's capital. There are specialized zones: Dubai Internet City, Media City, International Financial City, and ordinary free economic zones such as Jebel Ali and Ras Al Khaimah, where almost all types of activities are allowed, except for banking services. Outside free zones, the rights of foreign partners are limited: there is a requirement according to which a local partner must own at least 51% of the company's shares or act as an intermediary.

Sometimes businessmen realize that another free economic zone would be more convenient for their business and want to transfer their company to another zone. But, unfortunately, most free economic zones do not allow companies to migrate, which forces them to create a new company that does not have the history and reputation of the previous company.

Nevertheless, some of the UAE's free economic zones allow the company to change its location (both admission of a new company in its jurisdiction and release/exemption of the company from its jurisdiction). This opportunity extends to 60 countries in the world. In the UAE, this possibility is not widely known, and few companies use it. But the foregoing opportunity offers significant advantages, as the company can change its location while retaining its legal personality. It allows to avoid the procedure of liquidation of the company. But at the same time, for such an organization it is necessary to go through a similar procedure in order for all creditors of the company to be aware of the fact that it passes under another jurisdiction and changes its location, and also that there are no unauthorized trials involving company. All the necessary documents and applications must be relevant so that the state authorities of one country can confirm to another state, under the jurisdiction of which the company passes, that the company is in good standing.

In the UAE, the following zones permit the redomiciliation between jurisdictions: the Dubai International Financial Center (DIFC), the Dubai Technology and Media Free Zone, the free trade zone of Ras Al Khaimah.

The main reasons for such redomiciliations are the following:

  • financial advantages: taxes are lower or there are no taxes;
  • more appropriate legislation;
  • more convenient access to the necessary staff;
  • location closer to the client;
  • lower infrastructure costs;
  • lower level of risk.

The UAE has the potential to attract a large number of companies from other jurisdictions that also allow for the migration of companies, as this implies a free tax area and a system of agreements for avoiding double taxation (DTA).

A migrant company applies for a Certificate of Succession in the country of the host jurisdiction. It will be issued after all documents have been considered, and the decision will clearly state the intention of the company to continue its activities in accordance with the new jurisdiction and new legislation.

Succession means not only that all rights and assets of the company follow it to a new jurisdiction, but also that the company retains both previous debts and liabilities. The company and its management continue to be responsible for all previous claims and claims and are subject to civil and criminal proceedings. Also, any decision and judicial act before carrying out migration can be executed.

At the same time, migration of the company to the UAE will make it somewhat more difficult to enforce this decision if for execution of the decision it is necessary to apply to the courts of the United Arab Emirates, where the language of the proceedings is Arabic and all documents in Arabic, which will lead to the need to translate documents into the official language.

Currently there were only a few cases of migration of companies in the UAE. This possibility is not widely known, and, in addition, it takes a lot of time to collect all the necessary documentation and adopt the decision on the issue of migration by the authorities. However, the advantages of being in a tax-free zone can be high enough to transfer a company to another zone.

It is worth to clarify that the UAE, since its formation in 1971, is a fairly safe region that is not subject to any armed conflicts and does not suffer from instability. But the very possibility of transferring to a different jurisdiction in case of significant problems certainly calms investors and serves as their kind of insurance.

If you decide to register a company in the UAE’s free economic zone, please contact our company’s specialists who will render you highly qualified assistance and register the company as soon as possible.

Also, our company "Law&Trust International" will be glad to help you with the transfer of the company located in the UAE to another jurisdiction selected by you.