The idea of company re-domiciliation has developed and grown more popular in recent years. The process offers an easy-going and attractive option for foreign companies looking to expand their business operations into the UAE and the broader Middle East region. If you are looking to redomicile a company to the UAE, then you’re on the right page. Here Adam Global will help you learn the ropes about every aspect of the re-domiciliation by answering the following FAQs:
- What is redomiliation?
- Why should I redomicile my company to the UAE?
- What are the benefits of company re-domiciliation to the UAE?
- Which jurisdictions in the UAE allow the redomiciliation of overseas businesses?
- How can I redomicile my company to the UAE?
- What are the eligibility criteria for company redomiciliation to the UAE?
- What is the right approach to redomiciling into the UAE?
- Who can help you redomicile your company in the UAE?
What is Redomiliation? Does the UAE permit the redomiciliation of foreign companies?
Redomiciliation is the process by which a business moves its domicile from the country where it was founded to another. Companies all around the world are currently making a lot of demand to shift their jurisdiction of the establishment to the United Arab Emirates (UAE), one of the most sought-after countries in the world to live, work and do business. The business-friendly UAE embraces the concept of redomiciliation and allows a foreign company to move its headquarters to the UAE and become a UAE company. Boasting around 50 multi-disciplinary free zones, each with its own set of operating and residency restrictions, the UAE has grown to be a popular choice for redomiciliation.
The UAE introduced redomiciliation laws in 2019 as part of its efforts to attract more foreign investment and promote economic growth. The redomiciliation process enables foreign companies to take advantage of the UAE’s business-friendly environment, including its liberal tax regime, ease of doing business, and proximity to emerging markets.
While the idea of re-domiciliation is not new in general and has always been in demand to some extent, we are currently witnessing a surge in its use, primarily due to regulatory changes. We generally see that the Re-domiciliation process is occasionally advertised as being fairly simple in the public domain. The process of re-domiciliation can be difficult and may result in business interruption because it has a number of legal, operational, and tax ramifications, however, the degree of complexity varies on the unique facts.
Why should I redomicile my company to the UAE?
Companies can redomicile to the UAE for various reasons. It could be business, legal, or practical considerations. And the best part is, all of a company’s rights and obligations move with it when it changes its domicile to the UAE to become a UAE-registered company in the process. Additionally, the redomiciled firm is now subject to UAE law as well as any applicable free zone laws and regulations. Plus, redomiciling to the UAE can offer a range of advantages to companies looking to expand their operations.
Why opt for redomiciliation?
Some of the key reasons why most companies choose to redomicile their business to the UAE are:
- Adverse changes to the laws of the country in which a company is registered
- The urge to pursue a more favourable tax regime
- To access new international markets
- The desire to lower annual running costs
Why UAE for redomiliation?
The UAE offers a cartload of benefits to redomiciling companies including:
- Business-friendly environment
- Advantageous tax regime
- Strategic location
- 0% personal income tax
- Corporate tax holidays for 50 years in free zones (renewable)
- Flexible regulations and not-so-strict control
- High ROI
- Stable and forward-thinking economy
- Easy access to distinct financial centres
- Access to a range of local and international banks
- An extensive network of tax treaties with over 80 countries
- Align their place of registration with their shareholder base
- Ability to acquire real estate in UAE freehold regions
What are the benefits of company re-domiciliation to the UAE?
A company can enjoy a whole host of benefits by redomiciling to the UAE, including:
Favourable tax regime: The UAE has a tax-friendly environment, with low corporate income tax and no withholding tax on dividends. This can result in significant cost savings for companies.
Access to a growing market: The UAE is strategically located at the crossroads of Europe, Asia, and Africa, and offers access to a market of over 2 billion people. The UAE is also a gateway to the wider Middle East region, which is experiencing rapid economic growth.
Ease of doing business: The UAE has a business-friendly environment, with streamlined procedures for setting up and running a business. The country also has a highly developed infrastructure and a skilled workforce.
Political and economic stability: The UAE is known for its stability and security, with a strong legal system and a transparent regulatory framework. This provides a safe and secure environment for companies to operate in.
Attractive free zones: The UAE has several free zones that offer specific benefits, such as 100% foreign ownership, no personal income tax, and customs duty exemption. These free zones cater to specific industries, such as technology, finance, and logistics.
Diversification of operations: Redomiciling to the UAE can enable companies to diversify their operations and reduce their reliance on a single market or location.
Which jurisdictions in the UAE allow the redomiciliation of overseas businesses?
Dubai International Financial Centre (DIFC): DIFC is a free zone in Dubai that offers a common law legal system and a favourable regulatory environment. DIFC allows for the redomiciliation of foreign companies to the DIFC jurisdiction.
Abu Dhabi Global Market (ADGM): ADGM is governed by separate laws that adhere to a Common Law framework and has its own court. The ADGM businesses law has certain redomiciliation provisions,
Dubai Multi Commodities Centre (DMCC): Assuming that the regulations of the original jurisdiction also allowed such a transfer, DMCC has implemented the procedure and rules for the migration of businesses from other jurisdictions, including locally established free zones.
Ras Al Khaimah International Corporate Center (RAKICC): Offshore enterprises can easily apply to continue as a corporation in RAKICC and benefit from a tax-neutral environment if permitted by the regulations of the original jurisdiction.
Ajman Free Zone (AFZ): AFZ is a free zone in the emirate of Ajman that allows for the redomiciliation of foreign companies to the AFZ jurisdiction.
Jebel Ali Free Zone Authority (JAFZA): JAFZA is a free zone that shares space with one of the world’s busiest ports. According to JAFZA regulations, businesses may transfer their registration from their home jurisdiction and carry on operations while holding a JAFZA license.
How can I redomicile my company to the UAE?
The redomiciliation process in the UAE involves several steps, including obtaining necessary approvals from the relevant government authorities, complying with legal requirements, and transferring assets and liabilities to the new UAE company. The process can be complex and time-consuming, and it’s important for companies to seek professional advice and guidance from experienced lawyers and business consultants in Dubai or any part of the UAE. Here is an overview of the main steps involved in the redomiciliation process:
Check eligibility: Before considering redomiciliation, a company should check whether it is eligible for the process. This can depend on several factors, such as the company’s legal structure, the laws of the country it is currently based in, and the requirements of the UAE.
Choose the appropriate UAE jurisdiction: The UAE is made up of several jurisdictions, each with its own laws and regulations. A company should consider which jurisdiction is most appropriate for its needs, taking into account factors such as the type of business it operates and the industry it is in.
Obtain necessary approvals: The company will need to obtain approvals from the relevant authorities in both the current country of domicile and the UAE. This can involve obtaining legal opinions, certificates of good standing, and other documents.
Establish the new UAE company: The company will need to establish a new entity in the UAE, such as a limited liability company or a free zone company. This involves registering the new company with the relevant authorities, obtaining a trade license, and other legal and regulatory requirements.
Transfer assets and liabilities: The company will need to transfer its assets and liabilities to the new UAE company, including contracts, property, employees, and intellectual property. This may involve obtaining consent from third parties, such as suppliers or customers.
Dissolve the old company: Once the new company is established, the old company can be dissolved or wound up in accordance with the laws of the current country of domicile.
What are the eligibility criteria for company redomiciliation to the UAE?
The UAE Cabinet Resolution No. 16 of 2019 on the Regulation of Foreign Direct Investment allows for redomiciliation of foreign companies to the UAE, subject to certain conditions. To qualify for redomiliation to the UAE, the foreign company must:
1. be a limited liability company (LLC) or a similar legal form.
2. be incorporated in a jurisdiction that allows for redomiciliation.
3. have a clear legal status and must have been in operation for at least one year.
4. have a minimum capital requirement of AED 2 million (approximately USD 544,500).
5. obtain approval from the relevant authorities in the UAE, including the Department of Economic Development (DED) and the Federal Authority for Identity and Citizenship (ICA).
6. comply with all UAE laws and regulations, including those related to economic activities and licensing requirements.
7. have a physical presence in the UAE, which may include an office, a warehouse, or a similar facility.
If a foreign company meets these conditions, it may be eligible for redomiciliation to the UAE. However, it is important to note that redomiciliation is a complex process and requires careful consideration of various legal and regulatory requirements. It is advisable to seek the assistance of one of the reputed business setup consultants in the UAE with hands-on experience in redomiciliation to navigate the process with flying colours.
What is the right approach to redomiciling into the UAE?
Re-domiciliation is unquestionably a powerful business structuring tool because of the many advantages mentioned above. Due to the wide range of options and capacity to provide true substance, the UAE offers a compelling value proposition. This, according to our recent experience, has caused a rise in re-domiciliation to the UAE. We also see that these transactions frequently receive backing from the relevant free zone authorities.
On the other hand, companies and consultants need to be mindful of the complexity of the situation. To minimize negative effects, due diligence should be done before the re-domiciliation. Businesses should also conduct legal and tax due diligence in addition to a feasibility assessment for the UAE free zone.
The evaluation of the exit/entry tax effects, ongoing tax reporting requirements (such as the UAE ESR), as well as any considerations linked with any assets such as subsidiaries, should all be part of the tax due diligence process (capital gains taxes, stamp duty, impact on tax attributes such as losses).
Among other things, the legal due diligence should address and take into account how the company’s licensing, third-party contracts, subsidiaries and branches, financing arrangements, intellectual property, officer requirements, regulatory requirements, and ESR may be impacted by the re-domiciliation.
Who can help in redomiciling a foreign company in the UAE?
Redomiciling a foreign company to the UAE is a complex process that requires expertise in legal, financial, and regulatory matters. To successfully redomicile a foreign company to the UAE, it is recommended to seek the assistance of professionals who are experienced in this area such as:
- Lawyers: Lawyers can provide legal advice on the redomiciliation process, including drafting and reviewing legal documents, obtaining regulatory approvals, and ensuring compliance with all relevant laws and regulations.
- Accountants: Accountants can help with financial matters related to redomiciliation, including tax planning, financial reporting, and compliance with accounting standards.
- Company formation agents: Company formation agents can help with the practical aspects of redomiciliation, such as obtaining visas, opening bank accounts, and registering for taxes.
- Government authorities: The relevant government authorities in the UAE, including the Department of Economic Development (DED) and the Federal Authority for Identity and Citizenship (ICA), can provide guidance on the redomiciliation process and assist with obtaining regulatory approvals.
- Business consultants: Business consultants in the UAE such as Adam Global can supply guidance on the legal and regulatory requirements for redomiciliation in the UAE, including advice on licensing, visa requirements, and other compliance matters.
Get in Touch for UAE Redomiciliation Needs
Serving the industry for the last two decades as a one-stop shop for corporate solutions, Adam Global has a track record of successful re-domiciliation of a non-United Arab Emirates (UAE) incorporated entity into the UAE. Our redomiciliation experts can provide you with the necessary support to ensure a smooth and successful transition. It is still advised to talk with one of our best business advisors in Dubai. Click here to book your free consultation with us or simply dial +971 4 341 9701 to speak to us. You may also WhatsApp us your query at +971 50 911 0516.