A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd.

VOL 16, Issue 4 October 2014

Offshore Update

NEW FREE ZONES IN THE U.A.E.

Ajman Offshore
A bit late to join the bandwagon, the Ajman Free Zone Authorities (AFZA) introduced offshore company regulations during Ramadan in 2014.

Ajman Offshore is regulated by Ajman Free Zone Offshore Companies Regulations of 2014. Ajman Offshore has some similarities with the offshore companies from other jurisdictions, including JAFZA and RAKFTZ. AFZA offers the flexibility to the investor of not being required to visit the free zone, as long as, they sign the incorporation documents in the office of the locally licensed registered agent,

Registration of the offshore company can be carried out solely by an agent licensed to act as the registration agent. The regulations prescribe that the incorporation of the International Company shall be through a registered agent. The firms of accountants and lawyers, approved and licensed for that purpose by AFZA, are permitted to provide services to clients for registering offshore companies, registered office and for acting as the agents for the companies.

Salient features of the International Company:

  • Companies will have a limited liability status;
  • Minimum capital requirement of AED 10,000;
  • Requirement to have an approved registered agent either within the Free Zone or in the Emirate of Dubai;
  • Requirement to appoint shareholder, Directors, Manager and Secretary;
  • Bearer shares are not permitted;
  • No personal or corporate income tax;
  • No requirement to have the accounts audited on an annual basis.

International companies are allowed to:

  • Have contacts with legal consultants, lawyers, accountants and auditors;
  • Have bank account in the UAE;
  • Become shareholders in a new or existing Free Zone Entity or an LLC;
  • Hold shareholders’ and directors’ meetings within the UAE;
  • Carry out international trading.

International companies are not allowed to:

  • Do business with persons resident in the UAE;
  • Carry on banking business;
  • Carry on business as an insurance or re-insurance company, insurance agents or insurance brokers;
  • Carry on any other business which may, by regulations, be prohibited by the authorities.

The offshore companies can be utilized for carrying out the following activities:

  • General Trading
  • Consulting and Advisory Services
  • Holding Company
  • Investment and Joint Investment Company
  • Property Owning (subject to the local laws)
  • International Services
  • Professional Services
  • Shipping and Ship Management Companies
  • Commission Agents Company – Intermediary Brokers (IB’s)

Although the intent is to compete with the offshore companies from the Jebel Ali and Ras Al Khaimah free zones, Ajman offshore will need to beef up the features of its new offering to pose a serious threat to these established free zones.

(This article is compiled by Mr. Chaitanya Kirtikar, Manager, Offshore and Free Zone Services)

Meydan Free Zone
Meydan, the most important new business, sporting and lifestyle destination in Dubai and Meydan City Corporation oversees the development of the United Arab Emirates’ iconic horseracing development. It will serve as a major business and conference district. Located in the heart of Dubai, Meydan Free Zone (MFZ) provides businesses with a powerful global advantage. Offering highly competitive start-up costs without compromising on standards in location and ease of incorporation, MFZ drives your business with an extensive transport network, state-of-the-art telecommunications, a wide range of banking services and high-speed internet connectivity. MFZ also provides intelligent Information technology support through a team of professionals from around the world.

Meydan City will feature the MFZ and four distinct sub-districts – Meydan Racecourse, where the Meydan Grandstand takes centre stage and is home to the Dubai World Cup; Meydan Metropolis, a series of state-of-the-art business parks; Meydan Horizons, where business towers intermingle with luxury waterfront developments, and Meydan Godolphin Parks, with its distinctive Godolphin Tower created in the image of a thoroughbred, where the shopping destination Signature Mall is located.

Having the flexibility to operate through a flexi desk as opposed to having to get a full time office makes it easier for you to focus on maximizing your business without having to pay high commercial rental fees.

Advantages of setting up in MFZ

  • 100% business ownership for expats and sole shareholders are allowed;
  • Ability to operate through a flexi-desk;
  • Premier location for new business locating to Dubai;
  • Strategic location near Mohammed Bin Rashid Al Maktoum City, close proximity to the Dubai Logistics Corridor;
  • Secure regulated environment;
  • Guaranteed 50-year tax holiday on personal and corporate tax;
  • 100% capital repatriation;
  • Seamless and efficient licensing and registration procedure;
  • Type of licences offered are Manufacturing / Industrial, Trading and Services.

Initial interaction with the MFZ authorities suggests that they are quite selective in their choice of investors and it will be interesting to see if, and how, they plan to compete with the more popular Dubai-based free zones in the near future.

(This article is compiled by Mr. Sadiqali Bhojani, Manager, Free Zone Services.)