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

VOL 17, Issue 4 October 2015

OFFSHORE UPDATE

Dubai Design District – New Kid on the Block

Let’s face it. Most of us look at the new kid on the block as an outsider. Someone who will have difficulty fitting or blending into the crowd, someone who will be bullied till he quits or becomes part of the pattern. Here’s a new free zone in the already crowded free zone ‘space’ that is jostling and trying to be heard and stand out as someone with the right attitude.

The Dubai Design District or d3 as they like to call themselves – is a purpose-built community dedicated to promoting and nurturing emerging local talent and providing a creative home to established international design, luxury and fashion brands.

d3 is the newest of TECOM Investments’ Free Zone business parks with 11 buildings currently under construction. Once complete, d3 is aimed to be the beating heart of the Middle East’s design scene catering to the full value chain of the design, fashion and luxury industry – and all with the vision of creating a world class creative community that engages, nurture and promotes local, regional and global design talent. The development will include a 1.8 km waterfront development which will be populated with food and beverage outlets, hotels, retail outlets and a multi-use outdoor space.

d3 is located close to Mohammed Bin Rashid City and adjacent to Dubai’s Business Bay. The District is situated beside Dubai Creek, and behind Burj Khalifa and Dubai Mall.

So will it deliver? Only time will tell. However, one can safely say that it has all the trappings of a winner. Here’s a brief overview of the free zone.

Features

  • d3 offers a visually stunning mix of land and leasable space to nurture a creative collective of design talent. The idea is to combine carefully curated developments with technologically smart infrastructure to create a vibrant, sustainable and commercially viable community.
  • Smart city principles enhance connectivity, provide green solutions and raise living and working conditions for everybody – using technology to design a better world.
  • At d3, state of the art offices are home to global brands while studios and ateliers house local businesses.
  • Creative, customizable spaces are ideal for up and coming entrepreneurs and are designed to forge an active design community that is tailored to contemporary business needs.
  • It is easy to join the community. Freelancers can use flexible warehouses, design studios or hot-desks and local and branch offices can move in to brand new world-class offices ready for fit-out.

Types of entities allowed
d3 provides individuals and companies with the choice of operating either as a free zone entity or as an on-shore business. Each set up has its own merits:

A – Freezone License

  • 100% Foreign Ownership
  • Full repatriation of profits and capital
  • 50 year tax exemption

B – DED License

  • 51% owned by UAE nationals
  • Allowed to operate in the mainland and the zone.

d3 also provide freelance permits so that talented and ambitious young artists and designers can get a foothold on the commercial ladder and work in an environment that reflects their needs. The physical spaces at d3 are designed to provide this kind of flexibility.

Freezone

Freezone licenses are often a preferred option for companies that wish to retain 100% foreign ownership. Operating with a Freezone license means that you have the freedom to work within the zone. There are a number of different types of Freezone licenses, each attracting zero tax and full repatriation of profits:

  • Free Zone Limited Liability Company (FZ LLC)
  • Branch of a UAE company
  • Branch of a foreign company
  • Freelance permit

Commercial and freelance
All Freezone licenses come under either a commercial license or a freelance permit. Commercial licenses can either be a Freezone Limited Liability Company (owned by a natural or a corporate) or a Branch Company (a branch of either an existing UAE company or a foreign company). Freelance permit enable individuals to work as a sole proprietor for the specified activity.

Definitions of each Freezone license FZ-LLC

  • Wholly owned by the Company – an independent legal entity
  • Zero corporation or income tax for employees
  • Ability to repatriate 100% of profits
  • Can only operate within the Freezone
  • Must have at least one Director
  • A minimum capital requirement for incorporation is required

Branch office of an existing UAE company

  • 51% locally owned
  • Zero corporation or income tax for employees
  • No share capital required
  • Conducts all or some of the operations inherent in the parent’s business

Branch office of an existing foreign company

  • Zero corporation or income tax for employees
  • No share capital required
  • Not a separate legal entity from its parent
  • Conducts all or some of the operations inherent in the parent’s business

Freelance license

  • Offers the ability to operate as a freelance professional
  • Identified as a sole practitioner
  • Enables practitioner to conduct business under birth name as oppose to a brand name

Capital requirements
Depending on licensing category between AED 50,000 to AED 100,000

Main Segments and activities allowed

  • Marketing
  • Fashion (including Manufacturing )
  • Luxury (including Manufacturing )
  • Interior, Furniture and Objects (including Manufacturing)
  • Design
  • E-Commerce
  • Technical and Occupational Skills
  • Beauty Care
  • Art
  • Freelancer
  • Advertising and Communication
  • Media and Marketing Services
  • Event Management
  • Event Support Services

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