1. IS YOUR COMPANY ELIGIBLE FOR GLOBAL BUSINESS ENTITY STATUS?
- Be licensed by the Jebel Ali Free Zone Authority;
- Be incorporated in, or transfer its domicile to, the Jebel Ali Free Zone;
- Operate as a holding company, an investment vehicle, or headquarters for general or specific corporate operations; and
- Meet an “economic substance” test i.e. demonstrate that adequate resources will be deployed and available in the UAE to carry out licensed activities.
2. THE GBC ENTITY DIFFERENCE?
A GBC entity is a corporate vehicle capable of serving as global headquarters with UAE tax residency. Therefore, a GBC entity is not an “offshore vehicle” for UAE legal purposes or for international banking purposes. Any GBC entity can be 100 percent foreign-owned. The regulations governing GBC entities are based on common law principles similar to the corporate laws of England. The Dubai International Financial Centre Court can resolve any dispute. A division of the Jebel Ali Free Zone Authority will provide concierge service to assist GBC entities with the incorporation process, liaise with UAE government entities and utilities and process business licensing and visas. The concierge service can also act as the registered agent of the GBC entity.
3. IS A GBC ENTITY OR ARE BRANCHES IN THE UAE SUBJECT TO ANY CORPORATE INCOME TAX?
Currently, no companies (excluding UAE oil and gas production and bank operations), established within the UAE or its free zones are subject to any corporate income taxes. Likewise, there are no withholding taxes applied to the dividends companies pay to recipients outside the UAE.
4. CAN A GBC ENTITY BE USED AS AN INTELLECTUAL PROPERTY HOLDING COMPANY?
5. WHAT ARE THE ECONOMIC SUBSTANCE REQUIREMENTS?
A GBC entity must:
- Have personnel in UAE to manage licensed activities carried out in the UAE; staff can be located in the Jebel Ali Free Zone or at any other location in the country with a registered GBC entity branch or representative office;
- Have an adequate number of employees, physically present in the UAE, to carry out licensed (i.e. head office) activities;
- Incur adequate expenditure in the UAE to carry out licensed activities; and
- Have adequate physical assets in the UAE to carry out licensed activities.
6. CAN A GBC ENTITY OWN A MANUFACTURING OPERATION?
A GBC entity cannot carry out manufacturing itself. However, it has the capacity to incorporate and own subsidiaries. The relevant regulator will govern subsidiary operations. The Jebel Ali Free Zone and the emirate of Dubai offer manufacturing zones for foreign-owned companies to operate manufacturing and logistics facilities.
7. WHAT ROLE DOES THE GBC COUNCIL PLAY?
The GBC Council will provide a forum for registered GBC entities to share collective insights, opportunities, and experience in Dubai. This group will convene twice each year, with senior leadership of JAFZA and DP World in attendance.
8. HOW DOES THE GBC ENTITY INTERACT WITH THE CONCIERGE SERVICE ORGANIZATION?
The Concierge Service will perform local administrative services for the GBC entity and provide a user-friendly interface for the GBC entity with Dubai and UAE governmental authorities.
9. HOW CAN A MULTINATIONAL CORPORATION RESTRUCTURE EXISTING DUBAI ENTITIES FOR SUSTAINABLE FUTURE EXPANSION OF GLOBAL BUSINESS OPERATIONS?
The Global Business Corporation Regulations 2019 provide a mechanism for any existing corporate entity to convert to a GBC entity. Of course, in the case of preexisting entities the original constituent documents or law would have to permit transfer to another jurisdiction. Alternatively, a new entity could be set up as a GBC entity holding company for existing multinational companies.
10. ARE THERE EXCHANGE CONTROL OR CURRENCY REGULATIONS?
There are no currency exchange controls and no restrictions on fund or dividend remittance, except for restrictions on transactions involving Israeli or Iranian counterparties or currencies.
11. HOW DIFFICULT IS IT FOR A SPOUSE TO GET A WORKING PERMIT?
In general, any spouse who can secure a job offer from any UAE employer is able to obtain a working visa linked to that position.
12. HOW DOES THE COST OF LIVING COMPARE TO OTHER MAJOR CITIES?
The cost of living in Dubai is generally lower than that in developed Western countries. Accommodation costs and private school fees are the exception; they are relatively high. However, residents have no personal income tax.
13. WHAT ARE THE APPLICABLE EMPLOYMENT LAWS IN THE UAE?
The UAE Federal Labour Law imposes minimum standards on the termination of employment, working hours, vacation time and safety standards, among other things, which cannot be contractually broken. All employers in the UAE (other than those in exempt categories or in free zones) must register with the Ministry of Human Resources and Emiratisation (“MOHRE”).
Trade unions and collective bargaining are not currently permitted. For both UAE nationals and non-nationals, employee grievances are handled through a conciliation process the MOHRE administers.
14. DO EMPLOYEES REQUIRE VISAS?
Employment visas are required for foreign nationals to work in the UAE. The entire process costs about 7,500 AED and takes four to five weeks. For a foreign national to obtain residency in the UAE:
- The foreign national must enter into an employment contract with an employer which is duly licensed in the UAE. Any GBC entity will be able to hire foreign nationals from almost any country in the world and employees will obtain residence visas linked to their continued employment. The number of employment visas allotted to the GBC entity is proportional to the area of the premises purchased or leased by the GBC entity.
- Employment contracts with the Ministry of Human Resources and Emiratisation (MOHRE) registered employers must be on the form prescribed by and registered with the MOHRE.
15. WHAT BUSINESS ACTIVITIES CAN A GBC ENTITY CONDUCT OUTSIDE THE JEBEL ALI FREE ZONE?
There are a number of free zones established within the UAE free from the foreign ownership restrictions. These restrictions apply to businesses registered by the usual regulatory and licensing authorities in the different emirates which make up the UAE. Usual authorities register and license businesses commonly referred to as “onshore” businesses (clear distinction from “free zone” businesses). JAFZ is the oldest and most successful free zone.
Any GBC entity can establish a branch office outside the free zone to carry out its core investment / management / administrative functions. However, trading and contracting businesses (involving unrelated customers or clients in the UAE) will usually require licensing by the “onshore” UAE authorities, and will be subject to their rules (often requiring majority UAE ownership).
16. HOW DOES THE NEW FEDERAL LAW ON 100% FOREIGN OWNERSHIP AFFECT THE GBC ENTITY?
Foreign shareholders can own 100% of any GBC entity due to concessions available to companies establishing through the Jebel Ali Free Zone.In September 2018, a new foreign direct investment law was established to provide a framework for the UAE Cabinet. This law permits foreign shareholders to own up to 100 per cent of companies in certain designated sectors.
These designated industry sectors have not yet been determined. Once fixed, industry sectors will not impact any JAFZA-registered entities, since foreign share-holders can wholly own GBC entities .