If you are a business owner of a foreign company looking to set up in the UAE and take advantage of the country’s unique trading location, modern infrastructure and tax exemptions, you may want to consider redomiciling your existing company to the UAE. This can be more advantageous than registering a foreign branch office or subsidiary.
What is redomiciliation?
Redomiciliation is a process by which you transfer a company’s domicile/seat of incorporation from one jurisdiction to another, while maintaining the same legal identity. This legal continuation allows the company to retain its legal status, corporate structure and all its transactional history.
This has become more prevalent over the last few years as companies look to mitigate unfavourable regulatory changes and tax obligations
Why consider redomiciliation?
Among the main reasons why companies consider redomiciliation is the opportunity to enter a new international market and the potential to reduce annual running costs.
The benefit of company redomiciliation over liquidating an existing company and setting up a new legal entity is the allowance for the company to retain its legal identity and all existing contractual relationships. This is beneficial because it reduces the time and costs involved with incorporating a business with a new legal identity such as the drawing up of new contracts and company incorporation documents and transferal of assets to a new entity. Essentially, the company can continue to carry out the obligations of its existing contracts as long as it’s fully compliant with all regulations in the chosen jurisdiction.
Another major motive for restructurings that involve redomiciliation are changes to tax obligations or regulatory requirements.
The OECD’s Base Erosion and Profit Shifting (BEPS) project, Economic Substance Regulations (ESR) and the more recently announced Global Minimum Tax directive have all disincentivised the use of offshore structures and encouraged a trend of offshore operations transitioning toon shore or free zone jurisdictions available in countries like the UAE.
How to redomicile a company to the UAE
Although redomiciliation is common in many civil and common law jurisdictions and island states which have legislation in place to allow the process, there is no legislative framework that recognises redomiciliation onshore in the UAE. However, there are several free zones in the UAE that have provisions in place which allow for redomiciliation. These include:
- Abu Dhabi Global Market
- Dubai Development Authority Free Zone
- Dubai International Financial Centre
- Dubai Multi Commodities Centre
- Jebel Ali Free Zone
- Ras Al Khaimah Free Trade Zone
The first step in the redomiciliation process is to establish the requirements in the Emigrating State. First and foremost, there should be a mechanism in place by which the redomociliation process can occur. Once this is established, the company will require:
- Authorisation for the application for redomiciliation
- A certificate of continuation issued by the respective registrar
- Confirmation that the shareholders/creditors of the company will not be unfairly prejudiced
- A statement of solvency of the company
Once the above has been confirmed and the documentation has been generated, consideration should be given as to the best free zone to migrate into. Most free zones are developed around a particular industry or business sector so one should be chosen that caters to the needs of your business. The business must then submit an application to the authority of the free zone requesting a free zone licence and specifying the activities which are to be carried out.
How can Global link help?
Redomiciliation to the UAE undoubtedly brings with it financial and strategic benefits. However, the process can be complex and will involve legal and tax due diligence as well as a thorough understanding of the pros and cons of each free zone.
Global Link has over 16 years’ experience working with local and global business, providing bespoke consultancy services for company incorporation in Dubai and the wider UAE.
We can help you through the process of company redomiciliation, advising you on the best jurisdiction for your business and liaising with all relevant parties on your behalf.
If you need advice on company redomiciliation or for any other company incorporation, visa or PRO service, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.