Corporate Migration to the UAE
Companies are allowed under the laws of the UAE to change their jurisdiction.
Corporate migration enables companies to avoid liquidating the existing company and transfer portfolio of assets to an entity, incorporated for that purpose in a new jurisdiction which suits them better. Corporate migration is particularly popular with companies registered in jurisdictions without substance which have outgrown their environment and now seek to capitalize on the UAE’s business advantages and benefits.
Benefits of corporate migration in the UAE include: a zero tax jurisdiction, wide range of corporate vehicles, extensive network of tax treaties with over 80 countries, full repatriation of capital and profit, recognized financial hub, world class infrastructure facilities and connectivity, presence of internationally recognized financial, legal and tax services providers, primary hub and platform to access international business, high quality of life, political stability and liberal business environment.
Corporate migration (or, redomiciliation) is the process by which a company moves its domicile - or place of incorporation - from one jurisdiction (country) to another by changing the country under whose laws it is registered or incorporated, whilst maintaining the same legal identity. The ease with which corporate migration may take place has increased in recent years.
Corporate migration enables companies to avoid liquidating the existing company and lose its history and transfer portfolio of assets to an entity, incorporated for that purpose in a new jurisdiction.
In line with the international practice of permitting companies to change their seat of incorporation, companies are allowed under the laws of the UAE to change their jurisdiction.
Indicatively, it takes approximately one month to effect corporate migration in RAK ICC, in the UAE.
Companies migrate for a variety of reasons, including:
• to benefit from a favourable tax environment
• take advantage of less stringent regulation and scrutiny
• align their place of registration with their shareholder base
• move to an international financial centre
• access specialist capital markets
When an existing company migrates, the company’s existing legal status, goodwill and operational history is preserved. This process will allow for companies which currently operate in more expensive, difficult regulatory, high tax and high risk environments in other countries to migrate to another country without triggering a disposal of their assets or a diminution in their goodwill or operating history.
The registration system of authorities in the UAE allows companies to base their global operations and activities in the UAE, at very competitive costs. On the contrary, in many other countries offering such opportunities, the cost of similar services is far higher. Companies from offshore jurisdictions migrating in the UAE, can carry out business operations within the UAE, provided appropriate licences are obtained.
Benefits of the UAE
The UAE has successfully established itself as one of the premier structuring hub worldwide, primarily capitalizing on the following competitive advantages:
• Zero tax retime
• Wide range of corporate vehicles
• Extensive network of tax treaties with over 80 countries
• Full repatriation of capital and profit
• Recognized financial hub
• World class infrastructure facilities and connectivity
• Presence of internationally recognized financial, legal and tax services providers
• Primary hub and platform to access international business
• High quality of life
• Political stability and liberal business environment
Corporate migration is particularly popular with companies registered in jurisdictions without substance which have outgrown their environment and now seek to
is also expected that free zones in the UAE currently lacking corporate migration legislation will adapt their regulations and introduce it soon.
Corporate migration in the UAE
The legal framework of the UAE allows companies to change jurisdictions. Hence, foreign entities are allowed to replace their domicile and migrate in the UAE.
Within the UAE, a number of authorities pursue corporate migration, the most notable being:
• RAK ICC (International Corporate Centre)
• DIFC (Dubai International Financial Centre), and
• ADGM (Abu Dhabi Global Market)
RAK ICC is the most popular.
It takes approximately one month to effect corporate migration in RAK ICC, UAE.
What is required: The outgoing jurisdiction
a) The outgoing company must be fully up to date with statutory filings
b) There must be no on going legal proceedings against the outgoing company
c) Various documents need to be filed with and obtained from the outgoing registry
d) A certificate of good standing and certificate of incumbency must be provided
The incoming jurisdiction
Accordingly, an overseas company, if authorized by the laws of the jurisdiction in which it is incorporated, can apply for continuation as a company in the UAE’s RAK ICC. The application must include information and documents required by RAK ICC.
The company must, within 3 months from the date of issue of the provisional certificate, file with the authority a certificate evidencing that the overseas company has ceased to be incorporated under the laws of the current jurisdiction and return the provisional certificate of continuation.
Upon continuation of a company in RAK ICC:
• All assets, tangible and intangible, rights and all other property of any kind of the company continue to belong to the company
• The company, its officers and directors continue to be liable for obligations of the company prior to its migration
• Any existing cause of action, claim, duty or liability to prosecution in respect of the company is unaffected
proceeding pending by or against the company is unaffected
The DIFC is an established onshore financial centre strategically located between the East and West, which provides a secure and efficient platform for business and financial institutions to reach into and out of the emerging markets of the region. The quality and range of the DIFC’s independent regulation, common law framework, supportive infrastructure and its tax friendly regime make it the perfect base to take advantage of the region’s rapidly growing demand for financial and business services.
The DIFC fills the time zone gap for a global financial centre between the leading financial centres of London and New York in the West and Hong Kong, Singapore and Tokyo in the East. Guided by its core values of integrity, transparency and efficiency, the DIFC is playing a pivotal role in meeting the growing financial needs of the region.
Entities engaged in financial and legal services can set up in the DIFC.Corporate migration of foreign financial and legal entities is permitted in the DIFC.
Another option for financial services is ADGM.
ADGM is a new international financial free zone to connect the economies of the Middle East, Africa and South Asia with world markets.
ADGM has its own civil and commercial legal regime based on and incorporating aspects of English law, which apply within the defined geographical area of the free zone. The regime is independent of the existing legal regime in Abu Dhabi, so Abu Dhabi civil and commercial laws (comprising both Emirate laws and Federal laws of the UAE) will not apply in the ADGM but Federal criminal laws will apply. ADGM has its own independent registrar, financial services regulator and court system.
is permitted in the ADGM.
DMCC and DCC
DMCC (Dubai Multi Commodities Centre) also known as JLT and DCC (Dubai Creative Cluster) which includes 3 free zones - Dubai Internet City, TECOM, Media City - welcome corporate migration.
So far each application for corporate migration is considered on its own merits and in the next few months both authorities will announce their detailed regulations and conditions.
Example: Use of ADGM SPV for Corporate Migration
An entrepreneur sets up a digital product (the “IT product”). He registers a company (“IT co”) in an offshore jurisdiction and proceeds to raise capital to fund its commercial launch.
The offshore jurisdiction has struggled to meet OECD standards. The negative media scrutiny associated with offshore regimes is impacting IT co’s ability to raise initial capital. IT co also finds difficulties to open a relationship with a reputable custodian bank.
IT co migrates to ADGM in the UAE as a dematerialized SPV and achieves:
• capitalization in a credible jurisdiction
• straight forward common law regulatory framework
• low maintenance costs
• no tax
With its capital now raised, IT co launches a full operation. It starts with a small backoffice and a few staff members. IT co will license the use of its product worldwide and receive royalties.
Royalties are subject to withholding tax in several countries. IT co needs to obtain a tax residence certificate (TRC) in the UAE to seek double tax treaty benefits and reduce the WHT impact.
IT co rents an office within ADGM and evolves from SPV to a holding company, meets the criterion and achieves the follows:
• logistical needs are met
• substance and ability to obtain a TRC and benefit from double tax treaties
• no tax