Redomiciliation is a process whereby a company transfers its domicile from its jurisdiction of establishment to another. Currently, there is significant demand from companies globally to change their jurisdiction of establishment. As a consequence, redomiciliation as a concept has evolved and become easier to achieve. The United Arab Emirates (UAE) has numerous free zones, each with separate laws for operation and domicile and has become an increasingly attractive location for redomiciliation.
Why Redomicile?
Companies redomicile for a variety of reasons – whether commercial, legal or practical. When a company redomiciles to the UAE, it is converted into a UAE - registered company, which means that all rights and liabilities of the company transfer with it. In addition, the redomiciled company is automatically regulated under UAE law together with the relevant free zone laws and regulation that apply to the company.
The main reasons why companies redomicile to the UAE include the following:
- benefit from a favourable tax environment and 0% personal income tax
- extensive network of tax treaties with over 80 countries
- take advantage of less stringent regulation and scrutiny
- align their place of registration with their shareholder base
- move to an international financial centre
- access to local and international banks
- to increase the exposure and profile of the company in the Middle East
Where an existing company migrates or redomiciles to the UAE, the company's existing legal status, goodwill and operational history is preserved. This process will allow for companies who currently operate in more costly, difficult regulatory, high tax and high risk environments in other countries to migrate to the UAE without triggering a disposal of their assets or a diminution in their goodwill or operating history.
Common UAE free zones used for redomiciliation include:
- Abu Dhabi Global Market (ADGM): ADGM has its own court, with independent regulations abiding by a Common Law framework. The ADGM companies law contains detailed provisions for redomiciliation,
- Dubai Multi Commodities Centre (DMCC): DMCC has executed the process and regulations for migration of companies from other jurisdictions, including locally based free zones, assuming the originating jurisdiction's regulations similarly permit such transfer,
- Ras Al Khaimah International Corporate Center (RAKICC): Offshore companies, if permitted under the laws of the originating jurisdiction, can easily apply for continuation as a company in RAKICC and enjoy a tax neutral environment,
- Dubai International Financial Centre (DIFC): DIFC has its own court system, with independent regulations abiding by a Common Law framework. The DIFC companies law contains detailed provisions for redomiciliation; and
- Jebel Ali Free Zone Authority (JAFZA): JAFZA operates in conjunction with one of the largest seaports in the world. JAFZA has regulations allowing companies to transfer their registration from their home jurisdiction and to continue their business under a license from JAFZA.
Redomiciliation Eligibility
The main criterion is to consider whether the company's place of incorporation maintains the legal provisions for the proposed redomiciliation process and whether approval for redomiciliation may be granted by the laws of the home jurisdiction of the company.
In addition, before applying for redomiciliation into the UAE, it is vitally important to confirm a company's eligibility for registration with the relevant UAE free zone to which the company is proposing to be redomiciled to.
For instance, in the UAE, the ADGM and DIFC free zones companies law contain detailed provisions covering redomiciliation. As stated above, the company must be authorised to make such an application by the laws of the jurisdiction where it is currently incorporated.
Countries which currently allow redomiciliation include:
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Other Considerations
The process of redomiciliation of a company in to the UAE has two main stages:
- Preparation of documents for the transfer of business out of the jurisdiction of establishment; and
- The actual transfer process with registration to a new address in the relevant free zone in the UAE.
The redomiciliation process in the various UAE free zones is well established and understood by the relevant free zone authorities.
The redomiciliation process can be done within a reasonable time frame with the right help and proper guidance from a licensed professional on the ground in the UAE. Advice from corporate law and tax specialists in the originating jurisdiction should also be sought.
The ARP Law team of expert legal consultants can help and advise you on the best way to establish or redomicile your business in to the UAE. We are able to guide you with our expertise on any questions regarding redomiciliation in to the UAE. Given our years of experience in corporate advisory matters in the UAE, we are able to offer superior advisory service and clear direction and guidance to companies and / or investors who wish to set up or move their operations in to the onshore or offshore jurisdictions in the UAE.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
