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Offshore Company Formation in JAFZA
Kreston Menon
JAFZA is one of the fastest growing freezones of Dubai with its own set of regulations, and was created for the express purpose of attracting foreign investment. The Jebel Ali Free Zone (JAFZA) Offshore companies are non-resident companies with special status and are formed under the JAFZA Offshore Companies Regulations enacted on 15. 1.2003. Let’s take a look at the advantages and benefits offered for offshore company formation in JAFZA.
What you Should do for Offshore Company Formation in JAFZA?
At the outset, this freezone was set up to become a global business hub. With its solid infrastructure and strategic location, JAFZA is an attractive proposition for offshore company formation Dubai. Here entrepreneurs can register offshore company in Dubai and also free zone companies with licenses to operate. Though licenses are mandatory for doing business in UAE, offshore companies do not require an operating license as they cannot conduct trading, manufacturing or business within the Emirates.
So why are investors happy to setup offshore company in JAFZA? Let’s take a look at the special advantages offered by this special economic zone:
- A company registered in JAFZA has a legal status for carrying on bona fide business and makes it easy to conduct business within the Middle East
- JAFZA offshore has a reputation as a serious global hub for trading and manufacturing, which is advantageous for the company
- Only offshore companies registered in JAFZA can own property, either in their individual names or through UAE companies
- Offshore companies registered in JAFZA can easily open bank accounts in Dubai
- No taxation and no restriction on capital and profit repatriation
- Assistance with banking, insurance, visas, accounting, legal matters, feasibility studies and so on
These are the steps for offshore company formation in JAFZA:
- You need to contact a reliable JAFZA authorized agent for the registration process
- Get an official quote for the scope of work you need, like registration, nominee services, opening bank accounts, any specific attestations required
- Submit three names for the company out of which one will be finalized by the authorities
- Decide upon the activities of your business – property investment, consultancy, trade, or acting as a holding company
- Determine the share capital
- Finalize the list of shareholders, a minimum of 2 directors, and secretary
- Submit the mandatory documents, like passport copy, address proof, reference from bank and shareholders’ resume.
- The Memorandum, Share certificates, fees and application forms signed by the shareholders, secretary and directors is submitted in the presence of the shareholders.
- If the Registrar is satisfied that everything is in order, the company is registered in three days.
Offshore company incorporation JAFZA can be done as limited liability companies. The companies can be formed with a single shareholder, and there is no limit on the maximum number. The company should have ‘limited’ as a suffix to its name.
Companies have to pay a one-time registration fee of AED 10,000 and an annual fee of AED 2,500 to renew it. Land and office space is provided at reasonable rates and easy terms of renewal.
Offshore company setup in JAFZA can engage in the following activities apart from those mentioned before:
- Interacting professionally with legal consultants, lawyers, accountants and auditors
- Holding shareholders and directors’ meetings
- Opening branches or representative offices worldwide
- Holding shares of a limited liability company being formed in Dubai or elsewhere in UAE
- Holding shares in any other entity formed within the UAE, outside the UAE or within UAE Free Zones
Here is an infographic that accompanies the services about Business Setup Dubai
(Click infographic to enlarge.)
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Business Setup in Dubai Technopark
Kreston Menon
Dubai is a flourishing, vibrant city and the most cosmopolitan of all of UAE’s Emirates. The city-state has been fortunate to have a liberal and progressive thinking government that realized from a nearly time, the importance of foreign investment to drive development. They dreamt of a Dubai that would rival Western cities like London and New York as far as business and industrialization was concerned. To realize this dream, the rulers ensured an open economy, and also set up Dubai freezones to entice foreign investment.
Also Read about: Company Formation in JAFZA
These special economic zones generally have rules and regulations that are more liberal than normal. Let’s take a look now at Technopark at Jebel Ali in Dubai.
Built on a sprawling 21 million square meters of land, this special economic zone was created to promote research and development in technology, and to some extent, water management. The facility can house 60,000 permanent residents and 133,000 employees. It began functioning in 1985, and is managed by the Economic Zones World. Entrepreneurs who want business setup in Dubai Technopark can do so in one of these three segments – Trading in specified items, Professional or Industrial Activities. The main activities are one of the following: mobility, logistics, engineering, health, water and energy.
The business setup in Dubai Technopark has to be as one of the below mentioned legal entities:
- Limited liability company ( in accordance with UAE commercial companies Law )
- GCC national owned sole proprietorship
- Civil partnership firm for investment in intellectual faculties (in accordance with Federal Civil Transactions Law)
- Branch of a free zone entity
- Branch of a foreign company
The Technopark special economic zone lays heavy emphasis on R&D in technology and managing the scare water resources of the Middle East. What with having access to the resources of the finest academic institutions and international organizations and interacting with the best brains in the fields, working in the Technopark is an unparalleled experience.
Company formation in Dubai Technopark requires less paperwork and minimal hassle, as the rules and regulations in special economic zones are far more liberal. Let’s examine the special advantages of the Technopark at a glance:
- Easier granting of visas: the number depends on the type of facility leased
- Authorities provide land and office space on easy and renewable lease terms
- Water and power connections are provided at reasonable rates
- Strategically located close to Jebel Ali port, Al Maktoum International Airport and the JAFZA, logistics and transportation is a breeze
- Easy access by road (8 entry points), metro rail and by sea port
- Excellent sea to air transshipment facilities
- The self-contained township hosts posh hotels, lavish living spaces, shopping malls, educational institutions, well maintained roads with smoothly moving traffic and manufacturing units that are located away from residences – making it an excellent place to work and live.
- Efficient management of environmental resources, sustainable industrial development communication and IT, life sciences, socio-economic knowledge – the Technopark focuses on these core areas.
By business setup in Dubai Technopark, you can rub shoulders with some of the world’s leading researchers and innovators, and work together to deliver innovative solutions to improve life on the Earth.
Here is an infographic that accompanies the article about Company formation in Dubai
(Click infographic to enlarge.)
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Investing in India – Opportunities, Trends and Challenges
Kreston Menon
This article coincides with the successful state visits of the Indian Prime Minister, Narendra Modi to France, Germany and Canada as well as the fruitful visit of Kerala Chief Minister, Oommen Chandy to the UAE, which included a high level meeting with His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and the Ruler of Dubai. The ultimate aim of both the leaders were the same: Bring investments to India.
As I am trying to do a reality check on the ground realities related to Foreign Direct Investments in India, I would like to emphasize on the investment opportunities, trends and challenges for the potential investor. People may have divided opinion on the style of functioning of the Prime Minister, but I am sure everyone will agree with me that he has brought a positive change in the perception of investors. Any investor would like to have a strong leader, who stands for reforms, who talks straight and means business, who is hands on and demands results. Let the politicians discuss about the other side of it, but for the business community he is a leader who has a vision and plan for tomorrow.
The “Make in India” initiative of the Indian Government has been well received by investors. The Kerala Government has given the nod to go ahead to build the metro coaches at the Sri City manufacturing unit of the French Giant Alstom, rather than importing them from France. Responding to Modi’s Make in India initiative, Airbus says it is prepared to manufacture aircraft in India, and has plans to raise component outsourcing to $2 billion over the next five years from $400 million at present.
No one has doubts about India’s significant manufacturing expertise. The entry into Mars orbit of the ‘Made in India – Managed by India’ Mangalyaan satellite trumpeted to the world the country’s skills in high technology. Yet India’s manufacturing industry is significantly small, both as a proportion of the economy and in terms of its share of global exports. It requires robust and drastic action to modernize archaic employment laws, simplify taxes, redraft dysfunctional trade agreements and fix the country’s chaotic and inferior infrastructure.
Also Read: The Seven Essentials of Successful Business Innovation
But the positives weigh more. Exports as a percentage of Gross Domestic Product have more than doubled – from 6.9% to 17%, since 1992, when Dr. Manmohan Singh, the then Finance Minister and later Prime Minister, introduced a pioneering budget that opened the Indian economy to the world. India exported more than $313 billion in goods in the fiscal year to March 2014 compared to $18 billion in 1992.
The surge in exports reflects a broad diversification in both product range and destination markets, which has accelerated in the past decade, moving away from the traditional trends. The share of traditional exports such as textiles, ready-made garments, leather products and agricultural commodities has fallen significantly over the past two decades. Petroleum products and engineering goods such as machinery and parts, transport equipment and electronic goods now account for more than 40% of exports.
If we look at the sector wise contribution to GDP, India is doing pretty well in services sector (includes IT, tourism, retail, banking, finance) which contributes 53% to GDP and employs 27% of the work force. Manufacturing or Industry (petroleum, pharmaceuticals, gems, jewelry, textile, mining, engineering industry) contributes 27% and employs 22% of total workforce. Agriculture contributes 14% but employs 51% of the total workforce. or so and will continue to do so; thanks to the advantage we have in the Information Technology sector. Agriculture sector needs to be mechanized in such a way that the productivity goes up exponentially ensuring food security to the billion plus population.This high per-person productivity will help the surplus manpower to move from agriculture to the manufacturing and service sectors.
Long-term growth drivers for India
• Demographic dividend
Currently half of India’s 1.2-billion population is under the age of 25. By 2020, India will have the world’s youngest population, with a median age of 29 years, compared with a median age of 37 in China. This demographic dividend could potentially give India the biggest labor force and make it the largest consumer market in the world.
• Growing middle class
India’s educated, tech-savvy and relatively affluent middle class of 250 million already represents one of the biggest consumer markets in the world.
• Low penetration of goods and services
Despite the economy’s progress over the past quarter-century, the Indian market still has a relatively low penetration of goods and services, which translates into massive untapped potential. For example, in 2009, there were only 11 passenger cars per 1,000 people in India, compared with 34 in China, 179 in Brazil, 233 in Russia, and 440 in the U.S.
• India is a mature democracy with well established institutions
India has a thriving business sector with dynamic SMEs and large companies that are increasingly expanding overseas, educational institutions that are among the world’s best, and competent financial organizations. RBI plays a responsible role in regulating the banks and the Indian stock market is one of the most mature and vibrant financial market. The daily turnover in the Equity Cash segment of National Stock Exchange (NSE) is around $3 billion and that of Bombay Stock Exchange (BSE) is half a billion dollars.
• Reforms Matter
In India, these include foreign direct investment, the Land Acquisition Bill, the coal and power sector, direct transfer subsidies and streamlined tax regimes. The government will have to take bold steps like allowing foreign investments into the key sectors and even divesting the PSUs, even the profit making ones.
• China-style GDP Growth
India is expected to have the fastest GDP growth rate in emerging markets and will beat China by 2016 if it grows over 7.5% next year. The government is counting on 8%. But you also have to note that India began its economic reforms in 1991 where as China began in 1980. China is today a $10.4- trillion economy and India is just a $2-trillion economy.China successfully built ultra modern cities and the rural areas were transformed to major business hubs. Similarly, the Indian Government has announced the plan to build 100 smart cities across the country.
• India Vs China
Under pressure from USA, China had to appreciate its currency which is eroding its export competitiveness. Currently the wages in India’s organized manufacturing sector is $1.50 an hour unlike China’s which stands at $3 an hour which implies India has a competitive advantage in terms of labour costs. Sustained effort over the next 10 years can definitely make India a manufacturing hub.
The Challenges
Improve the ease of doing business. Present Government has kept the goal of attaining 50th rank from the present rank of 134 in the next two years. Time taken in registration of business from existing 27 days be reduced to only one day as in Canada and New Zealand is one of the targets. Decision making has to be rule based and not left to the discretion of the individual which is Crony capitalism.
Provide clarity on taxation issues, merger & acquisition process. The recent examples of Nokia shutting its plant in Chennai because of tax issue and the Vodafone retrospective tax issue definitely had a negative impact on International investors exploring investment opportunities in India and was keeping potential major players away from India. I appreciate the Finance Minister Mr. Arun Jaitley for bringing some clarity to the issue, which might allay the fears of foreign investors.
Focus on quality education and not just improving skills. Skills are transient and might become redundant with changes in technologies. Quality education will ensure that people will continuously learn new skills to meet the changing requirements of an economy. Labour reforms are the need of the hour. Incentivize good performance rather than making it tenure based. We have numerous examples of PSU in India who are struggling to stay afloat because of inflexible labour laws. BSNL is a prime example of this. Labour reform is about adopting practices linked with growth of the contributing employee along with the growth of the organization.
Increasing FDI by opening up various sectors on need basis. Present government having a majority of its own must conduct the economic reforms at a good pace. The initial signs are encouraging but can it be sustained is the big question which only time will answer.
India offers a great opportunity for investments. And the world is looking towards India. India is undoubtedly emerging as the leading Global Economic Power and an Emerging Market.
This article was originally published in Kreston Menon April-June Newsletter.
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Company Setup in DMCC
Kreston Menon
Dubai is known as the business capital of the Middle East thanks to its liberal economy and a Government which is progressive in thought. Its cosmopolitan culture also makes Dubai attractive to foreign entrepreneurs for Company setup in DMCC.
To encourage more foreign investment which they realized would be the driving force for the economy, the government established several special economic zones in Dubai called freezones, with more liberal regulation and minimal taxation. Let us take a brief look at one of these special zones, the Dubai Multi Commodities Centre or DMCC.
Started in 2002, the DMCC was incorporated under the legislation passed by the Chairman of the PCFC on 01.05.2002. Company formation in DMCC can be in one of these segments: commodities, gold, pearls, diamonds, tea, cotton, minerals and metals. The business will be incorporated as a DMCC company, with the minimum capital specified at the time by the DMCC authorities.
Advantages of Company Setup in DMCC :
- You can start business with just one shareholder; no limit on maximum numbers, however, subscription needs to be AED 50,000 above the standard minimum capital.
- You can operate out of privately developed properties
- No income or corporate for a minimum of 50 years
- No restriction on ownership or capital repatriation
- Minimal paperwork
- Licenses granted for a comprehensive range of services
- Office space and land can be purchased or leased at very reasonable rates
- Versatile office solutions
- Provision of speedy immigration and other Government services
- Conducting events, workshops and sector specific clubs for networking opportunities
- Provision of training on latest trade regulation developments and standards of compliance
Company Setup in DMCC is easy, these are the steps
- Decide what type of company you want – branch of local or foreign company, limited liability company: either as a newly formed entity with single or several shareholders, or as a fully owned subsidiary of a foreign or local company.
- Select the business activities as per your business plan – whether you want to do trading, service or industrial activity.
- You can also consider additional customized license structures like the Single Family Office option which helps in managing the wealth of a family.
- Choose the company name.
- Submit application with required paperwork like passport copy, residence proof, business plan, and other documents as may be required according to your type of business.
- To make things even easier for businesses, online applications are also allowed.
Once your business setup in Dubai or Dubai Multi Commodities Centre, you gain access to a broad range of ancillary services from the Zone authorities like international courier services, commemorative certificates, insurance schemes for health, employee compensation and third party liability, exclusive credit cards for members of DMCC, and more.
The DMCC will also be starting a tech hub to help startups to function in a collaborative atmosphere among likeminded business people, with negligible upfront expenses. This round the clock tech hub will have offer training, workshops, a programmers’ ‘coding cave’, and more.
To provide easy access to the central registry of ownership for stored commodities in Dubai, an electronic system called the DMCC Tradeflow was started in 2012. Its main intention was to encourage commodities trade by providing more security to both warehouse owners and traders through various methods. The online platform also provides a secure platform for e-trading, accessible from anywhere in the world.
Any business consultants in Dubai will tell you that company formation in DMCC means being part of a vibrant and fast growing economy; so make full use of it!
Here is an infographic that accompanies the article about Company Setup in DMCC:
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Company Formation In DAFZA Makes Good Business Sense: Here’s Why
Kreston Menon
Dubai: The very name conjures up images of sand dunes, camels, locals rubbing shoulders with people from all over the world, extravagant malls, the Burj-al-Arab, lavish lifestyles – all in all, a thriving, futuristic desert city. With its cosmopolitan culture, open economic structure, strategic location and superlative infrastructure, it makes sense for company formation in DAFZA.
Dubai has been fortunate to have been ruled by a visionary and liberal Government that realized the value of inviting foreign investment. Almost since inception, this Emirate has encouraged foreigners for business setup in Dubai . With that objective in mind, they framed regulations for that specific purpose. Minimal paperwork, absence of taxation, provision of robust infrastructure, etc. are some of the reasons that make company setup DAFZA very attractive to foreigners.
The Government has also established several special economic zones called Free Zones for the express purpose of attracting foreign investment. Let’s check out one of the busiest and most popular free zones in Dubai, the DAFZA. It was established in 1996, adjacent to Dubai International Airport to help drive Dubai’s economy with foreign investment, DAFZA currently has over 1600 companies operating there in sectors as varied as aviation, IT, jewellery, pharmaceuticals and food and beverages, among others.
Company formation in DAFZA as one of the following – Free Zone Establishment, Free Zone Company, Local Company Branch, Foreign Company Branch, in any of the following industry segments: trading, light industry, assembling, services and logistics.
Company setup DAFZA is easy as 1-2-3.
Choose the licence best suited for your business
Choose which category your business falls into
Submit the requisite paperwork
Three types of licences are offered in DAFZA:
Trade Licence – for importing, exporting, distributing and storing specific products included in the approved list
Service Licence – the license should be for the same activity as the parent company’s license, dispensed by the Economic Department or Municipality of the appropriate Emirate in the UAE.
Light Industry – granted for the manufacture, processing, assembly and packaging of approved products. Hazardous products will not be given approval because of DAFZA’s closeness to Dubai Airport
Advantages of Company Setup in Dubai Airport Free Zone:
No restriction on foreign ownership
No restriction on repatriation of capital and profits
No taxation – corporate or on personal income – for up to 50 years; this can be extended
No import or re-export duties to pay
No restriction on employing foreign talent
No restriction on foreign exchange
Options to lease land and develop it as required for the business
Help with visa provided
On site customs, health and security services
Expedited processing of all paperwork and customs procedures
Top notch facilities like spacious offices, warehousing and other facilities
Provision of power and water connections at reasonable rates
Corollary services like banking, insurance, financing are easily available
Dedicated logistics and cargo handling facilities
Strategically located next to the airport which offers connectivity to 200+ cities
The only drawbacks are that once you’ve established your company in the DAFZA, then business setup Dubai is not possible – your operations and offices have to be confined to the free zone region.
But the advantages far outweigh this drawback – and that’s why it makes excellent business sense to your company formation in DAFZA.
Here is the infographic that accompanies the procedures for business setup Dubai:
(Click infographic to enlarge.)
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Why you Should Set up Your Company in JAFZA?
Kreston Menon
Dubai is a flourishing cosmopolitan city which offers excellent living conditions, making it an ideal location for starting a business and having a comfortable family life. Known as the business capital of the Middle East, Business setup in Dubai is relatively easy and hassle free. Its strategic location, liberal economy, presence of special economic zones, and solid financial infrastructure availability make it attractive as a business hub.
Dubai’s progressive thinking Government realized early on, the advantages of attracting foreign investment for the purpose of their own growth, and so they have always encouraged company setup in Dubai by foreign businesses. Towards this goal, they set up several free zones with special, easy rules – absence of taxation being the most attractive feature.
Let’s examine one of the first, most popular and flourishing free zones in this Emirate, the Jebel Ali Free Zone, or JAFZA. Setting up a business in JAFZA involves three simple steps:
- Submitting your application
- Selecting the products, registration, and payment of fees
- Receiving licences and products
Yes, that’s all it takes. The headaches connected to acquiring land, office space, warehousing, power connections, even visas – is all handled by the Zone authorities. Paperwork is minimal – no wonder that investors are keep to setup company in JAFZA.
Starting its operations way back in 1985, JAFZA allows businesses to be set up as one of the following legal entities – Free Zone Company, Free Zone Establishment, Branch of a Foreign Company, or as a Branch of a Local Company, in one of the following industry segments – logistics, service manufacturing, assembling or trading. Today, more than 7000 companies are successfully conducting their business within JAFZA.
The infrastructure facilities at JAFZA ensure that you get all that you need for a business set up Dubai might require, like land plots, office spaces, warehousing facilities, showrooms, on-site accommodation, tailor-made development solutions, and so on. Everything has been created to suit the precise requirements of manufacturing and trading businesses.
Let’s take a quick look at the advantages of company setup in JAFZA:
- 100% foreign ownership is possible
- Exemption from income and corporate tax payment up to 50 years, extendable
- 100% capital repatriation allowed
- Exemption from import and re-export duties
- No restriction on currencies
- Ability to hire 100% foreign employees
- Premises can be mortgaged to banks or finance companies
- Customs can be arranged onsite
- Authorities help in obtaining visas
- Banking, finance, insurance and other necessary services are easily accessible
- Opening corporate bank accounts is easy
- Convenient location near Jebel Ali port and Dubai airport allows convenient logistics to transport hubs
- Authorities provide water and electricity connections and supply at reasonable rates.
However there are a couple of drawbacks: JAFZA has one of the highest capital requirements of all company setup free zones in Dubai, and rentals and one time fees are also on the higher side. There is also a pretty long list of companies applying to do business in JAFZA, so you may have to plan well in advance, if you are interested.
It must be said though, that the solid infrastructure, liberal regulations, and ease of business setup in JAFZA, makes it a great place for Dubai company setup.
Here is the infographic that accompanies the article about Company Formation in JAFZA:
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