Jebel Ali Free Zone (JAFZA) in Dubai is a prominent free trade zone offering unique benefits for offshore companies. The JAFZA Special Status Non-Resident Company is an ideal structure for international trade, asset protection, and wealth management. This guide provides a detailed overview of the benefits, legal framework, compliance requirements, and tax advantages of setting up a JAFZA Special Status Non-Resident Company.
Overview of JAFZA Special Status Non-Resident Companies
JAFZA Special Status Non-Resident Companies are offshore entities incorporated in the Jebel Ali Free Zone. These companies are allowed to conduct business internationally but are restricted from carrying out trade or business within the UAE or any other free zone, with certain exceptions.
Key Features of JAFZA Special Status Non-Resident Companies
Business Activities: JAFZA non-resident companies can engage in international trade, consulting, professional services, holding intangible assets, investments, property ownership abroad, shipping, and ship management. They cannot engage in banking, insurance, fund management, or similar activities.
Real Estate: These companies may acquire real estate in designated areas and government-approved projects within the UAE.
Professional Services: They can have relationships with residents for professional services such as legal or consulting.
Banking Access: JAFZA non-resident companies have access to the UAE banking system and can open corporate bank accounts.
Legal and Regulatory Framework
Country Code: AE
Legal Basis: Based on common law principles, despite the broader UAE legal system being grounded in Sharia and Civil Law.
Legal Framework: JAFZA Offshore Companies Regulations
Company Form: Special Status Non-Resident Company (Company limited by shares)
Liability: Limited to the share capital.
Business Restrictions: Cannot trade with UAE residents or hold assets in the UAE, except for real estate in approved areas.
Share Capital and Shareholders
Share Capital: No minimum share capital required. Shares can be issued in any currency and on a non-paid-up basis. Bearer shares are not allowed.
Shareholders: Minimum of one shareholder required, who can be an individual or a corporation of any nationality. Shareholder details are not publicly disclosed, and nominee shareholders are permitted.
Directors and Secretary
Directors: At least one director required, who must be a natural person and can be non-resident. Director details are not publicly disclosed. Nominee directors are allowed.
Secretary: A local secretary must be appointed and cannot be a corporation.
Compliance and Reporting
Registered Address: Must have a registered office and a registered agent authorized by JAFZA.
General Meetings: No requirement for annual meetings or their location.
Electronic Signature: Permitted.
Re-domiciliation: Allowed for foreign companies.
Accounting and Audits: Must maintain accounting records, appoint an auditor, and file audited financial statements annually. Subject to an annual registration fee.
Taxation
Corporate Income Tax: Exempt from all forms of taxes as long as the place of effective management is outside the UAE and no permanent establishment is constituted within the UAE.
Other Taxes: No personal income tax, capital gains tax, real property tax, inheritance tax, estate duty, capital transfer tax, gifts tax, or wealth tax. VAT at 5% applies to most goods and services, but generally not relevant to JAFZA non-resident companies.
Place of Effective Management
Determining the place of effective management involves considering:
Location of board of directors' meetings.
Where the company’s officers make decisions.
Other factors evidencing management control.
Establishing Permanent Establishment
A permanent establishment in the UAE could be constituted if:
The company has a place of business, branch, or office in the UAE.
The company has a dependent agent in the UAE who regularly negotiates or concludes contracts on behalf of the company.
Conclusion
JAFZA Special Status Non-Resident Companies offer significant advantages for international businesses seeking a tax-efficient and business-friendly jurisdiction. With exemptions from corporate taxes, confidentiality provisions, and access to the robust UAE banking system, JAFZA is an excellent choice for companies engaged in global trade, investment, and asset protection.
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