Purchasing property in Dubai used to be highly complicated for foreign buyers and investors. Previously, UAE property laws prohibited expatriates from owning real estate in the UAE. However, due to significant interest from foreign investors in Dubai’s real estate market, Sheikh Mohammad Bin Rashid Al Maktoum, the ruler of Dubai, introduced new laws that allow expatriates to have freehold lease rights for up to 99 years. A Free Zone, or free trade zone, is an economic area with its own specific regulations that differ from those governing businesses outside the zone. Dubai Free Zone companies benefit from special tax and foreign ownership laws, facilitating the trade of services and products. These zones were established to diversify the economy and attract more foreign investors, offering them a conducive entrepreneurial environment to boost their profits. If you’re considering setting up a business or corporate firm in a Dubai Free Zone, consulting Dubai advocates and legal consultants or corporate law firms in Dubai can be highly beneficial.
The first Free Zone in the UAE, the Jebel Ali Free Zone, was established in 1985. Now, there are over 40 Free Zones across the UAE. If you are considering setting up a business or corporate firm in a Dubai Free Zone, here are some attractive benefits:
Real Estate Law Number Seven
Real Estate Law Number 7, passed by the Dubai government in 2006, is a significant piece of legislation in the city’s real estate sector. This law was introduced to ease the restrictions on expatriates regarding property ownership in Dubai. Before this law, UAE estate regulations prohibited expatriates from holding title to any property or land in Dubai. However, with the enactment of Real Estate Law Number 7, non-residents and foreigners are now permitted to obtain property ownership through lease or rent agreements. According to UAE property laws, these lease or rent agreements can extend up to approximately 99 years, providing a substantial period for expatriates to enjoy their property rights in Dubai. This legislative change has opened up the real estate market to a broader range of investors and has contributed to the city’s growth and development as a global investment hub.
Dubai Free Zones offer a diverse range of business licenses, which can be obtained easily with advocates and legal consultants in Dubai, tailored to various industries and professional endeavours, each designed to meet specific business needs and regulatory requirements.
One of the most sought-after licenses is the Industrial License, which is required for businesses involved in the production of goods and products. This includes the manufacture of machinery, chemicals, and food products. Companies with this license can benefit from specialized infrastructure and facilities designed to support industrial operations. The Professional License is essential for businesses offering professional services, such as consulting, accounting, and legal services. This license also caters to creative industries, including graphic design, architecture, and advertising. It allows professionals to operate within a legal framework that supports and protects their activities, ensuring they can offer high-quality services to their clients.
For individuals who wish to work independently, the Freelance Permit is an ideal option. This permit is designed for freelancers who want to offer their professional services as independent contractors rather than as employees of a company. It provides a flexible and supportive environment for freelancers to thrive and grow their businesses. The E-Commerce License is crucial for businesses involved in online trading and e-commerce activities. This license permits only the online sale of goods, ensuring that e-commerce businesses comply with relevant regulations and standards. It supports the growing digital economy by enabling entrepreneurs to tap into the vast online market. The Tourism License is required for businesses operating in the tourism sector, such as hotels, tour operators, and travel agencies. This license ensures that tourism-related businesses adhere to industry standards and regulations, providing quality services to tourists and contributing to Dubai’s reputation as a world-class tourist destination.
Finally, the Commercial License is for businesses engaged in trading activities, including wholesale and retail trade, import and export, and storage and distribution. This license allows businesses to operate in a competitive and dynamic trading environment, leveraging Dubai’s strategic location and excellent logistics infrastructure.
Each of these licenses is designed to provide businesses with the legal framework and support they need to succeed in their respective industries. By offering a variety of business licenses, Dubai Free Zones create an enabling environment for entrepreneurship and innovation, attracting businesses from around the world and contributing to Dubai’s economic growth and diversification, supported by law consultants in Dubai and corporate law firms in Dubai.
Delays and inaccuracies in property registration can cause significant problems for buyers and developers, including disputes over property ownership and difficulties in obtaining financing. These issues can disrupt the real estate market, causing financial losses and legal complications for all parties involved. Relevant legislation addressing these concerns includes Law No. 7 of 2006 concerning Real Property Registration in the Emirate of Dubai and Law No. 13 of 2008 concerning the Interim Real Estate Register in the Emirate of Dubai. These laws provide a legal framework for property registration and aim to ensure clarity and security in property transactions.
To resolve these issues, implementing advanced digital registration systems is crucial. Such systems can streamline processes, reduce errors, and expedite registrations. For instance, Dubai’s “DLD Blockchain” initiative is a step in the right direction, ensuring secure and transparent transactions. Additionally, conducting regular audits of the property registration process can identify bottlenecks and areas for improvement, ensuring continuous enhancement of the system. It is also important to note that real estate ownership in Dubai is restricted to entities within Dubai’s free zones. This regulation further underscores the need for efficient and accurate property registration systems to support a thriving real estate market. This can be effectively managed with the support of legal firms in UAE or through.
To gain access to and acceptance from major global economies, the UAE has implemented tax reforms to avoid being labelled as a tax haven and potentially blacklisted by trading partners. Consequently, a 9% corporate tax has been introduced, although individuals remain untaxed. The effective date for this 9% corporate tax was June 1, 2023. However, for businesses whose fiscal year aligns with the calendar year, the tax obligation commenced on January 1, 2024.
Despite these tax changes, free-zone companies can maintain a 0% tax rate by meeting certain conditions. The new corporate tax rate applies to foreign entities and individuals not falling under the qualifying income bracket. Qualifying income, subject to 0% corporate tax, is determined based on the specific business activity or transaction within the free zone. The criteria for what constitute qualifying income are relatively complex. Navigating these rules can be challenging and is not a process one should undertake without professional assistance. At MENSK Consultancy, our team of professionals provides unparalleled expertise to guide you through these complexities with best legal advice.
The new UAE corporate tax framework establishes rules based on the nature of a company’s activities, customer base, and assets. To understand these measures, it is essential to grasp the basic concept underpinning the UAE’s Corporate Tax Law regarding tax liabilities: the distinction between a resident ‘natural person’ and a resident ‘juridical person’ under UAE law.
Businesses operating from a free zone are classified as either free zone or non-free zone persons. Under UAE tax laws, natural persons, even if operating from a free zone, are not recognized as free zone persons. Conversely, a juridical person can be considered a free zone person if they are incorporated within a free zone. A free zone person can be further categorized into two types:
A qualifying free zone person must demonstrate substantial presence in the UAE by maintaining sufficient assets, employing qualified personnel, and incurring appropriate operating expenses to conduct business activities in a free zone.
Under UAE tax regulations, business activities in free zones are divided into qualifying and excluded activities:
Regarding intellectual property, qualifying income now includes income derived from the ownership or exploitation of qualifying intellectual property, specifically targeting companies generating income from intellectual property—excluding trademark royalties—that engage in research and development either directly or through third parties.
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Navigating the complexities of Dubai’s Free Zones and real estate market requires a strategic approach, combining legal expertise with a thorough understanding of local regulations. The progressive changes in property ownership laws and business licensing in Dubai offer substantial benefits for foreign investors and entrepreneurs, fostering a dynamic economic environment. As the UAE adapts its tax and property laws to align with global standards, the role of Dubai advocates and legal consultants becomes increasingly pivotal. Their expertise helps ensure compliance and leverages the full potential of the regulatory framework, allowing businesses and investors to maximize their opportunities. Ultimately, success in Dubai’s vibrant market hinges on informed decision-making and professional guidance. By engaging with corporate law firms in Dubai and seeking legal advice in Sharjah, Abu Dhabi and other free zones, individuals and businesses can navigate the legal landscape effectively, securing their investments and contributing to the ongoing growth of Dubai as a leading global business hub. All of this can be achieved at MENSK Consultancy which provides you with the best legal advice in Dubai related to corporate law, Real estate law in the UAE and many other fields.
