Although Dubai is a 'no-tax' jurisdiction, ownership restrictions on companies in the normal economy mean that the Jebel Ali Free Zone, Dubai Investment Park, Dubai Internet City, the Dubai International Finance Centre (DIFC), which opened in 2003, the Dubai Airport Free Zone, and Dubai Media City are the key locations offering an 'offshore' option to foreign operators. Operations inside the Free Zone (JAFZ) can be carried out under various different types of license, but most often a foreign company will use a a 'Free Zone Establishment'.

Dubai Forms of Offshore Operation

Companies approved for operation in Jebel Ali Free Zone are granted one of the following types of licences, renewable annually for as long as the company holds a valid lease from the Free Zone Authority:

A Free Zone Establishment - or FZE - is an establishment formed and registered in Jebel Ali and regulated solely by the Free Zone Authority.

Such establishments must have a capital of at least AED1 million and liability will be limited to the amount of paid-up capital. A FZE need only have a single shareholder and is an independent legal entity.

Any company, organisation or individual wishing to form a Free Zone Establishment must submit a completed application form to the FZE Department of the Free Zone Authority. A decision on whether permission has been granted will be given within 30 days of receipt of the application and any other information and documentation required.

If permission is granted, the Authority will record all relevant details in the FZE Register and issue a Certificate of Formation. This will specify the date of registration after which the FZE will be free to conduct any such business as is permitted in its Special Licence.

In mid-2008, over one-quarter of Dubai's GDP was generated by the Jebel Ali Free Zone, which at that time had over 6,000 companies operating within the zone.

The Dubai Internet City is regulated by a law passed in 2000, and is formally known as Dubai Technology, Electronic Commerce and Media Free Zone. The privileges offered to its occupants are very similar to those applying in Jebel Ali. In line with Dubai's liberal economic policies and regulations, Dubai Internet City offers foreign companies 100% tax-free ownership, 100% repatriation of capital and profits, no currency restrictions, easy registration and licensing, stringent cyber regulations, protection of intellectual property.

The Dubai International Financial Centre (DIFC) was launched in 2003 and began operations in late 2004. lt was intended to fill a significant gap in the market for international Shariah banking, fund management and life assurance. The proposed regulatory framework was published for industry consultation in June, 2003. Philip Thorpe, chief executive of the DIFC Regulatory Authority, explained that: "We have...made good use of our freedom to create a single, logical framework - in contrast to older-established jurisdictions, who often have to make (do) and mend within existing frameworks which may gradually become more complex and less relevant."

In July, 2003, the UAE Federal Cabinet approved a Federal Decree allowing the DIFC a large degree of sovereignty. In addition to confirming the appointment of General Sheikh Mohammed bin Rashid Al Maktoum, UAE Defence Minister and then-Crown Prince of Dubai (now Ruler) as the President of the DIFC, the decree officially created the DIFC Financial Services Authority, the DIFC Judicial Establishments and the DIFC Registrar of Companies.

The DIFC has a separate set of laws called the Commercial Code, comprising a comprehensive set of regulations like company law, legislation on property rights, including laws on security and collateral, title to goods and securities, commercial transactions and contracts, and insolvency.

In January, 2004, the Dubai Financial Services Authority (DFSA) announced that 12 new laws relating to operations within the Dubai International Finance Centre (DIFC) had been put in place. Chief executive officer of the DFSA, Philip Thorpe explained that:

"The 12 new laws have been drafted by the DFSA to world-class standards, using the best examples of legislation from around the globe. They are clear and concise, and will provide certainty as to the rights and obligations of the financial institutions and other companies who will operate in or from the DIFC."

The laws (to which the DFSA has provided access on its website) are:

Regulatory Law;
Companies Law;
Law on the Application of Civil and Commercial Laws in the DIFC;
Law Relating to the application of DIFC Laws;
Limited Liability Partnership Law;
Contract Law;
Insolvency Law;
Arbitration Law;
Data Protection Law;
Commercial Court Law;
General Partnership Law; and
Markets Law.

In June 2005, five new laws dealing with legal obligations, employment and security interests in relation to the Dubai International Financial Centre were enacted.

The new legislation comprised:

Then in November 2005, the DIFC Trust Law 2005, which provides a comprehensive framework for the creation of trusts in the DIFC, was enacted. Consisting of ten major sections, the legal framework encompassed matters such as choice of governing law, place of administration, creation, validity and modification of a DIFC trust, office of trustee, and duties and powers of trustees.

The Trust Law, DIFC Law No. 11 of 2005 followed closely the enactment in September of the Personal Property Law No. 9 of 2005, which defines the rights and obligations of parties in relation to property other than real estate (land and buildings) located in the DIFC, and the Law Relating to the Application of DIFC Laws (Amended and Restated) No. 10 of 2005.

In 2006, both the Companies Law and the Limited Partnerships Law were amended.

In February 2008, the new DIFC arbitration law was enacted by Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The new law facilitated the establishment of the the DIFC's Arbitration Centre and adopted the UNCITRAL Model Law, with amendments aimed at improving its provisions. The reform also widened the scope of arbitrations which the law governs, to include all types of arbitrations and parties opting to arbitrate at DIFC.

In November 2008, the DIFC released its proposed updates on Companies Law and Insolvency Law for public consultation.

The Companies Law has been updated to include the registration requirements laid down by the DIFC Registrar of Companies. The Insolvency Law has been updated to include changes in applications and procedures for winding up Protected Cell Company (PCC) structures used by insurers to provide an easy and cost-effective way for smaller organizations to establish captive insurance units.

Also in November 2008, the DIFC announced that it had enacted new regulations that enable companies within the financial district to quickly form Special Purpose Company (SPC) structures. The new regulations allow companies to create SPCs for facilitating both Islamic and conventional transactions as well as vessel registrations. Transactions that can be facilitated by the new law include acquisitions and financings. Under the law, Special Purpose Companies can be easily structured and incorporated, while enjoying exemptions from some filing and disclosure rules relating to conventional companies in DIFC.

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Dubai Tax Treatment of Offshore Operations

Amongst the incentives offered to companies operating within the Jebel Ali Free Zone, the DIC and the DIFC are:

Dubai Taxation of Foreign Employees of Offshore Operations

No personal income tax is deducted from wages and salaries paid to employees or on other income earned. See Domestic Personal Taxes for the general principles of individual taxation (or lack of it) in Dubai, which also apply to the resident employees of offshore entities.

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Dubai Exchange Controls

There are no exchange controls in Dubai.

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Dubai Employment & Residence

Citizens of GCC countries (Gulf Cooperation Council: Saudi Arabia, Kuwait, Bahrain, Qatar and the Sultanate of Oman) and British nationals with the right of abode in the UK do not need visas to enter the UAE. GCC nationals can stay more or less as long as they like. Britons can stay for a month and can then apply for a visa for a further two months.

The DNRD issues different types of visas, which are listed below. Applications for visas can be completed online or at a DNRD office.

1) Transit Visa

2) 90 days long-term visit visa and 30 days short-term visit visa for individuals:

2.1 In case of Personal sponsorship:

2.2 In case of Establishments sponsorship:

3 - 90 days long-term visit visa for companies

4 - 30 days short-term visit visa for companies:

5 - Tourist visa

A Multiple Visit Visa can be granted after a normal visa has been issued and used, and are an option for business visitors who are frequent visitors to the UAE and who have a relationship with a reputable company in the UAE. Valid for six months from date of issue, each visit must not exceed 16 days in total. This visa costs AED320 (2011). The visitor must enter the UAE on a visit visa and obtain the multiple entry visa while in the country.

A Residence Visa stamped on a passport proves the legal residence of an expatriate in the country. This visa is given to workers who have obtained work permits or for relatives living with them permanently, and additional documentation is required.

In June, 2004, the Dubai government unveiled plans to enshrine in law rules governing foreign freehold ownership of property. Deputy director general of the Dubai Chamber of Commerce and Industry (DCCI), Ahmed Abdul Rahman Al Banna explained that:

"At present there is no federal law to govern foreign freehold ownership of property in Dubai," although he added that as an internim measure "major property developers have got together to offer guarantees to investors on freehold ownership, which has been endorsed by the Dubai government."

The DCCI deputy director general went on to announce that: "As part of our commitment to regulate the real estate sector, the Dubai government will issue a new property law which will address some of the key issues including legalising foreign freehold ownership of properties."

In March 2006, the long-awaited Dubai property law was issued, but Law No.7 of 2006 stipulated that freehold is limited to UAE and GCC citizens and companies wholly owned by them, as well as public shareholding companies. However, the law also stipulated that upon approval of Dubai's ruler, non-UAE nationals may be given the right to own properties in some parts of Dubai.

In August 2006, the Dubai International Financial Centre Authority (DIFCA) published draft legislation that will allow foreign freehold ownership of property in the DIFC.

The laws published included the DIFC Real Property Law 2006 and the Strata Title Law 2006. The Real Property Law guarantees ownership of freehold land and interest in land within the DIFC. It will allow for foreign companies and individuals to hold freehold ownership of real estate within the Dubai International Financial Centre.

The Strata Title Law establishes a system of guaranteed freehold title to units in buildings in the DIFC. It is based on the system originally developed in Australia, which is now in use in many countries around the world, including Singapore.

Consultation on the proposed laws ended in September 2006, and both laws were enacted in June 2007.

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