rak international corporate centre - …...a gbc1 company receiving interest income from abroad is...

RAK INTERNATIONAL CORPORATE CENTREGovernment of Ras Al Khaimah, United Arab Emirates

UNITED ARAB EMIRATES - A WORLD CLASS LEADING JURISDICTION

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# 27 Amongst 140 countries in the global competitiveness ranking ( highest in the region: higher than Malta (36), Cyprus (44), Mauritius (49), Panama (64) and Seychelles (74)

#2 in the world government trust index

# 11 in the world bank’s annual ease of doing business ranking

#1 on ease of doing business index-Mena Region

Credit ratings : S&P AA, Moody’s AA2 ( same as Hong Kong, France, UK and South Korea)

# 2017 GDP per capita US$40,000 (Same as Germany)

# 8 largest oil producer in the world

Mature banking system ( over 50 national and international banks)

UAE ranked #2 in the world in terms of avoidance of double taxation agreements and #1 among the Arab nations.

RAK INTERNATIONAL CORPORATE CENTRE (RAK ICC)

RAK International Corporate Centre is a Corporate Registry based in Ras Al Khaimah, UAE and is the 2017 amalgamation of two company registries, RAK IC and RAK Offshore, which have been operating since 2006 in Ras Al Khaimah.

RAK International Corporate Centre (RAK ICC) operates in the picturesque Emirate of Ras Al Khaimah, United Arab Emirates. The Emirate is also known as the ‘Rising Emirate’ having gained a reputation for its recent economic growth and emerging business opportunities, including maintaining up to date regulatory and international technical standards as and when these develop

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RAK ICC a cutting edge, globally, up to date Corporate Centre100% compliant with new worldwide reporting standards

OVER 30,000 COMPANIESWITH SHAREHOLDERS FROM OVER 160 COUNTRIES

OVER 30,000INCORPORATIONS

India 12%

United Kingdom 9%

United Arab Emirates 7%

France 6%

Italy 4%

Pakistan 3%

Germany 3%

Canada 2%

Russian Federation 2%

Lebanon 2%

Others (156 Countries) 50%

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Regular training is provided to the registered agents staff on relevant matters including updates on compliance, documentation, AML and KYC as per the international standards.

STRONG NETWORK OF QUALIFIED AGENTS & SERVICE PROVIDERS WITH REGIONAL & GLOBAL REACH

WHY RAK ICC?

• 100% foreign ownership

• One day incorporating process;

• No restrictions on number of shareholders;

• Corporate Director is permitted

• No office requirement;

• No attestation required for corporate documents;

• Cost efficient registration and renewal fees;

• No requirement to file financial accounts

• No requirement for minimum capital;

• Constitutional documents can be issued in dual languages

• Common law regulations with access to DIFC and ADGM courts;

• Variety of legal structures and different products available for different usages;

• No restriction on capital repatriation;

• Migration or Continuance of Existing Corporate Entities from various jurisdictions

• Different classes of shares and the ability to register the share pledge

• Access to a broad range of UAE Double Tax Treaty network;

• Ability to open bank accounts locally and internationally

• USD freely available. Local currency pegged to USD

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Corporate Features Legal Features Other Features

RAK ICC PRODUCTS, SERVICES & USES

COMPANY LIMITED BY SHARES

REGISTER WILLS AT RAK ICC

COMPANY LIMITED BY GUARANTEE

RESTRICTED PURPOSES COMPANY

UNLIMITED COMPANY

SEGREATED PORTFOLIO COMPANY

TRANSFER OF DOMICILE

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HOLDING COMPANIES AND SPVS

JOINT VENTURE COMPANIES

IP HOLDING COMPANIES

FAMILY OFFICE STRUCTURES

TRADING/INVOICING COMPANIES AND IBCS

PE & FUND STRUCTURES

STRUCTURED SOLUTIONS

RAK ICC PREMIUM PRODUCT:

Premium Product is a collaboration between RAK ICC and Ras Al Khaimah Economic Zone (RAKEZ) thatallows offshore companies registered with RAK ICC to carry out activities onshore by establishing asubsidiary at RAKEZ.

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Companies are treated as business enterprise of substance

Investors can open bank accounts locally and internationally

Option to lease a physical facility from RAKEZ

Enjoy Double Taxation Treaty benefits

Global trade and investments

Eligibility for a UAE Residence Visa

PARENT COMPANY / INVESTOR

RAK ICC Holdco

RAKEZ SubsidiaryOpCo

BENEFITS

SPECIAL PURPOSE VEHICLES (SPVS)

SPVs are corporate vehicles with several attractive features established for the purpose of various usages mainly forsecuritization and isolating financial and legal risk by ring-fencing assets and liabilities. SPVs can be established assubsidiaries, project or joint venture vehicles to ensure that only those assets related to a transaction are exposed to theliabilities associated with that transaction. As the key feature of an SPV is its separate legal personality, claims by the SPV’screditors cannot attach to the assets of the SPV’s shareholders or any of its sister companies.

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Structured finance transactions

Securitisations

Asset holding and transfers

Financing and raising capital

Ring-Fencing and risk sharing

Fractional Ownership structures


RAK ICC SPV

Lender / Bank

Share Pledge agreement

Loan agreement

Financing

BENEFITS

INTELLECTUAL PROPERTY (IP) SOLUTION

The intellectual property (IP) associated with a business name or system can be one of its most valuable assets – but only if it is properly protected. Any business that wishes to establish a national or international identity should take steps to protect the use of its name, logo or other IP, such as patent rights, formulae/processes, designs, trademarks, franchises, license agreements, “know-how” and copyrights.

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Centralisation

IP Asst Protection

Taxation

Securitization

Clear Balance Sheet

PARENT COMPANY

RAK ICC IP Holdco

Operating Co (State C)

Operating Co (State B)

Operating Co (State A)

IP Rights

BENEFITS

PRIVATE CLIENTS SOLUTION

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Foundation as shareholder

Estate Planning

Tax benefits

Asset Protection

DIFC Will

Foundation / Private Client

RAK ICC Family Office

SPV

Operating CoReal estate Listed equity

A family office is an entity (or multiple entities) established by a wealthy family to manage its wealth and, in somecases, to provide family members with services such as tax and estate planning services and legal services. Familyoffices may also include a philanthropic arm for supporting the family’s charitable, social and educational interests

Family Beneficiaries

BENEFITS

SEGREGATED PORTFOLIO COMPANY

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Separate Legal Personality

Limited Liability of shareholders

Up to ten segregated portfolios

Separation of Liability

Sub bank accounts can be established

A Segregated Portfolio Company (or SPC), sometimes referred to as a protected cell company, is a company whichsegregates the assets and liabilities of different classes (or sometimes series) of shares from each other and fromthe general assets of the SPC.Segregated Portfolio assets comprise assets representing share capital, retained earnings, capital reserves, sharepremiums and all other assets attributable to or held within the Segregated Portfolio.

BENEFITS

PASSIVE HOLDING COMPANIES

MAIN BENEFITS TO CLIENTS

RAK ICC Passive holding company can be used to ring-fence investments, public and private equity stakes and other assets

✓ Provide an effective structure for ease of ownership transfer across different shareholders (sales of business & inheritance planning)

✓ Security for finance based on corporate valuation based on underlying asset holdings

✓ Offer an operating structure for pooling of assets for management and reporting purposes

✓ Maintain privacy of wealth

ILLUSTRATION OF THE USAGE OF PASSIVE HOLDING COMPANIES


Listed equities

Publicly traded bonds

Owns a passive holding company in RAK ICC

Non-controlling equity stake in private UAE or int’l business

RAK ICC HOLDCO

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ACTIVE HOLDING COMPANY -ATTRACTIVE FOR A RANGE OF PURPOSES (EXAMPLES OF USE CASES)

MANUFACTURER USES STRUCTURE TO MANAGE ASSETS

✓ Gateway for expanding ME business, with physical and cultural proximity

✓ Effective operating structure for management and reporting purposes

✓ Ease of ownership of assets across countries, especially those facing asset transfer restrictions due to political sensitivity

✓ Ease of ownership transfer

PARENT COMPANY

Oil refinery in Kuwait Factory in Egypt Factory in Bahrain

Owns a Holding Company in RAK ICC

RAK ICC FREEZONE HOLDCO

KUWAIT COMPANY

EGYPT COMPANY

BAHRAIN COMPANY

MANUFACTURER SETS UP REGIONAL TREASURY FUNCTION

✓ Redeploy cash, improve treasury efficiency and manage financial risk

✓ Enable financial due diligence for local deals

✓ Facilitate foreign currencies payments especially for clients from countries with foreign exchange restrictions

✓ Exemption from custom duties on trades

RAK ICC FREEZONE FINCO

Parent company trading/sourcing/owning assets

CHINA

Raw material in Philippines Sales in ME Subsidiaries in Egypt

$ $ $

Owns a Financing Company

JV PARTNERS ESTABLISH HOLDCO TO ACCESS INDEPENDENT DIFC COURTS

✓ Certainty and clarity of legal system

✓ Swifter and more efficient resolutions to court proceedings –less prone to bribery and lengthy processes

✓ General preference for Common Law systems over Sharia Law for conducting business

✓ Cultural and physical proximity

Sets up joint venture

INVESTOR IN RUSSIA

INVESTOR IN EGYPT

For investment in other countries

Asset in Oman Projects in South Africa

RAK ICC FREEZONE HOLDCO

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ACTIVE HOLDING STRUCTURES

INTERNATIONAL TRADING AND PROCUREMENT COMPANIES MANAGE SOURCING IN THE REGION

✓ Simplicity of management

✓ Leverage scale to lower cost

✓ Use UAE as part of supply chain to complete trade route

✓ Tax optimisation opportunities

RAK ICC FZ / trading company

Owns car componentsproduction unitsGERMANY

Petroleum in Saudi Arabia Aluminium in UAE

OTHER MIDDLE EASTERN COUNTRIES

RAK ICC

Steel in India

Owns a trading company

$ $

Sell via intemediary1

$ $ $

Purchase from

E-COMMERCE COMPANY CONDUCTS BUSINESSES INTERNATIONALLY

✓ Higher level of control and oversight over distribution compared to using distributors

✓ Use UAE as part of supply chain to complete trade route


SuppliersMULTIPLE COUNTRIES

OTHER COUNTRIES

Egypt Libya UAE

$ $ $

RAK ICC

Sell via intermediary1

Sets up distribution unit

RAK ICC FZ / trading company

INTERNATIONAL DIGITAL SERVICE PROVIDER SETS UP REGIONAL HUB

✓ Physical access to regional market and closeness of time zone with major Asian and European markets

✓ Low cost of living


Digital service provider

Staff work forINDIA

DISTRIBUTORS / CUSTOMERS

$ $

RAK ICC RAK ICC FZ / trading company

$

Freelancer.com Clients in Kuwait Clients in UAE

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COMPARISON OF STANDARD CORPORATE TAX RATESU.A.E. MALTA CYPRUS BVI HONG KONG SINGAPORE MAURITIUS SEYCHELLES

CORPORATE INCOME 0%1 5%2 12.5% 0% 8.25/16.5%3 17%5 15%6 0%8

CAPITAL GAINS 0% 0%13 0%10 0% 0% 0% 0%12 0%

DIVIDENDS 0% 0%13 0% 0% 0% 0% 3/15%9 0%

INTEREST INCOME 0% 0/35%11 12.5% 0% 0/8.25%4 17%5 3/15%7 10%

1) Oil and gas exploration companies and branches of foreign banks are subject to corporate income tax

2) Official rate is 35% but the effective rate is 5% due to the imputation system

3) First HKD2m taxed at 8.25% and any profits above that taxed at standard 16.5% rate-Source based as opposed to world-wide basis of taxation

4) Interest income derived from debt instruments with a maturity period of <7 years is taxed at 8.25%; interest income with a maturity period of 7 years or longer is tax-exempt

5) Different exemptions levels (e.g. up to 100% for the first SGD 100,000 of taxable income) are put in place for new businesses and start-ups

6) Companies holding a Category 2 Global Business Licence (“GBC2”) are exempted from corporate income tax but GBC2 were abolished in 1 Jan 2019. Income tax on net income is currently a flat rate at 15%. A reduced 3% rate applies to taxable profit attributable to the export of goods.

7) Interest income received by resident companies (non-GBC1 companies) is liable to tax at the rate of 15%. A GBC1 company receiving interest income from abroad is liable to tax at the effective rate of 3%. As of January 2019, the deemed FTC regime available to GBC1 companies will be abolished and foreign-source interest not allowed as deduction in source country will qualify for 80% partial exemption on gross amount received.

8) The rate for Seychelles resident companies is 25 / 30%, but International Business Companies (“IBCs”) are exempted from corporate tax

9) Dividend income received from abroad by a company resident in Mauritius (non-GBC1) is subject to 15% tax rate. Dividend income received from abroad by a GBC1 company is subject to tax at an effective rate of 3%. As of January 2019, the deemed FTC regime available to GBC1 companies will be abolished and foreign-source dividends not allowed as deduction in source country will qualify for 80% partial exemption on gross amount received., subject to substance rules

10) Standard capital gains tax is 20% but company shares are exempt, unless there is Cyprus residential property in the structure

11) 0% for passive interest and 35% for active interest income (effectively 0-10%)

12) 0% capital gains tax. Certain transactions are taxed as corporate in tax instead of capital gains, such as any gains derived from the sale of shares held for less than six months

13) Dividends and Capital gains are subject to corporation tax in Malta; however, due to the Participation Exemption the effective tax rate is 0%. Dividends and Capital Gains are subject to income tax (at normal rates of corporate income tax of 35%).

Source: PwC Tax Summaries, EY, Deloitte, PKF

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COMPARISON OF INVESTMENT PROTECTION THROUGH BILATERAL INVESTMENT TREATIES (BITS)

U.A.E. MALTA CYPRUS BVI HONG KONG SINGAPORE MAURITIUS 1SEYCHELLES

U.K. Y Y Y3

No BITs with any countries

Y Y Y

GERMANY Y Y Y3Y Y Y

INDIA Y Y Y *Y

CHINA Y Y Y Y Y *Y

SOUTH AFRICA Y

PAKISTAN Y Y Y

SRI LANKA Y

SAUDI ARABIA Y

OMAN Y

TURKEY Y Y Y Y

EGYPT Y Y Y Y Y *Y

TANZANIA Y

ETHIOPIA 2*Y

KENYA *Y *Y

1) Seychelles signed BIT’s have not been put in force for many years (Egypt – Signed 2002, China – Signed 2007, India – Signed 2010)2) *Y indicates the BIT has been signed but is not yet in force3) Investor protection offered under the Treaty on functioning of the European Union; No BITs in placeSource: Investment Policy Hub (UNCTAD)

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COMPARISON OF INVESTMENT PROTECTION THROUGH BILATERAL INVESTMENT TREATIES (BITS)

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U.A.E. Malta Cyprus BVI Hong Kong Singapore Mauritius Seychelles

France Y Y Y2

No BITs with any countries

Y Y Y Y

Italy Y Y Y2Y

Canada Y

Brazil

Mexico *Y Y

Colombia *Y *Y

Argentina *Y

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1) *Y indicates the BIT has been signed but is not yet in force

2) Investor protection offered under the Treaty on functioning of the European Union; No BITs in place

Source: Investment Policy Hub (UNCTAD)

THE UAE DOUBLE TAX TREATY NETWORK (DTTS)

Strategy& analysis, Tax Notes database of in-force treaties as at 31 August 2018, subject to change.

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List of UAE Double Tax Treaties (Income and Capital)

In-Force DTTs (89)1 Pending DTTs (20)Signed DTTs (but not yet ratified) (8)

Under negotiation (8)

Africa (13) Uzbekistan Belgium PolandRatified by both states (6)

North America Africa Africa

Algeria Asia (17) Bosnia and Herzegovina Portugal Africa Bermuda Angola Chad

Comoro Islands Bangladesh Bulgaria Romania Burundi South America Mali Malawi

Egypt Brunei Cyprus Russia2 Ethiopia Argentina Uganda Tanzania

Guinea China (P.R.C.) Czech Republic Serbia Mauritania Ecuador Zimbabwe Asia

Kenya Hong Kong Estonia Slovakia Middle East Paraguay Europe Mongolia

Mauritius India Finland Slovenia Iraq San Marino Nepal

Morocco Indonesia France Spain Palestine Caribbean Europe

Mozambique Japan Georgia Switzerland Europe Antigua and Barbuda Guernsey

Senegal Korea (Rep.) Germany Ukraine Croatia Central America South America

Seychelles Malaysia Greece United Kingdom Ratified by the UAE (14) Costa Rica Peru

South Africa Maldives Hungary Caribbean Africa South America Oceania

Sudan Pakistan Ireland Barbados Benin Colombia Australia

Tunisia Philippines Italy North America Cameroon

Middle East Singapore Jersey Canada Equatorial Guinea

Jordan Sri Lanka Kosovo Central America Gambia

Lebanon Thailand Latvia Mexico Libya

Syria Turkey Liechtenstein Panama Nigeria

Yemen Vietnam Lithuania South America Rwanda

Central Asia Europe (41) Luxembourg Uruguay Middle East

Azerbaijan Albania Macedonia Venezuela Saudi Arabia

Kazakhstan Andorra Malta Oceania Caribbean

Kyrgyzstan Armenia Moldova Fiji St. Kitts and Nevis

Turkmenistan Austria Montenegro New Zealand Central America

Tajikistan Belarus Netherlands Belize

The UAE Ministry of Finance has taken important steps in this direction and has signed as many as 210 tax agreements to date (including 123 agreements to avoid double taxation and 87 agreements to protect and promote investment).

EFFECTIVE WITHHOLDING TAX RATES ON DIVIDENDS DIFFER ACROSS JURISDICTIONS (1 OF 2)

HoldCo jurisdictions


U.K. 0% 0% 0% 0% 0% 0% 0% 15%

Germany 0% 0% 0% 0% 0% 0% 0% 15%

India 0% 0% 0% 0% 0% 0% 0% 15%

China 0% 0% 0% 0% 0% 0% 0% 5%

South Africa 0% 0% 0% 0% 0% 0% 0% 5/10%


Pakistan 10% 12.5% 12.5% 12.5% 10% 10/12.5% 10% 12.5%

Sri Lanka 10% 14% 14% 14% 14% 7.5/10% 10/15% 14%

Saudi Arabia 5% 5% 5% 5% 5% 5% 5% 5%

Oman 10% 10% 10% 10% 10% 5% 0% 5%

Turkey 10/12% 10/15% 15% 15% 15% 10/15% 15% 15%

Egypt 0% 10% 10% 10% 10% 10% 5/10% 10%

Tanzania 5/10% 5/10% 5/10% 5/10% 5/10% 5/10% 5/10% 5/10%

Ethiopia 10% 10% 5% 10% 10% 5% 10% 10%

Kenya 5% 10% 10% 10% 10% 10% 10% 10%

From investment to HoldCojurisdiction

From HoldCo to UBO jurisdiction

1) Domestic rate is 0% in principle; Source: PwC Tax Summaries, EY, Deloitte, SRC

DTT in place but non-treaty rate more advantageous DTT signed but not yet in force; non-treaty rate used No DTT in place, non-treaty rates used in practice


France 0% 0%/15% 10%/15% 21%/30% 10% 5%/15% 5%/15% 21%/30%

Italy 5%/15% 15% 15% 26% 10% 10% 5%/15% 26%

Canada 5%/15% 15% 15% 25% 5%/15% 15% 25% 25%

Brazil 0% 0% 0% 0% 0% 0% 0% 0%

Mexico 0% 0% 10% 10% 0% 0% 10% 10%

Colombia 5%/38.25% 5%/38.25% 5%/38.25% 5%/38.25% 5%/38.25% 5%/38.25% 5%/38.25% 5%/38.25%

Argentina 7%/13% 7%/13% 7%/13% 7%/13% 7%/13% 7%/13% 7%/13% 7%/13%

From investment to HoldCojurisdiction

1) Domestic rate is 0% in principle; Source: PwC Tax Summaries, EY, Deloitte, SRC

DTT in place but non-treaty rate more advantageousDTT signed but not yet in force; non-treaty rate used No DTT in place, non-treaty rates used in practice

EFFECTIVE WITHHOLDING TAX RATES ON DIVIDENDS DIFFER ACROSS JURISDICTIONS (2 OF 2)

RE-DOMICILIATION OPPORTUNITIES

Traditional Offshore jurisdictions are under pressure (competition ,regulatory issues & Substance).

Finding a valuable alternative to jurisdictions traditionally labelled as “offshore centre” facing extreme scrutiny internationally

Evolving client priorities are driving a shift from traditional offshore centres to high quality well-regulated mid-shore and onshore centres.

Companies are increasingly concerned with the reputational risks associated with the choice of jurisdiction.

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MAJOR ADVANTAGES

Companies could maintain its existing legal status

Companies could preserve its operational and banking history

Access to common law courts

Wills registration to protect the assets and shares in the name of the company

REASONS FOR REDOMICILIATION

WHY RAK INTERNATIONAL CORPORATE CENTRE?

➢Well established corporate registry based in a strong recognized reputable jurisdiction operating in full compliance with international standards and best practices

➢Independent courts with common law judges for enforcement and matters of dispute. DIFC Wills are registered and enforced for asset protection and succession planning

➢Access to a large DTT network including a wide range of Bi-Lateral Investment Treaties. Three-year (2019-2021) extension of the MoU between the UAE and the Organisation for Economic Cooperation and Development (OECD) has been signed in March 2019

➢Simple registration process with international corporate features and availability of various corporate structures

➢Residency Options; ZERO corporate and Individual Taxes

➢International and UAE Bank accounts available

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THANK YOU

RAK International Corporate Centre - Government of Ras Al Khaimah

Ras Al Khaimah, United Arab Emirates, [email protected], www.rakicc.com

rak international corporate centre - …...a gbc1 company receiving interest income from abroad is...

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