UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva and Sean Cope, DLA Piper Middle East LLP
5.3 REITs While the UAE is not traditionally recognised as a funds jurisdiction, the development of offshore jurisdictions such as the DIFC and ADGM, with evolving legislation aimed towards the develop - ment of a funds market, has made these finan - cial free zones a more attractive jurisdiction for the establishment of such real estate funds. UAE REITs can apply for corporate tax exemption if they meet certain specified criteria. 5.4 Minimum Capital Requirement LLC There is no prescribed minimum capital amount for an LLC, but share capital must be adequate. This can be decided by the shareholders, and there is no published guidance in this regard. In practice, a notary public currently accepts a minimum share capital of AED100,000 to AED150,000, divided into equal shares with a
Private Joint Stock Company (Private JSC) A private JSC is similar to a PJSC but with cer - tain differences, including: • the minimum share capital is AED5 million; • the shares cannot be offered publicly; and • only two founder members are required. The Companies Law provides that, unless spe - cifically stated, all requirements that apply to a PJSC apply to a private JSC as well. Tax Implications Under the new CIT regime, income from immov - able property derived by a legal entity, whether derived from sale or through leasing, will typi - cally be subject to a 9% tax rate for “regular taxpayers” who are subject to the standard tax regime (taxable income up to AED375,000 is taxed at 0%). Under the free zone tax regime, entities that are considered qualifying free zone persons (QFZPs) are eligible for a 0% CIT rate on certain types of income (ie, qualifying income), provided specific criteria are met. The regulations with respect to the free zone tax regime are relatively complex, but in essence, in a real estate context, only income from commercial properties located in the free zone may qualify for the 0% rate, pro - vided the transaction is conducted with an entity registered within a free zone (ie, a free zone per - son). Conversely, revenue from residential properties does not qualify for the 0% rate. It is important to note that properties such as hotels, motels, bed and breakfasts, serviced apartments, and similar establishments are not categorised as commercial properties for the purposes of the free zone tax regime.
minimum value of AED1,000. JAFZA Offshore Companies
AED1,000 applies for such companies, and shares must have a minimum value of AED1
each. PJSC
AED30,000,000 applies for a general company, and this amount increases in the case of banks and insurance companies. Given the substantial capital requirement and the fairly restrictive rules of establishment and management, it is often not a suitable corporate vehicle for overseas inves - tors wishing to establish a vehicle for investment purposes. Private JSC AED5 million applies for such companies.
1047 CHAMBERS.COM
Powered by FlippingBook