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Top 10 Reasons Dubai is the Ultimate Business Hub
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Top 10 Reasons Dubai is the Ultimate Business Hub

Over the years, Dubai has emerged as the global hotspot for businesses with a robust commercial ecosystem. Forward-thinking entrepreneurs are keen to expand their footprints in this Middle Eastern Country, known for its opulent lifestyle and luxurious appeal. Ambitious business leaders around the globe seek professional guidance from consultants, streamlining the process of company formation in Dubai. From its business-friendly environment to demographic advantage, Dubai appeals to successful brands with a plethora of benefits.

Let’s take a look at the top reasons justifying the popularity of Dubai as a global business hub.

Why is Dubai Ideal for Setting up a Business?

If you are wondering why Dubai is best for business, here are ten reasons that demonstrate the tremendous potential of this city.

1. Business-friendly environment

With low tax rates, investor-friendly policies, and streamlined regulatory norms, Dubai stands out with a holistic business environment. The commitment and support of the government to foster a conducive commercial infrastructure makes Dubai one of the best places to carry out business.

2. Demographic advantage

One of the prime reasons why entrepreneurs prioritize setting up their business in Dubai is the strategic location of the city. As a part of the UAE, Dubai is situated at the crossroads of Europe, Asia, and Africa. This offers seamless access to the key markets for entrepreneurs. This strategic location facilitates seamless connectivity, which makes it a global business centre, offering a gateway to emerging markets.

3. Favourable Visa scheme

Dubai has come up with progressive visa regulations to encourage foreign investment. The government has simplified the process to obtain long-term visas for foreign investors. This strategic initiative positions Dubai as a top destination for global entrepreneurs.

4. Sophisticated infrastructure

Dubai stands tall among global business hubs with its advanced infrastructure, compared to the most sophisticated urban business zones across the world. From modern telecommunication systems to fast transportation systems like the Dubai Metro, businesses benefit from the holistic commercial environment to ease up operations.

5. Diverse Financial Sector

Establishing and expanding entrepreneurship in Dubai proves to be highly lucrative for investors. The city boasts a diversified economy, with several key sectors like real estate, finance, logistics, tourism, and technology to invest in. Thus, investors can choose from a broad spectrum of opportunities. This diverse economic landscape in the city fosters innovation, empowering entrepreneurs to tap into different market segments.

6. Business-friendly tax policies

The tax environment in Dubai is one of the best in the world for investors. After setting up a business in Dubai, entrepreneurs can take advantage of tax benefits and exemptions in free zones. With a business setup in Dubai UAE free zone, entities can benefit from minimal corporate tax, while personal income tax isn’t levied in the country.

7. Dynamic business environment

Innovation and collaboration largely drive the business ecosystem in Dubai. This city hosts networking platforms, accelerators, incubation centres, and co-working spaces in large numbers. This goes a long way in fostering strategic partnerships, mentorship, and knowledge sharing.

8. Diverse cultural scenario

Having a cosmopolitan population, Dubai is a melting pot of diverse cultures and nationalities. While entrepreneurs can tap a global pool of talent, they can also rub shoulders with professionals all around the globe. This significantly nurtures creativity and innovation, as they engage in cross-cultural dialogue to propel their ventures ahead.
9. Economic free zones
In Dubai, businesses can set up their establishments in free zones to benefit from tax exemptions and take advantage of a conducive business environment. Some of these zones include the Dubai Airport Free Zone and the Dubai Silicon Oasis. Free Zones in Dubai attract both international and local investors looking for tax benefits and commercial opportunities.
10. Silk Road initiative
Dubai has participated in the Silk Road Initiative, which positions it as a key player in global commerce. The initiative aims to enhance freight systems through air and sea routes, thereby boosting transit systems to consolidate its appeal as an international hub of trade and commerce.
Professional Assistance to Set Up a Business in Dubai

Global entrepreneurs thinking of setting up their operations in Dubai often look out for a strategic partner for consultation and advice. The IMC Group continues to be one of the leading partners, facilitating company formation in Dubai. This group of professionals, with its tailored solutions, network, and expertise, empowers entrepreneurs to capitalize on the tremendous opportunities in Dubai and understand its complex regulatory norms to ensure compliance. From establishing a presence in free zones to accessing investment avenues and fostering collaborations, the IMC Group lends its comprehensive assistance in driving entrepreneurial success in the thriving business ecosystem in Dubai.

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A Guide for Companies in the UAE to Adhere to the New Compliance Mandates
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A Guide for Companies in the UAE to Adhere to the New Compliance Mandates

In a recent move that promises greater economic transparency and regulatory integrity, the Ministry of Economy in the UAE has implemented stringent legislation. According to the newly enacted law, all companies operating within the UAE jurisdiction (except entities in ADGM, DIFC, and government sectors) must maintain an extensively updated ‘Corporate Register’.

This development took shape through the Cabinet Resolution No. 109 of 2023 and Cabinet Decision No. 132 of 2023. It marks the commitment of the government to combat financial discrepencies and enhance the business landscape in the country. In this guide, we have explained specific aspects of this mandate. Read on to understand its implications for businesses and actionable steps to ensure seamless compliance, avoiding hefty penalties.

The Corporate Register Requirement for Companies in the UAE

The Corporate Register serves as a foundational repository, carrying details about the organizational framework and governance of an organization. It goes a long way in fostering transparency and helping regulatory bodies and financial institutions carry out thorough due diligence. This significantly bolsters trust within the business environment in the UAE. New businesses must prepare their registers to be inspected within 60 days of their registration date. On the other hand, existing companies have just 30 days upon receipt of circulars regarding new rules to update and prepare their registers.

Each company bears the responsibility of maintaining updated corporate secretarial records, including the time of meetings between the board and shareholders, agendas, and notices. The authorities are likely to verify these records. The relevant licensing authority should be notified about any alterations to these records within 15 days. Besides, companies are required to update these documents on the government portal and submit the revised client documents.

Non-compliance with these mandates carries significant penalties, with fines of up to AED 50,000. Other potential consequences include temporary suspension of the trade license or closure of the business. Moreover, the licensing authority will scrutinize these directives to ensure transparency.

Conclusion

Recent legislative updates in the UAE mark a significant stride for the country to create a more transparent and regulatory corporate environment. While the mission to establish a Corporate Register seems daunting, timely compliance proves essential to meet legal requirements. It also nurtures a commercial environment defined by trust and transparency for businesses.

How Can the IMC Group Help You?

As a trusted advisory partner for businesses in the UAE, the IMC Group comprehensively understands the new challenges you are encountering in adapting to new regulations. Our proactive team of experts specializing in legal matters and compliance issues can assist you in complying with the fresh set of norms. Whether you have an existing company in the UAE and need to update records or have been planning to set up a new business, we can help you ensure meticulous documentation and full compliance with the latest set of laws.

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Insights from the "Investing in the Golden Triangle" Conference: Fresh Investment Opportunities
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Insights from the “Investing in the Golden Triangle” Conference: Fresh Investment Opportunities

The recently concluded “Investing in the Golden Triangle” conference in Egypt revealed promising investment opportunities in major economies in the Middle East. The agenda of this conference was to explore investment prospects in the UAE, Egypt, and Saudi Arabia (KSA). Prominent business and economic experts attended the conference to discuss the feasibility of establishing companies in these thriving economies. Emerging businesses eyeing a company formation in Dubai will find these insights valuable.

At the conference, industry leaders shared their opinions at a panel titled “Establishing Companies in the Golden Triangle Countries”. Prominent speakers from different organizations shared crucial tips on the process of company formation in these countries. They also shared some strategic insights and investment opportunities that new companies will find beneficial.

An overview of the investment landscape

Insights from the panel provided a comprehensive overview of the business infrastructure in Egypt, UAE, and KSA. Experts speaking at the conference focussed on investment opportunities in the Golden Triangle. They also guided the attendees on different relevant types of companies and legal frameworks in each of these countries.

The speakers also addressed crucial tax considerations and strategies while speaking at the conference. This would help new businesses invest strategically in the region.

One of the prominent aspects of discussion at the conference was the significant investment opportunity in Egypt. The country has made recent strides to improve its Ease of Doing Business, channelling substantial investments. Experts also highlighted the status of the UAE, which continues to be a dynamic business hub. Particularly, Dubai has been shaping the growth trajectory of the UAE. On the other hand, foreign investors are increasingly eyeing impressive prospects in Saudi Arabia.

Comprehensive Business Solutions

Experts speaking at the conference recommended a wide range of tailored services offered to companies and investors. Leading service providers like the IMC Group comprehensively assist foreign businesses in company formation in Saudi Arabia. Other services offered by top service providers include registering foreign businesses, obtaining commercial licenses, facilitating banking services, offering corporate training, and insurance options. Some of the service providers also provide investment consultancy to cater to the diverse requirements of the investors.

The IMC Group remains committed to assisting investors in establishing their enterprises in a cost-effective way in the UAE. Investors willing to expand their ventures to Egypt and Saudi Arabia can also benefit from its plethora of services, including accounting, banking solutions, immigration support, and wealth management.

The “Investing in the Golden Triangle” conference highlighted the immense business potential still untapped in the UAE, KSA, and Egypt.

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UAE’s Strategic Corporate Tax Initiative: A Roadmap for International Businesses
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UAE’s Strategic Corporate Tax Initiative: A Roadmap for International Businesses

Global corporate firms have recently shifted their focus to the corporate taxation policies of the UAE. The popular business hub has been a favourable place to expand commercial operations for international enterprises. Recently, the UAE has introduced a 9% corporate tax, which sparked discussions among the international business community. In this edition, we are going to discuss the potential impact and strategic significance of this corporate taxation policy of the UAE.

Strategic Tax move from the UAE

Contrary to initial concerns, the corporate tax policies of the UAE is considered to be strategic. This decision redirects taxes back into the UAE economy, fostering a diverse revenue base beyond oil. The UAE has come up with a tactical stance to leverage tax revenues to strengthen its economic foundations and reduce its dependence on traditional sectors. This fosters long-term resilience and sustainability in the country.

The groundwork for this initiative involved forging an extensive network of 193 Double Tax Agreements (DTAs) with global tax jurisdictions. Naturally, global businesses are reaching out to corporate tax consultants in Dubai to remain on the right track with regard to tax compliance.

The DTAs serve as a cornerstone of the new tax strategy in the UAE. They assure businesses with protection against double taxation, fostering a favourable environment for international investments. The meticulous planning and execution of these agreements reflect the commitment of the UAE to nurture a business-friendly ecosystem.

Competitive Tax Framework

In the UAE, the corporate tax rate of 9% applies to profits of more than AED 375,000 for businesses. This move positions the country competitively on the global stage. Along with this tactical tax framework, the country provides exemptions for personal income, real estate investments, and non-business income. Naturally, the UAE appeals to investors as a dynamic hub to carry out business.

Comprehensive Tax Treaties in the UAE

The UAE addresses both direct and indirect corporate taxes through 193 DTAs. This provides attractive avenues for corporate entities to mitigate or eliminate taxes on their investments or profits. These comprehensive tax treaties offer clarity and predictability for businesses operating across borders, creating a conducive environment for cross-border investment and trade.

Dubai has secured as many as 92 double tax treaties covering various income streams. These include dividends, royalties, interest, and earnings from real estate. The strategic location of Dubai as a global business hub, along with its robust legal and regulatory framework, makes it a preferred choice for MNCs looking to venture into the Middle East.

How can International Firms Benefit from UAE’s Tax Policies?

International businesses operating in Dubai can often balance their tax liabilities in their home countries, thanks to its favourable legal frameworks. The new tax strategy reduces the overall tax burden for MNCs operating in Dubai, besides encouraging investments and expansion in the UAE. The ability to optimize tax planning strategies within a transparent and compliant framework adds value to businesses operating in the region.
Seek Professional Assistance with Tax Consultancy from Experts

With changing paradigms in the corporate tax regime in the UAE, international businesses would be looking for professional advice from reputed tax consultants. The IMC Group continues to be the first choice for global businesses struggling to respond to the evolving tax structure in the Middle East.

For detailed insight into the tax environment in the UAE, check out this 2024 UAE Corporate Tax Compliance Guide. With strategic tax planning and assistance from professionals, MNCs and foreign firms can position themselves as compliant entities in the dynamic business environment in the UAE.

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3 Crucial Trends in Private Wealth Management in the Middle East
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3 Crucial Trends in Private Wealth Management in the Middle East

The Middle East is witnessing a rapid transformation in its private wealth landscape, marked by the professionalization and institutionalization of family offices. With the substantial growth of wealth among ultra-high-net-worth individuals (UHNWIs), it’s logical to seek private client services for wealth management. While family advisory services turn out to be imperative, it’s worth taking note of the crucial trends of private wealth management in this region.

This edition presents you with three distinctive trends in private wealth management in the Middle East.

1. Family Offices Are Being Professionalized and Institutionalized

Across the GCC region, family offices are witnessing a period of significant expansion and professionalization. According to recent data, are are nearly 6,000 UHNWIs in the Middle East, collectively worth around $995 billion. This wealth is likely to further surge in the coming years. The spike in wealth has resulted in a notable increment in the number of family offices in the Middle East adopting more structured and institutional approaches.

Traditionally, family offices were managed by an accountant and an investment professional who used to oversee assets for the generations to come. However, the current trend marks a shift towards more institutionalized family offices. This attracts skilled professionals from reputed law firms, investment banks, and the Big Four accountancy firms. A modern single family office in Dubai has evolved into a dynastic institution. Experts help streamline the process of wealth transfer and establish sophisticated investment vehicles like pooled investment companies and Jersey Private Funds for institutional-style investments.

As family offices handle wealth management for their clients, they tend to attract top talent in the industry and retain it. Leading single family offices deploy incentivization techniques like deferred compensation schemes, carried interest, and long-term incentive plans. This strategic approach to talent management positions family offices to compete effectively with larger institutions like private banks for key personnel.

2. Planning Succession

In the Middle East, many families have rapidly accumulated wealth over the last few decades. This demands greater attention on succession planning among UHNW families. Succession planning has emerged as a relevant trend with imminent wealth transfer between generations. It’s interesting to note that several UHNW families are initiating succession planning for the first time.

According to estimates, nearly $1 trillion will be transferred within GCC families by 2030. This justifies the relevance of robust succession planning strategies. Legislative changes regarding family businesses have facilitated this wealth transfer process. Second and third-generation family members are mostly responsible for driving business growth, modernization, and diversification.

Wealth transfer between generations signifies a key juncture for families. This calls for the establishment of dynastic structures that include different businesses, philanthropic initiatives, and developmental projects. Professional structuring significantly enhances asset management and succession planning. This is why most families are looping in specializes in the field to work on complex structuring requirements.

3. Private Wealth Being Driven By M&A Transactions

The corporate M&A market in the Middle East is experiencing a surge. A report from the EY cited over 318 M&A deals completed in the first half of 2023, with a total value exceeding $43.8 billion. Notably, Saudi Arabia, the UAE, and Egypt dominate this landscape, with a particular focus on tech and infrastructure sectors.

Sectors based on technology, such as food-tech, ed-tech, and fintech are attracting investors from sovereign wealth funds and quasi-sovereign entities like Saudi PIF, ADQ, and Mubadala. These corporate transactions, backed by substantial entities, result in immediate liquidity events for individuals and families. Naturally, it drives the growth of private wealth and calls for sophisticated structuring strategies to manage the booming wealth effectively.

Seeking Professional Consultation for Private Wealth Management

The IMC group continues to be a trusted team of professionals offering financial advisory and succession planning assistance to families in the UAE. With experienced minds on the side, affluent families in the UAE can seamlessly manage their wealth, following the three visible trends we discussed with you in this edition.

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Dubai's Digital Revolution in Company Formation is A Gateway to Investment
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Dubai’s Digital Revolution in Company Formation is A Gateway to Investment

Dubai, a global business hub and a center of innovation, is set to revolutionize the process of company formation to facilitate commercial activities. With the recent issuance of Decree No. 13 of 2024 by HH Mohammed bin Rashid Al Maktoum, the city witnessed a strategic shift towards a unified digital platform for foreign businesses to establish companies here. Dubai continues to attract global businesses with its investor-friendly environment. The process of company formation in Dubai has now been digitized, and forward-thinking entities are seeking professional support to get their establishments registered in the city.

The establishment of the “Invest in Dubai” digital platform forms the core of this decree. This is a revolutionary initiative that can simplify and streamline the process of establishing businesses in the Emirates. Dubai is all set to leverage digital solutions to do away with administrative hurdles and thereby drive efficiency. This, in turn, will result in a greater influx of domestic and overseas investments.

The Significance of the Decree

Beyond streamlining the administrative procedure during company registration, the decree signifies the commitment of Dubai to embrace digital transformation. It serves as a catalyst for economic sustainability and prosperity. The digital platform is a gateway for investors, offering a seamless experience from initial inquiries to obtaining necessary licenses and permits.

The integration of this degree within the existing legal framework in Dubai makes it particularly impactful. The decree syncs with established laws governing economic activities and introduces a modernized process to boost business activities.

Objectives of the "Invest In Dubai" Platform

One of the key objectives of the “Invest in Dubai” platform is to create a conducive environment for startups, entrepreneurs, and established businesses. The platform will simplify the company formation process to encourage entrepreneurial ventures which will also foster innovation and lead to a greater number of job creation. This will significantly contribute to the efforts of the Emirates to diversify its economic activities.

The emphasis of the decree on Digitization also reflects the vision of Dubai to emerge as a global leader in technology. As Dubai embraces this sophisticated digital platform, it positions itself as a commercial hub to nurture a booming business ecosystem.

Moreover, Decree No. 13 focuses on collaboration and coordination among various government entities. For investors, this collaborative approach ensures a cohesive and streamlined experience. Besides ensuring transparency and reducing duplication, the streamlined approach minimizes administrative hurdles while setting up businesses in Dubai.

The digital platform will attract investments across various sectors to drive economic growth and foster sustainable development.

Professional support for setting up a business in Dubai

As Dubai continues to position itself as a preferred investment hub, foreign businesses will be looking forward to expanding their activities to the global business hotspot. Considering the challenges involved in the process, forward-thinking companies seek professional support from established business setup consultants in Dubai, like the IMC Group. Working closely with the experts, new businesses can establish their identity in the competitive environment with confidence.

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Foundations of Wealth Protection: Estate Planning for Your Legacy
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Foundations of Wealth Protection: Estate Planning for Your Legacy

The concept of wealth protection has witnessed a significant evolution in the UAE and GCC in recent years. Forward-thinking investors in the UAE habitually choose foundations as a strategic choice for wealth protection. Since its inception in 2017, more than 1,000 such entities are operating in the country. This marked a shift in paradigm from traditional methods such as trusts while catering to the needs of family businesses.

The priority of preserving legacy remains at the core of this transformation. Family businesses, integral to the economy in the GCC, often face complexities when it comes to succession planning. Foundations offer a structured and tailored approach, ensuring continuity and preserving cherished values. This fosters sustainable growth and adaptability over the long term.

The Role of Single Family Offices in Dubai

The presence of single family office in Dubai has further enriched the wealth protection paradigm in the city. These entities cater exclusively to the comprehensive financial needs of ultra-high-net-worth families, offering bespoke strategies for wealth preservation, succession planning, and legacy management. Thus, they go a long way in aligning the diverse assets and interests of affluent families with their long-term objectives.

Working closely with a single family office in Dubai, affluent families can benefit from their expertise in managing investments, estate planning, and minimizing risks. SFOs serve as integral components in the wealth management ecosystem, complementing foundations by offering holistic and personalized solutions customized to the unique needs of each family. Thus, they secure legacies across generations.

Upholding the Ethos of Families

One of the strategic advantages of foundations lies in their capacity to uphold the ethos of a family and guide their principles from one generation to the next. They serve as custodians of assets with pre-defined purposes, inspiring loyalty, and trust among stakeholders. Thus, they demonstrate their uncompromising commitment to ensuring prosperity.

Moreover, foundations and single family offices offer a robust protection to assets, securing them from potential creditors and legal disputes. Thus, they empower investors to maintain control. They offer the flexibility of governance, protect assets, and help families retain control. This makes foundations a viable alternative to conventional strategies for wealth protection, such as trusts.

Therefore, a single family office or foundation serves as a legal entity entrusted with the tasks of asset management to reach specific goals. These include:

  • Continuity: Facilitating seamless transitions of leadership
  • Values: Safeguarding businesses and preserving their ethics and principles
  • Mitigating risks: Addressing talent gaps and conflicts during leadership transitions
  • Sustainability: Ensuring long-term growth and adaptability
  • Trust: Cultivating the confidence of stakeholders along with loyalty through sustained success and commitment

As the popularity of family office rises, individuals and families looking forward to securing their financial future while preserving their heritage for generations are considering them to be an enticing choice. At the IMC Group, we are committed to assisting our clients in safeguarding and nurturing their financial legacies. If you are considering establishing a foundation in the UAE, the IMC Group can assist you with unparalleled expertise in business setup, registration, and support services.

The prime benefits of our services include:

  • Streamlining the process of incorporation for fast setup
  • Seamless migration from diverse global jurisdictions
  • Rigorous protocols to ensure compliance
  • A conducive and supportive business environment
The IMC Group continues to empower businesses to grow and capitalize on a wealth of opportunities.

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ESR Compliance in March 2024
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ESR Compliance in March 2024

As we approach the Economic Substance Regulations (ESR) compliance deadline on March 31st, 2024, for businesses and companies, we want to ensure that all our partners and clients are well-prepared and informed about their responsibilities under these regulations.

What is ESR Compliance and Who Does it Apply to?

ESR Compliance refers to the set of regulations in the UAE. These guidelines apply to companies and businesses engaging in specific activities. These activities include:
  • Insurance Businesses
  • Banking Businesses
  • Investment Fund Management Businesses
  • Headquarters Businesses
  • Lease-Finance Businesses
  • Holding Company Businesses
  • Shipping Businesses
  • Intellectual Property Businesses
  • Distribution and Service Centre Businesses
For companies, it’s imperative to determine whether or not they engage in any of the relevant activities during the financial year. If yes, it is necessary to comply with the ESR Compliance norms.
  • Issue an ESR Notification within 6 months from the conclusion of the financial year
  • Undertake an ESR evaluation and present the report to the relevant authority within 12 months from the conclusion of the financial year
Have a look at the due dates for businesses having these financial years:
Financial year ending Due date of notification Return due date
September 30, 2023 March 31, 2024 September 30, 2024
March 31, 2023 September 30, 2023 March 31, 2024
Non-compliance with the regulations will attract the following penalties to the businesses.
Non-Compliance Penalty (Amended amount in AED)
Not submitting a notification 20,000
Not submitting an economic substance report 50,000
Furnishing wrong information 50,000
Failure to clear the first year’s ET Test 50,000
Failure to clear the consecutive year’s ET Test 400,000

Have a Consultation Today

Don’t wait until the last minute. Reach out to us today to ensure your ESR Compliance is on track and avoid potential penalties or disruptions to your business operations. Our professionals will carry out an assessment and help you file the ESR Report within the stipulated timeframe.

Thank you for trusting IMC Group as your reliable partner amidst the dynamic regulatory landscape.

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Mastering Due Diligence for Successful M&A Transactions
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Mastering Due Diligence for Successful M&A Transactions

Merger and acquisition (M&A) transactions often turn out to be too complex, which justifies the need for due diligence. In this edition of our newsletter, we will explore why due diligence proves to be the cornerstone to mitigate business risks. Successful entities seek professional Mergers & Acquisitions Advisory in the UAE, discovering opportunities and fostering transparency between sellers and buyers.

Let’s find out how the transformative potential of due diligence can shape the trajectory of your M&A efforts.

What Makes Due Diligence Indispensible?

During mergers and acquisitions, due diligence serves as a compass for both the involved parties. It nurtures systematic investigation to identify potential risks, liabilities, and opportunities in the deal. A meticulous scrutiny of the different aspects of due diligence empowers stakeholders to make informed decisions. This fortifies the foundation of the newly configured business entity.

The Scope of Due Diligence during M&A Activities

The scope of due diligence is vast and calls for professional insights for a realistic assessment. The following parameters come within the ambit of due diligence.

1. Corporate

This involves evaluating the completeness, accuracy, and currency of filings, licenses, and registers. Often, the ultimate beneficial ownership and shareholders register necessary rectification pre-completion to prevent the buyer from inheriting any liabilities. In certain jurisdictions, evaluating corporate registries, including the onshore ones in the UAE may be challenging. However, ongoing efforts are being made to authenticate the accuracy of the records.

2. Related Party Contracts

The scope of due diligence involves examining the contracts with related parties. This helps in identifying undervalued agreements or cases where assets of profits may have been diverted from the target entity. Professional teams also consider director loans and discuss whether or not such agreements should persist post-completion.

3. Finance

Due diligence measures related to finance involve the evaluation of security over the target entity and indebtedness. This includes intra-group debt and any personal guarantees or related arrangements regarding debt facilities. This stringent scrutiny from experts helps in identifying repayments necessary to remove charges, where applicable. These are often identified through financial due diligence.

4. Commercial

Commercial due diligence involves an analysis of the key customer and supplier contracts of the target. This includes their terms and currency, with specific attention to agency or distributor arrangements in the UAE. This is due to the persisting challenges of termination due to the existence of local laws. Professionals also scrutinize contractual provisions that address risks related to change of control. Experts also provide necessary recommendations for the post-completion process.

5. Intellectual Property (IP)

This involves a comprehensive analysis of registered and unregistered intellectual properties and their ownership status. Due diligence teams also examine their dependency on third-party licenses. They make sure that employment contracts contain adequate IP provisions and measures for rectifying the same, like IP assignment documents.

6. Litigation

Due diligence for litigation scrutinizes the involvement of the target in recent litigation cases. Experts take a look at their status to evaluate associated risks. Accordingly, they recommend protective measures while dealing with transaction documents to mitigate the exposure of the buyer to latent liabilities arising from pre-acquisition litigation.

7. Employment

Employment is a crucial parameter of due diligence measures. It involves the assessment of contractual arrangements with employees and contractors. In the process, they examine compliance with statutory rights and obligations and identify potential loopholes. Professionals also provide recommendations for new employment contracts, particularly for senior management. They also examine whether key employees should continue working with the target company after the acquisition.
8. Property
This aspect of due diligence involves the scrutiny of properties leased or owned by the target entity. Scrutiny is carried out on lease expiration dates, terms, or any breach of contract.
9. Regulatory
Due diligence on regulatory norms includes the examination of the regulatory requirements of the target. This includes licenses and consents, which undergo thorough assessments. Due diligence teams also recommend necessary updates before or after the completion to fix potential issues.

Professional Due Diligence Services in the UAE

A robust legal counsel can significantly help business entities simplify the challenges during M&A transactions. Partnering with the IMC Group, known for its transaction advisory services in Dubai, brings professionalism and expertise to the table. This team of experts has a proven track record of facilitating cross-border and domestic corporate transactions.

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Strategies for Holding Companies Amidst the Corporate Tax Landscape in the UAE
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Strategies for Holding Companies Amidst the Corporate Tax Landscape in the UAE

The UAE has set benchmarks in the global business environment, attracting global brands over the years. In the past, the absence of personal and corporate tax in the UAE made it a lucrative choice for investors. However, the Federal Tax Authority of the UAE has introduced Corporate Tax (CT) through Federal Decree-Law No. 47 of 2022, following which businesses and corporations need to shell out tax. This justifies why forward-thinking businesses are seeking professional support to understand 2024 UAE corporate tax guidelines and ensure compliance.

In this newsletter, let’s explore the prime aspects of the newly introduced corporate tax in the UAE and how it will affect Holding Companies.

What is a Holding Company?

A Holding Company may be a Limited Liability Company or a Joint Stock Company establishing its subsidiaries abroad or inside the State or controls existing entities by holding membership interests or shares. The company has control over the subsidiary firm’s management, thereby influencing their decisions.

Tax Implications for Holding Companies

The implications of the UAE Corporate Tax law on holding companies extend beyond compliance. They will impact the financial operations of Holding companies, from capital gains to dividend income. The CT law introduces new considerations for tax planning and optimization. For Holding Companies, it’s imperative to evaluate their streams of revenue and evaluate the impact of corporate tax on their bottom line.

Benefitting from Free Zones

For Holding Companies operating in the Free Zones in the UAE, there are unique strategies to reduce tax liabilities. Qualifying Free Zone Persons (QFZPs) may benefit from a 0% tax rate on their income. However, they need to fulfil certain criteria outlined by the Federal Tax Authority. In order to maximize tax efficiency, they should maintain adequate substance in the Free Zones and comply with regulations regarding transfer pricing.

Strategic Compliance with Participation Exemptions

Holding Companies should understand the conditions under which profits and dividends may be exempted from their taxation. With professional support, these companies can align their operations with the clauses mentioned in Article 22 of FD 47. This will significantly reduce their tax burden and boost their competitive advantage.

Enhancing Economic Substance

One of the prime determinants of tax compliance and efficiency for Holding Companies is to demonstrate adequate economic substance. For Free Zone entities, it is imperative to make sure that their core income-generating activities are conducted within the jurisdiction of the Free Zone. Thus, these businesses should employ adequate assets and staff to support their commercial operations. Adhering to Economic Substance Regulations (ESR) will help them maintain their tax residency status and avoid penalties.

Transfer Pricing Best Practices for Holding Companies

The Corporate Tax Law in the UAE comes with some provisions for transfer pricing. This involves a strategic approach to intragroup transactions for Holding Companies. Holding Companies should adhere to the arm’s length principles and document transfer pricing policies to mitigate the risk of audits. A proactive stance in reviewing their transactions is crucial, besides implementing robust pricing strategies to align with the regulatory norms.
Strategic Planning for Long-Term Success

The introduction of Corporate Tax in the UAE presents both challenges and opportunities for Holding Companies. With professional corporate tax advisory in Dubai from experienced teams, Holding Companies can position themselves for long-term success.

The IMC Group continues to be a trusted partner, specializing in corporate tax advisory. Foreign corporates and investors venturing into the UAE can seek personalized assistance and strategic advice tailored to their interests from this proficient group of experts.

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