His Highness Sheikh Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, has announced the launch of the region’s first ‘Virtual Company Licence’.
The joint initiative by Dubai Economy, Dubai International Financial Centre (DIFC), General Directorate of Residency and Foreigners’ Affairs (GDRFA), Smart Dubai, and the Supreme Legislation Committee will allow investors, entrepreneurs and freelancers to set up and manage a business from abroad. Virtual Company Licence (VCL) owners will (in theory) be able to manage all their company activities, including document signing and submission digitally.
The programme allows only verified non-resident individuals to register a company, and the owners of such companies must be citizens or tax residents in a country that has implemented the Convention on Mutual Administrative Assistance in Tax Matters.
Above is a heat-map showing the eligible and ineligible countries. India, Pakistan, Saudi Arabia, China, Russia, North America, South Africa, Nigeria, Cameroon, Uganda, Brazil, Argentina, Chile are some of the countries on the eligible list. Yemen, Oman, Sri Lanka, Thailand, Venezuela, Algeria, Egypt are on the non-eligible list.
Virtual companies remain subject to corporate and income tax in the country of incorporation and/or residence, depending on the location of the economic activities they carry out. All VCL’s will have access to a regulated e-commerce platform.
“This licence is the first of its kind and you can get this without residing in Dubai,” said Mr Sami Al Qamzi, Director General of Dubai Economic Department. “The initiative corresponds with the third article of Dubai’s 50-year charter, which promises policies and initiatives that will ensure progress, growth and Dubai’s sustainability and prosperity.”
VCL’s are part of the Dubai Virtual Commercial City program, which aims to provide an ecosystem for global entrepreneurs, regardless of where they reside. The target for this initiative is to attract at least 100,000 companies from across the globe. However there are still certain caveats that need to be worked out. For example, a VCL does not guarantee entry to the UAE, or a corporate bank account. Furthermore, it is not clear how these types of Licences will be able to comply with the recently implemented Economic Substance Regulations in the UAE.
According to the Dubai Virtual Commercial City website, “Dubai Government authorities are working on a simplified visa process for the holders of virtual company licence. A virtual company licence doesn’t automatically guarantee a business bank account in the UAE and it will at the discretion of the commercial banks. However, we can facilitate access to account opening process.”
At the moment, the initiative focuses on three main sectors: creative industries, technology and services. Please contact us for more details.