Ras Al Khaimah (RAKEZ) economic substance requirements in 2023
In January 2019, the UAE government passed new Economic Substance Requirements (ESRs) for companies registered in the country which are engaged in “Relevant Activities”, including Ras Al Khaimah (RAKEZ) free zone and offshore entities.
- These new rules apply to RAKEZ companies engaged as i) holding companies and ii) headquarters as well as in iii) intellectual property iv) investment fund management v) lease-finance business vi) shipping vii) banking viii) insurance and ix) distribution and service centres.
- Three types of RAKEZ LLC, including i) non-resident RAKEZ offshore company and ii) tax-resident RAKEZ LLC and iii) RAKEZ company, can avail of double taxation treaties. New ESRs apply to every entity.
Problems and solutions
New legal requirement Simple, practical low cost solution
Ras Al Khaimah International Corporate Centre (RAK ICC) companies engaged in relevant activities must i) conduct income-generating activities in the UAE ii) rent a UAE physical office space iii) hire staff in UAE and iv) have active directors in the UAE.
Our Dubai office will assist you to:
✓ Locate a small shared physical office space for a one-time fee of US$950. Rental fees are then paid by our Clients directly to the landlord.
✓ Recruit a UAE low-salary admin employee for a one-time fee of US$4,950.
✓ Secure your UAE visa for a one-time fee of US$4,950.
Effective 2020, RAK companies conducting Relevant Activities must complete an annual economic substance notification and/or report confirming that the company is conducting relevant activities and/or generated income from these activities during the financial year. The notification must be submitted on the Ministry of Finance ESR portal.
✓ For a fee of US$550, Healy Consultants Group will prepare and file this report.
✓ The contents of this report will be agreed with our multi-national Clients, to ensure their business goals continue to be met.
Failure to timely comply with the above may result in i) UAE government sharing our Client’s business and personal information to the foreign government in the country where the entity is incorporated, or where the parent company or UBO are resident, in addition to potential suspension, revocation or non-renewal of the business licence and ii) Administrative penalties (of up to AED400,000/US$108,900) may also apply.
✓ Together with our multi-national Client, Healy Consultants Group will timely accurately and completely discharge your UAE annual legal, accounting and tax obligations.
Our multi-national Client does not want to submit an annual ESR report to the UAE government
✓ We help our Client re-domicile (click link) the UAE entity to alternative reputable zero tax jurisdictions, including Singapore or Delaware.
For the majority of multi-national Clients, a RAKEZ LLC is a useful zero tax international trading company. As much as possible, we recommend maintaining the company and submitting the annual ESR report. Otherwise, Healy Consultants Group will assist your Firm with re-domiciliation (click link) to a more business friendly jurisdiction.