The Emirate of Abu Dhabi is located in the Arabian Peninsula in the south of the Persian Gulf. Among seven emirates that are part of the UAE, it is the largest emirate. There are several free zones in the territory of Abu Dhabi.
The free zone Abu Dhabi Global Market (ADGM) is one of the two so-called “financial” free zones in the UAE. Its distinguishing feature is the direct use of rules of English law in the local legislation and local judges who know how to apply those rules. Companies incorporated in ADGM may conduct business both in (within ADGM) and outside the UAE. Such companies obtain a license (special permit from the Administration of the emirate) in accordance with the kind of activity they will engage in. Transfer of a company to the free zone implies the possibility to obtain resident visas for the company’s employees and their family members, which is an undoubted advantage.
In ADGM, there are licenses for 3 categories of activities:
Examples of financial activities: banking and its constituents, insurance, trust management, payment processing, investment.
Examples of non-financial activities: trade, production, provision of services.
Examples of retail activities: trade, production, provision of services.
ADGM imposes the following company structure requirements:
An individual aged 18 or older or a legal entity may be a director. No requirements have been set regarding director’s residency. At least one director of a company must be an individual.
The minimum number of directors is 1 (for PLC, it is 2), the maximum number is not set.
Directors’ information is not available to the public.
A private company is not required to have a secretary. A PLC must have a secretary.
An individual aged 18 or older or a legal entity may be a secretary. No requirements have been set regarding secretary’s residency.
The number of secretaries is not limited.
Secretary’s information is not available to the public.
Individuals and legal entities are allowed, with no requirements regarding their residency. ADGM does not require a company to have a local shareholder.
Shareholders’ information is not available to the public.
A company must have an authorized signatory in ADGM. Only an individual who is a citizen of one of the countries of the Cooperation Council for the Arab States of the Gulf (GCC: Bahrain, Qatar, Kuwait, the UAE, Oman, and Saudi Arabia) or a resident of the UAE may act as an authorized signatory.
Appointing one authorized signatory is sufficient (when appointing more than one authorized signatory, at least one of them must be a citizen of a GCC country or a resident of the UAE).
The authorized signatory acts as the company’s representative before the ADGM authorities and has their name stated in the license.
The authorized capital must be denominated in US dollars (USD). Confirmation of payment of the authorized capital is not required.
No standard minimum amount of the authorized capital of a private company has been set by the law in ADGM. The authorized capital of a private company must be divided into shares with no par value.
The minimum amount of the authorized capital of a public company is USD 50 000.
A company may issue shares of different classes. Issue of bearer shares is not allowed.
Before a company is incorporated, its founders must provide the free zone with a contract of lease of an office in ADGM. The address of the office will be deemed the company’s registered address.
In ADGM, there are several providers with whom an office lease contract can be entered into. However, a company’s address must be in the territory of ADGM. Providers offer different office options: from a coworking space to a full-fledged office. The necessary area of the leased office will be determined based on the proposed license of the company and proposed number of employees of the company in the UAE.
1. The company makes a decision to redomicile to ADGM. The following documents are prepared on this stage:
a relevant power of attorney may also be issued by this resolution;
2. Publication of a notice of the company’s redomiciliation in a local newspaper (stating the jurisdiction where the company will be redomiciled). A relevant notice must also be sent to each creditor and member of the company personally at least 14 days before filing the application for redomiciliation, since creditors and members should have an opportunity to object to the company’s redomiciliation.
3. Filing a notice with the Registrar in the BVI of the fact that a publication in a local newspaper has been made and all necessary notices have been sent out.
4. Obtaining in the BVI documents necessary for redomiciliation:
A Legal Opinion shall also be ordered in the BVI confirming that the company, according to its own law, may apply for redomiciliation[4].
5. Lease of an office for the company in ADGM.
By the time the redomiciliation application is filed, the company must have at least a confirmed reservation of an office in the territory of ADGM.
6. Filing a form of reservation of the company’s name in ADGM and application for the company’s redomiciliation to ADGM.
The following documents shall be enclosed with the application:
7. Payment of the redomiciliation fee (after the free zone’s approval).
8. Determination of suitable kinds of activity of the company in accordance with the ADGM classifier and issue of a commercial license to the company.
Upon the completion of redomiciliation ADGM issues a Certificate of Continuance.
9. ADGM sends to the Registrar in the BVI a written notice of continuation of the company’s activity in ADGM with a set of necessary documents.
10. In order to finalize the redomiciliation procedure (discontinuation) the company must file copies of documents certified by the Administration of the free zone with the Registrar of Companies in the BVI.
11. Obtaining a Certificate of Discontinuance from the Registrar of Companies in the BVI, which confirms that the company has been struck off from the Register in the BVI. The Registrar also publishes information on the company’s strike-off from the Register in a local newspaper to notify third parties of the termination of the company’s existence in the BVI.
IMPORTANT: companies registered in UAE free zones are exempt from capital gains tax, property tax and other taxes, except corporate tax and VAT.
From 1 June 2023, the UAE introduced a federal corporate tax. Free zone companies may be subject to both the standard rate of corporate tax (9%) and a zero rate. The application of a particular rate depends on a number of factors such as the company’s income, the types of its activities (whether they are excluded or qualifying, or not), counterparties, whether the company maintains adequate economic substance in the UAE, and other aspects.
On 1 January 2018, the UAE introduced value-added tax (VAT).
VAT, as a general consumption tax, applies to all transactions with goods and services unless such transaction is exempt from taxes or taxed at the rate of 0%.
The standard VAT rate in the UAE is 5%.
There is no obligation to register for VAT purposes while the turnover in the territory of the country is below the registration threshold, which in the UAE is AED 375 000 (~ USD 100 000).
Registering as a VAT payer is compulsory in the following cases:
Voluntary registration is also possible after the taxable transactions threshold of AED 187 500 (~ USD 50 000) has been exceeded.
Registration with the Federal Tax Authority of the UAE and obtaining a Tax Reference Number (TRN) for the company take at least 20 workdays.
After the registration with the Federal Tax Authority and obtaining a VAT payer number, the company must quarterly (and if its annual turnover exceeds AED 150 000 000 (~ USD 40 830 900)), then monthly) prepare and file a VAT return, and pay arising VAT within 28 days after the end of the VAT period.
Every company incorporated in ADGM must keep accounting records sufficient to confirm its financial position and containing up-to-date information on the assets and liabilities of the company. It is also necessary to annually prepare the company’s financial statements and undergo audit. Accounts of the following are exempt from audit:
The first reporting period of a company starts at its incorporation and lasts 6 to 18 months. Each subsequent reporting period lasts exactly 12 months from the date of the end of the previous reporting period.
For each reporting date, directors of the company must prepare financial statements of the company, including an auditor’s opinion (exceptions are stated above), and present them at an annual general meeting within 3 months of the end of the financial year.
Before starting the incorporation of a company, we recommend receiving consultation from a specialist of the non-resident audit department and tax specialist to determine tax burden of the company and discuss issues of further administration of the company.
PLCs allowed to be listed are imposed with additional requirements regarding audit and disclosure of financially important information. When planning to list shares of an ADGM company on exchanges of the UAE (ADX, DFM, NASDAQ-Dubai) or foreign exchanges, we recommend receiving consultation from a relevant specialist of GSL and a specialist of the non-resident audit department.
A company must annually renew its license (by paying the relevant fee) and lease contract.
The company’s renewal date is the date of issue of the license. In order to avoid penalties, the payment should be made 2 weeks before the renewal date. In the case of late payment, the Administration of the free zone reserves the right to impose penalties and suspend the license.
The cost of renewal of a company includes renewal of the office lease contract and renewal of the license. Upon renewal a renewed license is issued.
In the UAE, there is no such thing as residence permit. The migration rules of the UAE imply issue of resident visas, which are practically an analogue to a residence permit.
A resident visa may be obtained with regard to an ADGM company on the basis of entering into an employment contract with the company (work visa).
The number of resident visas depends on the business package chosen at the incorporation / redomiciliation of the company.
The procedure of obtaining resident visas is as follows (one may start obtaining a visa only after the company has been incorporated / the company’s redomiciliation has been finalized):
1. Obtaining an Establishment Card (opening the migration file of the company) – 3 to 5 days.
This document is necessary to enable the company to apply for resident visas in the future.
2. Submission of documents for a resident visa and obtaining an Entry Permit – 5 to 7 days.
To obtain a resident visa it is necessary to enter the UAE on an Entry Permit. If at the time of issue of an Entry Permit the applicant is already in the UAE, then in order to complete the procedure of obtaining a resident visa without leaving and reentering the country, the status of the visa must be changed. The service of changing the status of a visa is provided on request and paid separately.
3. Visiting the UAE to obtain a resident visa – in most cases a visa may be obtained within 5 workdays.
The applicant must:
Once the passport with a resident visa in it is received, the country may be left.
4. Obtaining a resident’s Emirates ID.
The card is issued a few days after the issue of the visa. Personal presence is not required to receive it.
Moreover, medical insurance is required to obtain a resident visa (the average cost of a non-nominal medical insurance policy starts at AED 6 000 per year).
The cost of obtaining a resident visa in ADGM is USD 4 200. For further information on the procedure of obtaining it, contact your consultant at GSL.
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Services
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Fees (USD)[7]
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Assistance in the procedure of redomiciliation of a company (served by GSL) from the BVI, including preparation of set of documents for change of jurisdiction to ADGM, UAE (outward part)
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3 400[8]
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State duties in the BVI paid at redomiciliation (including obtaining a Certificate of Discontinuance in the BVI)
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2 750
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Publication of a notice in a local newspaper in the BVI
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430
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Registration of change of a company’s status in the BOSS system in the BVI
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185
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Assistance in the procedure of redomiciliation of a company to ADGM (inward part)
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4 500
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State duties paid at redomiciliation to ADGM:
- for reservation of a company name; - for filing a redomiciliation application; - for redomiciliation. |
from 8 050
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State duties for the issue of a license for the first year and office lease expenses, including:
- office lease for 1 year; - license issue fee; - cost of the license itself. The cost of services is stated for: - sole shareholder; - non-financial license; - coworking office. Other options are available on request. |
from 24 400
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Annual renewal of a company, including:
- communication with state authorities on all issues of the company; - maintenance of the company’s portal in the free zone and in migration; - monitoring the law for changes, and notification in respect of changes and the need to adjust the company’s activity / structure; - monitoring the deadlines and making payments for the company’s renewal and office lease contract; - mail service (picking up / handing over documents and other correspondence). The stated cost does NOT include state duties charged by the free zone for the renewal of a license; they shall be paid according to the invoice sent by the free zone. |
4 500
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Obtaining a resident visa
(the expenses are stated for one work visa), including: - payment of all state fees (Entry Permit, Medical Fitness Report & Emirates ID, Visa Stamping on the Passport); - services in preparation and execution of necessary documents and getting them approved by the migration service; - escort on a trip to the clinic for medical examinations; - escort on a trip to the Federal Migration Service to give fingerprints and biometrics; - services in filing documents with the migration service to obtain and stamp a visa; - services in filing an application and obtaining a resident’s card; - services in selection of an insurance company to get medical insurance (if necessary); - transport costs. |
4 200
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Renewal of a resident visa
(the expenses are stated for one visa) Renewal of a resident visa (work visa is issued for 2 years) implies the same actions and expenses as the initial obtaining of the visa |
4 200
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Compliance fee
Paid in case of: - company’s renewal; - company’s liquidation; - transfer to another agent; - issue of a power of attorney for a new attorney; - change of director / authorized person / shareholder / beneficiary, except for a change to a nominee director / shareholder; - signing of documents. |
350 (standard fee – includes check of 1 individual)
+ 150 for each additional individual (director, shareholder or beneficiary) or legal entity (director or shareholder) if legal entity is served by GSL + 200 for each additional legal entity (director or shareholder) if legal entity is not served by GSL 450 (check for High Risk companies, including check of 1 individual) 100 (signing of documents) |
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Keeping accounting records of the company’s business
Systematic archiving of the company’s documents and provision thereof to the client on request |
200 / hour
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Preparation of financial statements, audit of the company’s business and filing of financial statements with the authorities of the free zone
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400 / hour[9]
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Tax consultation on VAT and other issues
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from 300 / hour
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Registration of a company for VAT purposes
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1 500
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Preparation and filing of VAT returns
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200 / hour
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[1] PLC – Public Limited Company, PJSC – Public Joint Stock Company
[2] B2B – Business to Business.
[3] B2C – Business to Consumer.
[4] Preparation of a Legal Opinion is charged for separately depending on the details of a specific company. The approximate cost starts at USD 1 000.
[5] Mainland is the part of the UAE beyond the borders of free zones.
[6] The fees are valid as at January 2024.
[7] A 5% VAT may be added to the cost of services provided in the UAE.
[8] The basic cost of services is stated. The final assessment of the cost of services in the redomiciliation of a company to ADGM and preparation of the necessary set of documents depends on the policy and requirements of the registered agent that serves the BVI company.
[9] The cost of preparation of financial statements and audit of the company’s business is determined based on time spent on work at the rate of USD 100 to USD 400 per hour (depending on the type of work and qualifications of the specialist involved); it is at least USD 2 200– the cost of audit of statements with the minimum number of transactions.