A new law, Law No. (16) of 2021 was issued by the Government of the UAE and the Ruler of Dubai, creating an independent legal entity called “Dubai Integrated Economic Zones” (“DIEZ”) Authority, bringing the three existing separate free zones - the Dubai Airport Free Zone, the Dubai Silicon Oasis and the Dubai Commerce City, under the control and guidance of just one Authority. The newly formed DIEZ will now all together supervise and administer said three zones, enjoying an absolute administrative and financial autonomy. The DIEZ will be effective as of January 1, 2022.
The DIEZ is aimed at enhancing Dubai’s global competitiveness and raising its foreign investment attractiveness, so that Dubai can become even more the destination of choice for global investors and a major focal point for global commerce.
By integrating government processes and facilitating greater access to global markets through a faster transition to a digital environment, the local Government aims in fact at strengthening its partnership with the private sector and making Dubai business environment more attractive, so as to bolster a sustained growth in this difficult time of international crises due to the COVID-19 issue.
The enactment of the new law aims to promote Dubai as one of the leading business and investment hubs in the world, as well as to provide an integrated and state of the art multimedia system in line with the highest global standards. The DIEZ will have a wide global network and will offer comprehensive and innovative packages of business solutions satisfying the needs and expectations of customers across various industries also on a trans-national basis, since the DIEZ has in fact also the purpose to ensure a seamless favorable carrying out of cross-border business activities.
The DIEZ shall primarily seek to attract both local and global companies for new business setup in the Dubai free zone, so that they can establish their business headquarters in the DIEZ. The favorite sectors, to enhance the business and economic competitiveness of Dubai, are mainly in retail, technology, Islamic economy, e-commerce, industrial, logistics and shipping sectors. On top of the foregoing, the DIEZ shall also provide all the required and necessary support to the SMEs in order to promote their business growth and diversification through innovation and entrepreneurship across various sectors, by improving the ease of doing business.
The DIEZ will act as the sole authority to create, develop and manage the infrastructure and administrative services and shall regulate all business activities and services including the import and storage of merchandise.
As a forecast, in the DIEZ free zone are expected to be doing business more than 5,000 global firms, dealing with some 20 major economic sectors and with an initial global staff of at least 30,000 employees. Almost 5 per cent of Dubai’s GDP will now be generated by the DIEZ.
Coming to the more particular aspects and benefits offered to set up and operate in the new free tax zone, 50 years of tax exemption has been announced for all companies and individuals licensed under the DIEZ, which shall be in force and effective as of the date of the enforcement of the new law, by the beginning of 2022. The tax exemption shall apply to all taxes – inclusive of income tax - and the exemption period can be extended for a similar period by a decision issued by the Dubai Ruler.
All companies licensed by the DIEZ, as well as their subsidiaries and individuals working therein, will be exempted from all restrictions related to the repatriation of capital, profits and salaries. The exemption will apply to all currencies and all destinations outside the DIEZ and will have a validity of 50 years renewable for a similar period. On top of the foregoing, no nationalization or restriction of ownership can be applied – pursuant to such new law - to the funds of licensed companies, subsidiaries and their employees.
As it relates to the regulations of Dubai Municipality or Dubai Economy in general, only those specific regulations relating to safety, security and food control, or any other regulations specifically applicable within free zones shall apply to the companies licensed by and under the DIEZ.
This new legal and economic initiative will certainly favor and support the further moving of several foreign companies and investors to do business in Dubai, at a time when similar initiatives should be taken by other States still suffering serious financial problems because of the not yet ending COVID-19 crisis.
Prof. Avv. Salvatore Vitale
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