All that you need to know

TWO SPECIFIC PROVISIONS

HOLDING COMPANY BUSINESS

A Holding Company Business is a Licensee that:

• Only holds equity interest(s) in juridical person(s); and
• Only earns dividend and capital gains from its equity interest(s)

A Holding Company Business is subject to reduced substance requirements as follows:

• Comply with existing reporting/compliance requirements under the regulations applicable to the Licensee; and
• Have adequate employees and physical assets (e.g. premises)

A Holding Company Business is not required:

• To be “directed and managed” in the UAE (unless otherwise provided for under the rules and regulations of any Regulatory Authority’s); or
• To have / demonstrate adequate expenditure in the UAE

If a Licensee undertakes any other commercial activity or earns any other forms of income, it cannot be a Holding Company Business.

HIGH RISK INTELLECTUAL PROPERTY BUSINESS

Intellectual Property Business means a business that holds, exploits or receives income from the Intellectual Property Asset(s).

Condition A or B set out below must be satisfied for an IP Business to be considered as “High Risk”

Condition A – all of the following need to be met

1. The Licensee did not create the IP asset which it holds for the purposes of its business;
2. The Licensee acquired the IP asset either from:
   • a connected person, or
   • in consideration for funding research and development by another person situated in a country other than the UAE.
3. The Licensee:
   • licenses the IP asset to one or more Connected Persons,or
   • otherwise generates income from the asset in consequence of activities performed by Foreign Connected Persons

Condition B

The Licensee does not carry out research and development, or branding, marketing and distribution as part of its UAE Core Income-Generating Activity

The increased substance requirements require a High-Risk IP Licensee to demonstrate (and submit proof) that:

• It has (had) a high degree of control over developing the IPasset; and
• It has adequate full-time employees with the necessary qualifications that permanently reside and perform their activities in the UAE – relevant employee information (e.g. experience, contracts, qualifications etc.) would need to be provided; and
• It has a business plan showing the reasons for holding the IP in the UAE; and
• Relevant decision making has and continues to take place in the UAE