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Freemontgroup

IwelcomeyoutotheDecember2016editionofournewsletter.

Inthisissue,wediscussanewtaxtreatyinbetweenCyprusandIndiaaswellasamendmentofIPregimeinCyprus.

ConcerningtheUAE,wehighlightregisteringanUmmAlQuwainCompanyexplainingthebenefitsofthecompany.

WealsopresentourlegalservicesinDubai,UAE.

I sincerelyhopeyouenjoy readingournewsletterandwearehappy to receiveyour feedbackandwelcomeyoursuggestions.

GeorgePhilippidesChairman

HighlightsonCyprus

A New Tax Treaty between CyprusandIndia

On the 18th November 2016 in Nicosia,Cyprusand India signedanewdouble taxagreement replacing the previousagreement,whichwassignedin1994.

ThenewagreementhasbeenanoutcomeofcontinuednegotiationsbetweenCyprusandIndia.ThemajortermsoftheagreementwereapprovedinJune2016.

Although the agreementwas published in theOfficial Gazette of Cyprus on the 25thNovember, it willcomeeffectiveoncethetwocountriescompletetheratificationprocess.InCyprustheagreementwillbe

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effectiveonorafterthe1stJanuary2017.InIndiatheagreementwillbeeffectivethreemonthslater,onorafterthe1stApril2017.

FollowingthechangestoIndia'sdoubletaxagreementswithMauritiusandSingapore,thenewagreementprovidesforsource-basedtaxationreplacingtheresident-basedtaxationwithregardstocapitalgainsfromthe alienation of shares. Now, the grandfathering of investments provides clarity to taxpayers holdinginvestments.Investmentsundertakenbeforethe1stApril2017willbegrandfatheredwithtaxationrightsover gains on the disposal of the shares in the country of residence of the taxpayer. Therefore, theamendedsource-basedtaxationwillapplyonlytogainsfromthealienationofsharesacquiredonorafterthe1stApril2017.WhenaCyprus tax residentdisposesofagrandfathered investment, theauthoritiesofCyprushave therighttotaxthegainsundertheamendedtaxagreement,whichisconsistentwiththeexistingone.Thefollowingkeyamendmentshavebeenincorporatedtotheagreement:

• 10percentwithholdingtaxwillbeimposedondividends.• 10 per cent withholding tax will be imposed on interest expenses and no tax will be imposed if the

beneficialowneroftheinterestisthegovernment,apoliticalsub-division,alocalauthorityoftheothercontractingstateaswellascertainIndianorganisationdefinedinthetreatyoranyotherorganisationasmaybeagreeduponbetweenthecompetentauthoritiesofthecontractingstates.

• 10percentwithholdingtaxwillbeimposedonroyaltiesasopposedtotheearlier15percent.• There is no withholding tax on dividend payments to non-residents. Cyprus does not impose any

withholdingtaxesoninterestandroyaltiespaidtonon-residents.

Theprovisionsincludetheexchangeofinformationbetweenthetwostates.Theexchangeofinformationwillbeinlinewiththelatestinternationalstandards.Thebankinginformationcanbeprovidedonlyupontheapprovaloftherespectiveauthorityinthecountryprovidingtheinformation.

In addition, with the new amendment now the term of permanent establishment includes a site orconstruction,installationorassemblyprojectoradministrativeactivitiesinconnectionwithasiteifitlastsmorethan6monthsasopposedtotheprevious12months.

The importantmomentumappears intheamendmentoftheclassificationorstatusofCyprus.Oncetheagreement is effective, itwill revoke the status of Cyprus as a 'Notified Jurisdictional Area’. Previously,from the 1st November 2013 Cyprus was first classified as a ‘Notified Jurisdictional Area.’ One of theoutcomesof this status is that, in certain conditions, a taxpayermay relyon theexisting treatyonlybyfollowingcertainadministrativeproceduresinIndia.

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AmendmentofCyprusIPRegime

On the 27th October 2016 the Official Gazette published theamendments to the Income Tax Law of Cyprus with theincorporatednewIntellectualProperty(IP)regimethathasbeenpassed by the House of Representatives. The Income Tax Lawprovides the transitional phase between the existing IP regimeandthenewIPregimebeinginlinewiththerecentinternationaldevelopments on the taxation of IP incomes andrecommendationsunderaction5oftheOECD’sBaseErosionandProfitShiftingproject.

ExistingIPregime

The new provisions contain guidance on theamended IP regime application and allow theexisting IP regime to remain in place until the30thJune2021.Torecall,theexistingIPregimeprovides an exemption from taxes of 80 percentofthenetprofit.

Net profit is calculated after deducting from the IP income all direct expenses associated with theproductionoftheincomeaswellascapitalallowancesatarateof20percent.

TheIPregimewillbeeffectiveuntilthestateddateforintellectualpropertyexistingasofthe1stJanuary2016ordevelopedoracquiredfromnon-relatedpersonsbetweenthe2ndJanuary2016andthe30thJune2016.Intellectualpropertyacquiredfromrelatedpartiesbetweenthe2ndJanuary2016andthe30thJune2016willbeentitledfortheexistingIPregimeuntilthe31stDecember2016.

TheNewIPRegimeandNexusApproach

The new IP regime presents the notion of qualifying profits that are eligible for the 80 per cent taxexemptioncalculatedonthebasisofthenexusapproachandrelatetointellectualpropertythatisentitledforthenewregimeofqualifyingassets.

Thequalifyingassetsarestatedinthenewprovisionsofthelegislationandincludeamongstotherspatents,copyrightedsoftwareprogramsandotherintangibleassetsthatarenon-obviousbutexcludetrademarksandothercopyrights.

ThenexusapproachisbasedonR&Dexpenditureincurredtodevelopthequalifyingassets.Thus,thelevelofprofitseligibleforthe80percenttaxexemptionwilldependonthelevelofR&Dexpenditureincurredbythetaxpayertodevelopthequalifyingassets.Under the new regime there is no income tax imposed on capital gains arising from the disposal of aqualifyingassetandthecapitalgainsarisingofsuchdisposalarenotincludedinthequalifyingprofits.

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Thenew IP regimeapplies toCyprus tax residents,non–tax residentswithpermanentestablishment inCyprusaswellasforeignpermanentestablishmentswhoaresubjecttotaxinCyprus.

The newly amended Income Tax Law introduces capital allowances for all intangible assets, excludinggoodwillandassetsqualifyingfortheexistingIPregime.

TaxBenefit

SincethenewIPregimeisinlinewiththeinternationallyagreedlatesttaxframework,theexpertsarguethatthenewIPregimemayenhancebusinessessetupsincreasingR&DactivitiesinCyprustobenefitfromthe new tax regime.With a low corporate tax rate of 12,5 per cent and an exemption on qualifying IPincomeof80percent,businessescanachieveaneffectivetaxrateas lowas2,5percentwhenallR&Dexpenditure is gained by the Cyprus entity benefiting from the regime. Moreover, since an overseasPermanentEstablishmentofaCyprusentityalsomayqualifyfortheIPregime,allqualifyingexpenditureincurredbysuchanentityistakenintoaccountinthenexusdivisioncalculation,hence,increasingthetaxadvantage.

For more details, request a quotation at Info@freemontgroup.com. Our dedicated team can give youadviceandhowtoprocessyourrequirementsbasedtoyourneeds.

HighlightsontheUAE

Umm Al Quwain Free TradeZone (UAQFTZ) is located inUmmAl Quwain, one of theUAE’s seven emiratesrenowned for its moderninfrastructure andunparallelednaturalbeauty.

UmmAlQuwainisagrowingtouristdestinationwithintheUnited Arab Emirates (UAE),offering an authentic scenicbeauty for the discerningtourist.

BeingarelativelynewFreeTradeZoneintheUAE,UmmAlQuwainoffersverycompetitivefeesandtheprivilegeofsigningdocumentsremotely.ThismeansaUmmAlQuwainFZcompanycanbesetupwithouttheshareholdersbeingpresentatthetimeaslongastheyvisitedUAEinthepast.

Registering an Umm Al Quwain Company constitutes an efficient and cost effective solution for themodernbusinessman.SomeofthekeybenefitsoflicensingacompanyinUmmAlQuwain(UAQFTZ)are

•doubletaxtreatiesbenefitsofUAEwith80othercountries

•100percentforeignownership

•zerocorporateandpersonalincometaxes

RegisteringanUmmAlQuwainCompany

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•allowsupto50shareholders

•100percentimportandexporttaxexemptionwithintheFTZ

•fastregistrationprocess

•proximitytotwointernationalairports,DubaiandSharjah,andmajorseaports

•norestrictionsonhiringforeignemployees

TypesoflicencesallowedwhenregisteringanUmmAlQuwainCompany

1.COMMERCIALLICENSE(TRADINGLICENSE)

There are two typesof license,which fall under this category: Commercial License andGeneral TradingLicense.

CommercialLicense:Thisauthorizestheimport,export,distributionandstoringofitemsspecifiedonthelicense.ACommercialLicensecanhavethreedifferentproductlinesor10similarproductlines.

General Trading License:This enables the licensee to trade in awider range of activities and gives thefreedomandflexibilitytotradeinanycommodity,whichispermittedwithintheUAE.

Note: Commodities which require special approval or clearance from various UAE authorities e.g.explosivesandarmamentscannotbetradedwithaGeneralTradinglicense.

Usualactivitiesincludei.e.TradingwithAutomobiles,SeedsTrading,Coal&firewoodtrading,cottonandnaturalfiberstrading,etc.

2.CONSULTANCYLICENSE

This isforentities,whichofferexpertorprofessionaladvice,andis issuedtoallmannerofprofessionalsincludingartisansandcraftsmen.Itallowstwosimilaractivities.

ActivitiesusuallyregisteredincludeMarketingConsultancy,ManagementConsultancyandITConsultancy.

3.FREELANCEPERMIT

Thisallowsanindividualtooperateasafreelanceprofessional,andconductbusinessinone’sbirthnameasopposedtoabrandnameorcompany.TheFreelancePermitisdesignedforindividualswhooperateintechnology,mediaandfilmsectors,andisissuedtotalentroles,creativerolesandselectedadministrativeroles.

ActivitiesusuallyregisteredincludeActors,Artists,PhotographerandProducer.

4.INDUSTRIALLICENSE

Thisenables the licensee to import rawmaterials, thenmanufacture/process /assemble /package thespecifiedproducts,andexport the finishedproduct. Itallowstheholder to import rawmaterials for thepurposeofmanufacturing,processingand/orassemblyofspecifiedproducts.

5.SERVICELICENSE

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Thislicenseisforserviceproviders.ItpermitsthelicenseetocarryouttheservicesspecifiedonthelicensewithintheFreeZone,suchasLogistics;CourierServices; InsuranceServiceProvider;TravelAgency;TourServices;CarRentaletc.

ObtaininganUmmAlQuwaintaxresidentcertificateandresidencepermits

AnUmmAl Quwain FZ can issue residence permits and obtain tax residence certificates from theUAEauthoritiesforitsforeignownersandexecutives.AFZcompany,musthavephysicalpresenceintheUAEand,inthatrespect,itmustownorhirepremises.

PrivateaccommodationisnotnecessaryforUmmAlQuwainFreeTradeZoneAuthoritywhenapplyingforresidencebutmanydothistoreinforcetheircaseforsubstanceandlegitimacy.

Asfarasthecompany isconcerned, itmusthavephysicalpresence intheUAE. Inthatregard,themostinteresting and cost effective options are proposed by free zones situated in a number of emiratesincludingUmmAlQuwain FreeTradeZone (UAQFTZ).Usually, theseoptions consist of “flexi desks”or“flexioffices”.

Furthermore, and if a local bank account is maintained with movements, the foreign owners andexecutivescanapplytotheUAEMinistryofFinancetoreceiveUAEtaxresidencecertificates.

AUAEresidencepermitandataxresidencecertificatecanbeusefultoforeignownersandexecutiveswhowishtoregistertheirtaxresidencyintheUAE.Itisworthnoting,thatbankinginstitutionsinUAEandmanyoutsideconsiderUAEtaxresidencecertificatesassufficientproofoftaxresidencyintheUAE.

For more details, request a quotation at Info@freemontgroup.com. Our dedicated team can give youadviceregardingUmmAlQuwainandhowtotailorasolutionbasedtoyourneeds.

Legal Services in Dubai and theUAE

FreemontGroupwantstoestablishitselfas a one-stop shop in order for you tohave your own peace of mind whenmaking important decisions regardingyour future. Apart from our maincompany, trust and tax advicewe offerlegalservicesinDubaiandtheUAE.

WhatourlegalteaminDubaicanoffer

Our legal services and support team inDubaiprovidearangeoflegalserviceswhichincludelegaldraftingandcompliance,draftingofagreements,minutes of shareholders’ and directors’ meetings, Intellectual Property consultation, documentcertificationandattestationandconsultationonCommercialCompanieslaw,LabourlawandimmigrationlawoftheUAE.

Ourdedicated legal team’spractice iswell establishedandhighly regarded forbeing strategic, practicalandcommerciallyminded.Ourproactiveapproachisatthecoreofnon-contentiousandcontentiouswork,

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whichallowsustoregularly,savesourclients’time,moneyandmitigatetheriskofunsuccessfuloutcomestokeepourclientsonestepahead.

LegalDraftingofContracts,Resolutions,PoliciesandPowerofattorney

Weprovidea comprehensive legal advice inboth strategic transactionsand on day-to-day issues faced by our clients. Each of our commerciallawyers works closely with our clients in order to deliver the mostcompletesolutiontoclients’requirements.

Our lawyer’s team can draft and legalize your documents as they arecertifiedbytheUAEauthorities.

IPConsultationandregistrationintheUAEandworldwide

Our team can register your Intellectual Property (Trade Mark, Patent and copy right) in the UAE andworldwidewhilstprovidingconsultationonIPLicensing,Infringementandprotection.

IP can be one of the most valuable assets of an organization. Choosing the right location for thecentralizationandmanagementofIPisaveryimportantstrategicbusinessdecision.TheideallocationtoestablishanIPstructureisonethatcanservetheorganization’sbusinessstrategies/model,safeguardandprotectitsIPandcontributetoitstaxoptimization.

AnumberofotherbenefitsthatanIPholdingcompanycanhaveforyou:

• Byplacingyour IP inoneentityyouareable tostreamline the internalprocesses for inter-grouplicensing.

• Cross-jurisdictional tax issues become simpler as you will be regularly licensing IP between thesamejurisdictions.

• You can justify staffing that entity with people who have the skills to manage the same soprotectingvaluableassetsofthecompanyfurther,simplifyingthelicensingprocess.

• Assets can be valued due to the income stream that accrues for the benefit of the IP holdingcompany.

• The value of the shares in the entity can be included into the accounts which will benefit theshareholdersoftheholdingcompany.

DocumentCertification/AttestationbyregisteredLawyersintheUAE

WeassistclientstoobtainanattestationorembassyandlegalizationfortheirdocumentsandCertificates.An attestation or embassy legalization certifies the authenticity of documents and are notarized beforetheycanbeacceptedbyGovernmentandBusinessestablishments.

Weundertakeallofyourdocumentsprocessing,fromsettingupabusinessinUAEtotheVisaprocessingofyourstaffandfamily.WehaveunparalleledexperienceinthefieldofDocumentClearing.

Ourlawyersattestandcertifytruecopiesandwitnesssignaturesonthefollowingtypesofdocuments:

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§ AlltypesofdocumentssuchaspassportsandIDs

§ PowersofattorneytobeusedoutsideUAE

§ ApplicationformsusedoutsideUAE

§ AlltypesofcompanydocumentsusedoutsideUAE

ConsultationonCommercialCompaniesLawandLabourLawoftheUAE

Ourdedicatedteamcanprovidethefollowingservices

§ AdviceontheUAElabourlaws

§ Preparingandreviewingemploymentcontracts

§ legalformalitiesforcompanyformations

§ legalopinionsandreviewofdocumentsandagreements

§ draftingofAgreements,SPA,MOU,powersofattorneyandotherlegaldocuments

§ registrationofforeignlegalentitiesandre-domiciliation

Formoredetails,requestaquotationatInfo@freemontgroup.com.

Our dedicated legal team can give you advice andhow to process your requirements based to yourneeds.

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