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Steven M Curbelo
Husni Al Bayari
Michael T. Love
Dubai World Central (DWC) / Dubai South Free Zone
Dubai World Central is a strategic initiative of the Dubai government launched in the year 2006. It is also referred to as the Dubai South free zone. It was designed with a plan to provide all types of industries with an economic platform and to create around 500,000 jobs in the emirate of Dubai.
It is located near to the Jebel Ali Sea Port and the Al Maktoum International Airport. Due to its location, DWC is the premier center for global trade and logistics in the Middle East region. It further cements Dubai’s position as the leading aviation and trade hub in the Middle East region. The strategic location of the DWC free zone places it in an ideal position to provide convenient shipment around Gulf Cooperation Council member states, Middle East and in the entire world. The DWC free zone is also host to important events like World Expo 2020 and the Dubai Air Show.
DWC takes advantage of its location and easily connects the Sea Port of Jebel Ali with the Al Maktoum Airport with the help of the dedicated Dubai Logistics Corridor. By connecting the two destinations, DWC is able to form a single-custom bonded zone which helps in reducing time on the ground and speeding up the process of air-to-sea/sea-to-air cargo. DWC is the first integrated multi model logistics platform with unmatched levels of connectivity, speed and efficiency.
Who is Responsible for Regulating the DWC Free Zone?
The DWC free zone authority is responsible for regulating the companies and the business environment within the DWC. The free zone authority is also responsible for establishing requirements for Business formations, business license renewal and financial reporting of companies within the DWC free zone. The authority also requires the companies operating within the Dubai World Central to submit to them their audited financial statements annually.
Types of Businesses in the DWC Free Zone
A company wanting to conduct its business operations within the DWC is first required to establish its legal presence through the DWC free zone authority and obtain a business license in relation to the business activity the company wants to conduct within the DWC. The following are the types of business formations that can be set up within the DWC free zone:
1) DWC Free Zone Limited Liability Company (DWC-LLC)
A limited liability company (LLC) in DWC is a new legal entity with its own legal personality. The minimum capital requirement for establishing a DWC – LLC is AED 300,000. A LLC in DWC is currently limited to a maximum of six shareholders.
2) Branch of a Local or International Company
A local or international company operating its business operations outside the DWC can set up its branch within the DWC free zone. There is no minimum capital requirement with regards to registering a branch in the DWC. A branch cannot engage in any activity which the parent entity is already not allowed to undertake.
Types of business License in DWC Free Zone
- Industrial License
- General Trading License
- Logistics License
- Service License
- Education License
Benefits of Conducting Business Operations in the DWC Free Zone
One of the major benefits of conducting business activities within the DWC is unique clustering and purpose-built infrastructure. Another benefit of having business operations in DWC is exemption from corporate and personal taxes. There are minimal restrictions on transfer of funds into and out of the DWC. The free zone authority in the DWC also ensures 100% foreign company ownership. The businesses are also exempt from all import and export duties. DWC provides a secure and regulated environment for companies to conduct their business operations.
External Audit Requirement in DWC
One of the mandatory requirements for businesses in DWC free zone is to renew their business license at the end of their respective financial year. A company in DWC is also required to conduct External Audit of its financial statements and submit the External Audit report to the free zone authority as it is an integral component of the process for renewing business license in the DWC.
The External Audit requirement assists the free zone authority to ensure that the business is operating ethically, legally and within the rules and regulations established by the free zone authority as well as the UAE (if applicable).
Reasons for the External Audit Requirement
There are several reasons for the External Audit requirement and one of them is that External Audits performed by independent auditors provide the authorities with information they need to ensure that the business environment within the free zone is well regulated.
The External Audit report provides assurance to the free zone authority that the financial statements are complete and prepared in accordance with applicable accounting standards and regulations. The Audit report also provides the authority with information about whether the company is involved in any wrong doing or misconduct.
Approved Auditors in DWC
Only Audit firms holding a valid Audit license in UAE and that are registered with the DWC free zone authority can perform External Audit of entities operating within the Dubai South free zone. The DWC free zone maintains a list of DWC Approved Auditors which contains names of DWC audit firms that are authorized to perform External Audit of financial statements of companies operating within the DWC free zone. All DWC Approved Audit Firms are licensed financial service providers in UAE. The DWC free zone authority has its own processes and procedures in place for giving approval to an audit firm to provide External Audit services within the Dubai South free zone.
The rules and regulations applicable DWC free zone provides auditors with the right to require any document, record and information considered necessary for Audit purposes.
In order to continue providing External Audit services in the free zones and the UAE, the audit firms are required to provide evidence of their employees participating in continuous educational and training programs with regards to maintaining and updating their technical knowledge in accordance with the changing accounting and auditing standards.
Benefits of External Audit Services in DWC
One of the major benefits of the External Audit requirement is that it assists the companies in the process of renewing their DWC business license. The External Audit of the entity’s financial statements and operations provide the entity’s stakeholders with information as to whether the financial reports are prepared in compliance with the applicable accounting standards and regulations and reflect a true and fair view of the entity’s financial standing.
An independent Audit report with favorable audit opinion also provides assurance to Banks, investors and financial institutions that are interested in investing in companies operating within the DWC free zone.
The Audit report also provides employees with information through which they can assess the company’s existing financial position and its future prospects and therefore can plan for their future accordingly.
How Push Digits can help you in Complying with the External Audit Requirement?
As part of Group of Firms in UAE, Push Digits is a professional service company providing services in the field of Audit, Accountancy, Business Advisory, Business Consultancy and Tax Consultancy. Push Digits is a strategic partner of a well reputed and recognized Audit Firm of UAE, Nadeem and Umendra Chartered Accountants which is an approved audit firm in DWC and many other free zones in the UAE.
Our Group of Firms in Accountancy, Audit and Consultancy services means that we can provide you with a variety of services catering to your needs, all from a single platform, executed by qualified and experienced audit and accounting professionals.