The course is taxation

Sharjah University Taxation and Zakat

Midterm exam – assignment 2 Assignment: 2

Total marks: 25

Due date: 7 May 2020

Task 1 (marks 15)

A Japanese company (“Jap Co”) is intending to start up a new business in the UAE with the name of “Jap

NewCo” and wants to avail the benefits of customs duty exemption under the Greater Arab Free Trade

Area (“GAFTA”) based on its supply chain model. It has provided following two model options for your

review:

Model 1

► Under this transaction model, Jap NewCo will be established in mainland UAE as a ‘Branch’ of Jap

Co. Subject to permissibility, Jap NewCo will obtain a trading license from the Department of

Economic Development in Dubai (“DED”).

Model 2

► Under this transaction model, Jap NewCo will be established in one of the UAE Free Zones as a

‘branch’ or ‘wholly owned subsidiary’ of Jap Co. Jap NewCo will obtain a trading license from the

respective Free Zone Authority.

Definition KSACo Manufacturer of steel products based in

KSA

Jap NewCo

Jap new proposed entity in mainland UAE for undertaking intermediary trade

Jordan Co

Customer/importer in Jordan

Sharjah University Taxation and Zakat

Midterm exam – assignment 2

Definition

KSACo Manufacturer of steel products based in KSA

Jap NewCo Jap new proposed entity in the UAE Free

Zone for undertaking intermediary trade

Jordan Co Customer/importer in Jordan

Please analyze both models from the UAE customs perspective and suggest Jap Co which model is

feasible for them and why? Please use the PPT for providing your comments and suggestions.

Task 2 (marks 10)

A company dealing in consumable products is established in Oman and wants to import goods into the

UAE which are excisable from the UAE excise tax standpoint. It is currently looking for different options

to set up a business/register it in the UAE mainland area or free zone area. Please briefly explain what is

the process to register a company from an excise tax standpoint in the UAE and which area (free zone vs

mainland) is feasible for them. Also, they want to defer the payment of excise tax and store the goods

into a warehouse. What should they do in order to avail this option?

Hint: please note that all the UAE free zones (from customs perspective) are not designated zones from

the UAE excise tax perspective. You can use Word doc in order to respond your questions