Sooner — Cash Flow & Tax Architecture

EY Tech UAE Free Zone Qualifying Income status

The structure relies on Tech qualifying for the UAE Free Zone 0% rate on its intra-group services revenue. Validation needed:

• Tech has adequate substance in DDA: employees physically located in DDA, IP creation in DDA, treasury operations in DDA. ✓ Working assumption.
• Tech's revenue mix — three PM split fees (credit decisioning, software licence, customer support ops), cost+5% recharge to mainland subs, treasury services to SPV — all fall under Qualifying Activities (UAE Cabinet Decision 100/2023, Articles 2 and 7).
• The "de minimis" test for non-qualifying revenue (lower of 5% / AED 5M) is satisfied. Tech's only revenue streams are the three PM intra-group services fees + cost+5% recharge to mainland subs + software licence fees to SRE/Mortgages — all Qualifying Activities. No external brand royalty income.
• The credit decisioning services fee specifically requires Tech to maintain its credit team in DDA with documented decision authority. ✓ Already operating.

EY Transfer pricing on the three PM split fees

The AED 1,000/mo per-active total is split across three priced-separately fees. Each requires arms'-length validation with comparables:

• Credit decisioning services — AED 400/mo per active. Comparable: fintech credit-as-a-service market rates, typically 30–50% of net interest margin. Tech's credit team in DDA performs underwriting + eligibility + portfolio monitoring.
• Software licence — AED 400/mo per active. Comparable: proprietary lending-platform licence rates, typically 25–40% of NIM. Tech owns the lending platform as copyrighted-software IP (Qualifying Intellectual Property under the modified nexus approach).
• Customer support operations — AED 200/mo per active. Comparable: outsourced ops cost-plus 5–10% margin.

EY's TP team builds the Local File / Master File documentation supporting these rates.

EY ADGM SPV: structural compliance under zero-profit pass-through

SPV is structured to book zero profit (buys receivables from PM at face value; cash in = cash out). This neutralises the SPV's ADGM Free Zone tax classification as a leakage variable. Validation needed:

• The pass-through mechanism is FTA-defensible — no anti-avoidance recharacterisation of SPV's role.
• SPV satisfies minimum compliance even with zero income (audited statements, registered office in ADGM).
• Acceptable that SPV is a corporate-services-managed entity with no employees, given zero income.

EY Software licence rate from Tech to Sooner RE + Mortgages

SRE and Mortgages use Tech's lending platform (originations engine, customer matching, CRM, listing aggregator integration). Tech licenses this platform to both subs at a percentage of revenue; the rate is a TP variable that sets the cushion against the AED 375K Small Business Relief cap.

• Working assumption: 10% of mainland sub revenue (i.e., ~AED 11M/yr at Y3 from SRE + ~AED 6.2M/yr from Mortgages = ~AED 17M/yr absorbed at Tech).
• Combined with cost+5% recharge (~AED 17M/yr to SRE + Mortgages), this absorbs ~AED 34M of mainland profit at Y3, leaving ~AED 119M residual taxed at 9% (~AED 10.7M CT/yr at Y3).
• Pushing software licence to 15% saves ~AED 1–2M/yr of CT but adds TP defensibility risk. EY validates the rate via comparables: proprietary lending-platform licences typically 8–25% of NIM; we sit conservatively at 10%.

This open item is the lever for tuning the Y3 effective CT rate between ~13% (aggressive software licence) and ~16% (cost-plus only).

EY UAE Substantial Shareholding Exemption / dividend mechanics (UK Holding ↔ UAE subs)

UK Holding is the offshore parent. No brand royalty is charged (per group decision: no UK royalty exposure to keep tax simple and UAE-only). Validation needed:

• UK SSE applies to dividends from each UAE sub if ever declared (≥ 10% holding test, 12-month period, trading-company test). Confirm with UK adviser if/when group plans to upstream profits.
• UK CFC implications now that an active trading group sits below UK Holding. Confirm.

Practically: Amwal's facility blocks parent dividends out of UK Holding for the term, so this is largely deferred. Engage UK adviser closer to facility maturity / refinance.

Sharif + Sharia adviser Sharia structure approval

The lease loop (head-lease + Murabaha-form sub-lease in End-User Unit; head-lease + market sub-lease + Mgmt Agreement in Tenanted Unit) and the receivables-purchase mechanics need Amwal's Sharia Supervisory Board sign-off. Validation needed:

• Head-lease at AED 1,000/yr is acceptable as a Sharia ijara overlay on the Murabaha financing.
• SPV's "buy at face value, collect at face value" structure satisfies AAOIFI FAS 28 for Murabaha.
• PM as Wakala/agent for buyer in Tenanted Unit residual-rent flow is Sharia-compliant.

Gabriel PM ownership: 51% Sooner / 49% Shaybani (agreed) — covenants required if 49% / 51% reverses

Per the MMA review with Victoria, the agreed structure is Sooner 51% / Al-Shaybani family office 49%, with Shaybani holding zero reserve matters and zero dividend rights. Shaybani compensation is exclusively the 0.3% per-origination service fee paid at origination from equity.

Contingency if ownership reverses (Sooner 49% / Shaybani 51%): a Shareholders' Agreement is required with Sooner-side reserve matters covering: any dividend declaration; any change to Tech split-fee rates (AED 400 / 400 / 200) or the cost+5% recharge formula; any change to the PM permitted-payment list; any change to the Shaybani service contract; any sale or transfer of PM equity. Without these covenants, the Sooner-minority position cannot defend the cash-flow architecture against majority-shareholder challenge. The Shaybani buy-out option (existing AED 250K provision) provides a clean exit path when Sooner can self-guarantee the AED 5M PM-licence bank guarantee.

Tax delta between the two ownership splits: < AED 50K/yr at Y3 run-rate. UK SSE applies in both because the test is ≥ 10% holding (49% qualifies).

Sharif + Walkers Backup servicer for $10M tranche

Current proposal: ClearGrid acts as backup servicer via a power of attorney + standing servicing agreement, operating under Sooner PM's licence umbrella. ClearGrid commits in writing to obtaining its own UAE Property Management licence within 18 months, providing a clean migration path to direct backup servicing.

Gabriel "Sooner Corporate Structure" PDF correction

The currently-circulating PDF labels Holding → PM at 49%. Per the agreed structure, this should be 51% (Sooner control). Correct before sending to Philippe to avoid an externally-visible inconsistency with the MMA framing.