The UAE has a strong reputation as a laissez-faire business hub, with a tax regime designed to be attractive to start-ups and multinational companies alike.
With a strong economy – despite global pandemic woes – the nation offers stability, security and vast growth opportunities to companies and entrepreneurs from all over the world.
According to official reports, the nation witnessed Foreign Direct Investment of nearly US$14 billion in the first half of 2022, up some 14.6% year-on-year. In a record first half, Dubai attracted 492 FDI projects during H1 2022, an 80.2% year-on-year increase, with greenfield (new) projects accounting for a 56% share of total projects.
The high levels of FDI make Dubai the world’s top destination for FDI projects, which bodes well for future economic strength, growth, and of course, job opportunities.
Economic diversification has also been key to the attractiveness of the Emirates as a business hub. The government realised many years ago that it needed to lessen its reliance on energy – oil and gas - as the finite supplies began to dwindle and the global focus shifted to new energy forms. This has led to less reliance on energy, and several ambitious non-oil growth plans, many of which are codified in official documentation, from biotech to humanitarian activities.
Of course, the numerous free zones deliver a raft of benefits to a variety of companies, creating opportunity to take advantage of the Emirates’ location at the heart of the MEASA region and enjoy full (foreign) ownership. Free Zone companies also enjoy 100% repatriation of capital and profits, 100% import and export tax exemption and 100% exemption from income and corporate taxes.
The favourable tax regime is undoubtedly a pull for companies of all sizes and stages. The UAE has created more than 92 double tax treaties, while there are no exchange control restrictions and the possibility of unrestricted repatriation of income/profits and capital.
A caveat worth noting is that the UAE introduced VAT at 5% in 2018. A business must register for VAT if its taxable supplies and imports exceed AED 375,000 per annum. VAT payment is optional for businesses whose supplies and imports exceed AED 187,500 per annum. Foreign companies can recover the VAT they incur when visiting the UAE.
As part of the UAE government’s commitment to meeting international standards for tax transparency and preventing harmful tax practices, a new corporate tax of 9% will be introduced in 2023, levied at 9% for taxable income exceeding AED 375,000.
The rate, which will apply to most types of business, compares favourably with global corporate tax rates, which currently stand at an average of 23.64%, according to KPMG data.
Innovation has long been a growth tenant in the Emirates. There is a multitude of schemes, organisations and business growth schemes designed to attract entrepreneurs, innovators and cutting-edge technology firms.
In fact, the UAE launched a national innovation strategy back in 2014, underpinned by new legislation, innovation incubators, investment in specialised skills, private-sector incentives, international research partnerships and an innovation drive within the government.
Today, the UAE ranks in the top three most innovative nations in the region, according to the annual Global Innovation Index, which also puts the UAE ahead of every other GCC nation.
Establishing a branch of a company registered elsewhere is one straightforward way of creating a presence in the UAE and discovering new markets and customers.
Company migration - or re-domiciliation - is a process of transferring a company’s legal domicile from one jurisdiction to another while retaining its history and track record. Subject to compliance with corresponding legal requirements in both jurisdictions, the company is removed from the register in the jurisdiction of original incorporation and continues its legal existence as a company registered in the UAE.
Whether you are looking to set up a new company, open a branch of an existing company or migrate an entire corporate entity, the UAE offers myriad advantages over many other nations, and Swiss Group is always on hand to assist in the process. Find more information in our practical ‘Business Opportunities in the UAE’ guide here.