In 2018, Dubai attracted 523 Foreign Direct Investment (“FDI”) projects. Over 40% higher than in 2017.
Keep reading to find out why so many foreign investors are coming to Dubai, UAE to set up their businesses there. You will quickly realize that you do not want to miss out on the opportunity to establish your company in Dubai!
Corporate Benefits for UAE Set Up of Foreign Investments
Not only does the UAE have 0% corporate income tax for most businesses, but these other taxes are non-existent:
– Capital Gains Tax
– Withholding Tax
– Dividend Tax
– Personal Income or Payroll Taxes
– Import and Export customs duty within Free Zones (with exceptions)
– Stamp Duty on contracts
It’s also important to note that as of 2017, 74 countries have Double Tax Treaties in force with the UAE.
Quick and Confidential Application Process:
Dubai Department of Economic Development (“DED”) reported that the city is now ranked number ten of the top global destinations for capital investments. It is now easier and faster than ever to establish a business in Dubai.
Any new applications for foreign investment projects require a response from relevant authorities within five days. If your application is denied, there is also an appeals mechanism provided by Federal Law No. 19 of 2018 on Foreign Direct Investment.
The FDI Law, yet to be fully enforced, ensures the confidentiality of all applications. Harsh penalties, including jail time and fines up to AED 10 million, are enforced for sharing sensitive information about investment projects.
Favorable Business Regulations
Foreign investors may hold 100% ownership of companies in UAE Free Zones. In Mainland UAE, international stakeholders can have 100% ownership for professional licenses, and 49% foreign ownership for others.
The UAE’s FDI Law also says that companies must receive the same treatment and benefits as those based on UAE Mainland. It adds a layer of protection against expropriation of assets too.
Non-Corporate Benefits for UAE Set Up of Foreign Investments
Location, Location, Location!
The UAE is one of the safest countries in the world where 96% of UAE residents feel safe to walk outdoors at night in one of the surveys. It’s no wonder why over 200 nationalities call it home, especially when you consider the eight months of beautiful summertime weather.
There is plenty to do in Dubai. Many cultural events and international sports tournaments are held there. There is also the luxurious lifestyle and endless shopping possibilities.
If you’re interested in traveling, Dubai is the place to be! It is a well-connected city to destinations around the globe. There are 142 Emirates direct flights to various locations across the world.
Thousands of law firms, consultants and PROs can assist you in the establishment of your business in Dubai. Not to mention that the online platforms of the different licensing authorities is self-explanatory, and one’s can do it with eyes closed.
The catch though, and this is where the majority of foreign investors trip, is location and compliance.
The UAE has over 40 free zones; out of which 30 are in Dubai. Each jurisdiction has its own regulation and usually used for different business activities. Are you setting up a distribution center? a manufacturing plant? if yes, where are your customers located?… in the Middle East? or you are setting up a service center or a headquarters?
Every type is unique and should be looked at individually to provide the best location for a foreign investor.
2nd is compliance. Compliance is essential and may lead to material “avoidable” penalties down the road if not taken seriously.
The different locations and jurisdiction in Dubai mean different compliance rules and regulations.
The main two areas of compliance that we always see gaps in are Value Added Tax (“VAT”) and import and export regulations.
VAT is a new system for the UAE in comparison to other countries. Having an Arabic speaking Accredited Tax Agent with direct contact with the UAE Federal Tax Authority is critical to ensuring accurate treatment of VAT for your business.
Import and export compliance regulations are missed most of the times. The UAE has thousands of practitioners that based on what we have seen lack the regulatory touch of transactions unfortunately.
Things to consider:
- Availability of inventory system based on HS codes and declaration reference number, etc.
- Issuance of accurate certificates of origin
- Value added for national products for free trade agreements purposes
- Consumption of goods in free zones
- Movement of goods from free zones to the local market and vis versa
Have a word with your advisor and be compliant for a life time.