Monday, 26 August 2013

Why Dubai is still unique for Business


Dubai has emerged as a leading regional commercial hub with state-of-the-art infrastructure and a world class business environment. It has now become the logical place to position your business in the Middle East, providing you with a unique and comprehensive value-added platform.

With its strategic location, 0% corporate and personal income tax and a consistently strong economic outlook, Dubai is the ideal base for multinationals, SMEs and start ups targeting markets in Central Asia, Middle East, Africa, Asian Subcontinent and Eastern Mediterranean with a population of over 2 billion people and a combined GDP of US$ 6.7 trillion. With a friendly beach front international and multi cultural environment and tax-free living and working it’s hard to find a more perfect setting to start a new business or set up a branch office.

Dubai is still unique in many respects: a major cosmopolitan city located in a country that does not levy direct taxes of any kind, has no VAT, and only a 5% customs duty. It is an offshore jurisdiction without the offshore stigma.

Operating a business in the UAE

Under UAE federal law foreign businesses have three main forms to choose from to conduct business in the UAE:

¨ As a local limited liability company;

¨ As a branch of a foreign company;

¨ As a representative office of a foreign company.

Alternatively, six out of seven Emirates (the exception being Abu Dhabi) offer the possibility to conduct business out of a freezone and two Emirates – Dubai and Ras al Khaimah – offer an International Business Company regime.

Free zones

If there is no need to sell goods directly to the local market then setting up in a freezone is often more attractive than setting up as a local company, which requires 51 per cent local ownership. The practice is to allow the provision of services through a freezone entity to the local market as long as a significant proportion of the turnover is realised abroad.

The main advantages of setting up in one of the freezones in the UAE are as follows:

• 100 per cent foreign ownership is allowed;

• A guarantee for 15-50 years against the  future imposition of corporation tax.

• The import of goods duty free provided the goods are not supplied to the local market;
 
• Streamlined procedures: all formalities are typically dealt with through the freezone  authorities instead of the various government departments;


• No restrictions on hiring expatriates.

The freezones each have their own freezone authority. These are profit-making entities. Their main source of income is derived from renting office space, collecting license fees, and providing services to the companies operating in the freezone. In all freezones financial statements need to be submitted to the freezone authorities annually.

The UAE is particularly well positioned to cope with the increasing pressure from onshore tax authorities to provide real economic substance. The UAE freezones offer a very easy and inexpensive way to obtain office space, locate a server, and hire staff:

International Business Companies (IBCs)

Dubai, through its Jebel Ali Freezone, and Ras al Khaimah, through the RAKIA freezone and the RAK Free Trade Zone, both offer an IBC regime. These companies are ideal for holding investments such as shares in local or freezone companies, UAE real estate, or for trading activities outside the UAE. IBCs cannot rent office space or apply for staff visas, and they are not allowed to trade with parties inside the UAE.

All in all, Dubai offers something that to many will sound too good to be true: an unrivalled lifestyle in a business-friendly, no-tax environment, with a strategic location and access to all the services that you would expect to be available in a world-class business Centre.

Winston Wambua

International Offshore Specialist

For more information please contact me on

Mobile +971553350517

Email: winstonk@live.com

Skype: Winston.Wambua

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