UAE is the leading business hub; it offers access to a market of outstanding potential for overseas companies to plan to set up their offshore company. Among its key characteristics are:
A Growing Market: Dubai’s imports have more than doubled since 1989; regional economic growth and liberalization is set to boost demand
A Prosperous Market: Strategic location at the heart of one of the world’s richest regions
A Diversified Market: Wide import requirements; opportunities for suppliers of most products
An Accessible Market: Served by more than 170 shipping lines and 86 airlines; an open market – no exchange controls, quotas or trade barriers
Business Environmnet in UAE
UAE offers incoming businesses all the advantages of a highly developed economy. The infrastructure and services match the highest international standards, facilitating efficiency, quality and service. Among the benefits are:
- Free enterprise system
- Highly developed transport infrastructure
- State-of-the-art telecommunications
- Sophisticated financial and services sector.
- Top international exhibition and conference venue
- High quality office and residential accommodation
- Reliable power, utilities etc.
- First class hotels, hospitals, schools, shops etc.
- Cosmopolitan lifestyle
UAE Business climate
Doing business in the UAE is very attractive due to the following reasons:
- No personal income and capital taxes
- No corporate taxation
- 100% repatriation of capital and profits
- No currency restrictions
- Competitive import duties (5% with many exemptions)
- Modern efficient communication facilities
- Abundant and inexpensive energy supply
- Simple staff recruitment procedures
- Competitive freight charges
- Competitive real estate costs
- Easy access to both sea and airports
There is no corporate tax or personal tax in the UAE. The only exceptions to this are oil producing companies and branches of foreign banks. Direct taxation is against the traditions of the UAE and it is highly unlikely that it will be introduced in the near future.
The basic requirement for all business activity in UAE is one of the following three categories of licenses:
- Commercial licenses covering all kinds of trading activity
- Professional licenses covering professions, services, craftsmen and artisans
- Industrial licenses for establishing industrial or manufacturing activity
Some categories of businesses require approval from ministries also: for example, banks and financial institutions from the Central Bank of the UAE; manufacturing from the Ministry of Finance and Industry; and pharmaceutical and medical products from the Ministry of Health; branch of foreign company from the ministry of Economy and Commerce. More detailed procedures apply to businesses engaged in oil or gas production and related industries.
Ownership Requirements Fifty-one per cent participation by UAE nationals is the general requirement for all UAE offshore company formations except:
- Where the law requires 100% local ownership
- In the Free Trade Zones where 100% foreign ownership is permitted
- In activities open to 100% AGCC ownership
- Where wholly owned AGCC companies enter into partnership with UAE nationals
- In respect of foreign companies registering branches or a representative office in Dubai
- In professional or artisan companies where 100% foreign ownership is permitted
Procedures Governing the foreign Business Operations
In practice, however, Dubai company formation procedures are similar to the general system other emirates follow, whereby foreign owned offshore companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler’s decree. Since 1984, steps have been taken to introduce a codified company law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 – the “Commercial Companies Law” – and its by-laws have been issued. In broad terms the provisions of the Law are as follows: The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organization which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and offshore company incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.