Incentives for Incorporating in Dubai

Dubai is part of the United Arab Emirates' (UAE) seven Emirates and is governed as a 'state' in order to be distinguished from the UAE. Being a leading business hub in the Middle East and worldwide, it is important to take a look at the various facets important to most entrepreneurs, in deciding whether setting up a company in Dubai is relevant to your business. By looking into Dubai's location and infrastructure, as well as the various criteria for business incorporation, it will be possible to better grasp the incentives offered when incorporating in Dubai.

 

Location

 

Located on the southern coast of the Persian Gulf as well as the Arabian Peninsula, Dubai is strategically located between Europe and Asia to facilitate business with two of the world's largest markets. Dubai can reach out from both east to west and north to south, as it is centrally located to minimize travel costs and time-zone differences.

 

As a result of such strategic positioning, Dubai holds many established business links with its surrounding nations, reaching over 1.5 billion people (Government of Dubai - Statistics).

 

Further enhancing its business, despite having a relatively small land area of 4,114km2, Dubai is situated in an area rich in energy and natural resources, available in high quantities and cheaply, that allow its businesses to thrive.

 

Transport

 

With Dubai's advantageous location, it can contribute to worldwide transport costs being reduced. Dubai has capitalized on these advantages and invested heavily into its trading facilities. Entrepreneurs doing business in Dubai have access to two state-of-the-art sea ports operated by over 120 shipping lines, as well as an important air freight center with a cargo port. Businessmen have access to Dubai's international airport, which acts as a main stopover for flights from Europe to Asia and hosts over 85 airlines, thus facilitating connections all over the world. Within Dubai there is also a new highway network that enhances Dubai's attractiveness of having a full range of modern transport facilities.

 

Culture

 

With a population of about 1.8 million (Dubai Statistics Center) that is growing tremendously as expats flock to Dubai, the state enjoys a diverse range of residents from a variety of cultures. The population is predominantly Indian (42.3%) with a strong Arab community as well (26.1%) and the remainder of the population comes from Pakistan, Europe, America, along with other nationalities. Not only is the Dubai workforce known for its multicultural dynamics but it is also reputed as being both multi-lingual and multi-skilled.

 

Dubai is recognized for its welcoming and affectionate people, and the workforce is pro-business with a long history of foreign trade that gives them a strong exposure to international practices of business. Many international businesses have partnered with companies in Dubai, creating franchises and joint ventures, which prove the international trust invested into the Dubai workforce, their efficiency and their talent.

 

Supporting Dubai's pro-business attitude are significant investments into a network of seven industrial areas around the Emirate, as well as a business park. Added to this are various free trade agreements and a flexible and open attitude towards expatriation in Dubai, which allow businesses to feel welcome and valued in the Emirate economy.

 

Policy and Taxes

 

Part of the Dubai pro-business culture are a variety of laws and tax policies that facilitate international business for most entrepreneurs. The Dubai regulatory system is renowned for being sound and stable, and works in line with strong and lasting industrial relations that reflect the pro-business environment that Dubai is home to.

 

The legal infrastructure is both comprehensive and detailed, allowing for a clear understanding of ownership rules, intellectual property rights and business set-up procedures and requirements. These are boosted by Dubai's loyalty to its business protocols and its commitment to protecting its business infrastructure.

 

Dubai's legal policies can be perceived as complicated by some, but are better grasped with the aid of an experienced professional services firm that can guide foreign entrepreneurs. Foreigners are allowed up to 49% ownership rights in a Limited Liability Dubai company, and up to 100% ownership in a branch or representative office, or in a free-zone company.

 

Entrepreneurs who incorporate in Dubai also benefit from significant tax advantages. Not only are there no corporate profits taxes for most companies, there is not any personal taxes either. Only oil companies and branches of foreign banks pay corporate tax, with oil companies paying up to 55% on taxable income and foreign banks paying 20% on taxable income, sourced in Dubai.

 

Customs duties are at a low rate of 4% and many companies can benefit from exemptions, with repatriation of capital and profits authorized by law. Companies in Dubai also benefit from having no trade quotas and no trade barriers, as well as no foreign exchange controls. However, despite these factors, the Heritage Organization ranked Dubai as the 54th freest nation in the world.

 

Current Business

 

The banking and finance industries in Dubai are an important part of the economy, despite the fact that banks are still subject to corporate tax. Dubai has an advanced banking system with many facilities, including vast amounts of credit and more than enough liquidity. Moody's gave Dubai a credit rating for Fixed Income Investments, proof of the trustworthiness of FDI in Dubai.

 

From a more hands-on perspective, Dubai's investments into their roads, airports, seaports and communication technologies provide an advanced and efficient infrastructure for businesses to thrive. High quality office properties and state-of-the-art exhibition facilities are also widely available for businesses to enjoy the same standards, if not better, that they can expect in Europe and the U.S, and at extremely competitive rates.

 

Benefiting from such facilities, the freight, hospitality and professional services industries within Dubai include companies that are leaders both regionally and internationally. It is, therefore, no surprise that UAE holds the rank of the world's 23rd most competitive economy, according to the Global Competitiveness Report 2009-2010.

 

As testimony of Dubai's competitiveness, the trade links that exist between Dubai and other nations are extensive and well developed, with a foreign trade network of about 179 states. Dubai is also a member of the UAE Federation, which is the 3rd largest export center in the world after Singapore and Hong Kong. This allows companies incorporated in Dubai to enjoy an important market outreach and a multitude of outlets for marketing on a worldwide basis, as well as endless options for sourcing goods and services.

 

Company Incorporation

 

Various requirements exist for Dubai company incorporation, which are important to take note of. As stated previously, International entrepreneurs can own up to 100% of a Dubai company if the company is located in a UAE Free Zone. In various other cases, foreigners are limited to up to 49% ownership. There is, however, a requirement for every Dubai Branch Company to have a UAE national sponsor, but this can be provided by an apporpriate professional services firm, where necessary.

 

Entrepreneurs who incorporate in Dubai benefit from no legal requirement to own or rent a physical office or hire staff, which make a Dubai offshore company ideal for many entrepreneurs who would like their business to fit in with their current daily lifestyle. In this way a virtual office can be arranged, and many professional services firms provide these facilities in line with their company incorporation aids.

 

A Dubai LLC is no longer subject to minimum capital requirements. This law was abolished by presidential decree recently with the aim to reduce the hurdles for entrepreneurs wanting to set up their business in the region. Company incorporation now requires that sufficient capital be available to achieve the business objectives.

 

As standard procedure, any business must be registered at the Department of Economic Development (DED) before being able to conduct its business activities. Many licenses exist that authorize and legitimise business activities for companies. For example, a professional trade license allows submission of invoices for services, but does not allow reselling of products. In this way, such a license may be more appropriate for a consultancy firm. It is important for companies to properly research the appropriate and necessary licenses for their business in Dubai. Such legislation allows better regulation of the business environment and a more secure and sound economic climate for business activities.

 

Living

 

For those who incorporate their company in Dubai and choose to live in the Emirate, there are many advantages that exist for them. Dubai is renowned for its luxury living and high quality of life. The government has made significant investments into real estate, architecture, and other private sectors, which result in a wide variety of living options for entrepreneurs and their families.

 

Schools, hospitals, shopping and recreational facilities are vast and are of high standards, providing for a balanced life of hard work and relaxation. The environment is clean, crime is low and the weather is enviable with mild winters. With such excellent facilities and a diverse and multicultural society, Dubai offers a convenient and interesting lifestyle for entrepreneurs.

 

As a whole, Dubai presents a well-rounded atmosphere for business, supported both by the culture, government legislation, and the extensive infrastructure and other facilities available. Dubai is a top competitor as a business hub for trade worldwide and a Dubai incorporated company can be a relevant and efficient option for a wide array of business operations.