Whether you have a full-fledged business plan or are simply starting to contemplate your next business venture or investment, there is a lot to be gained from choosing the UAE as your target location. From a friendly business climate to significant opportunities for growth, from streamlined legal frameworks to strategic locations, read on for six things to consider if you are interested in pursuing UAE foreign ownership.
When it comes to opening a business in a foreign country, there is almost nowhere more desirable than the UAE. This is due to the welcoming business climate that exists in the country. Here, you can find businesses of all shapes and sizes operated by individuals from all over the world.
The business-friendly attitude is one of the biggest reasons why so many entrepreneurs, investors, and business owners continue to look to open up in the UAE.
As a result of the UAE's vibrant economy and business-friendly climate, there is plenty of opportunity for businesses to develop or expand. From retail to food and drink, medical services, and tech innovations, almost all business sectors are growing in this region. This is exciting (and alluring) for organizations looking to expand their reach and grow their target market.
As the Emirates continues to emerge as a dominant player in the global economy, the opportunities for businesses offering high-quality and innovative products and services are only going to expand. Of course, that means competition is also going to grow, but, in the UAE, there is always room for those with the best brands, strategies, and visions.
The UAE is so attractive to investors and entrepreneurs because of the legal framework surrounding business opportunities – particularly for foreign-owned ones. Unlike in many other countries, in the UAE, there is minimal red tape for starting and operating a business, and legal procedures are (relatively) quick and straightforward.
In 2021, the UAE passed the UAE Commercial Companies Law (CCL), allowing foreign nationals to own 100% of companies incorporated in the UAE. This makes UAE foreign ownership even more appealing as previously, foreign nationals were limited to a 49% share in any given company. Additionally, single-shareholder entities can also now be 100% owned by foreign investors or entrepreneurs.
Not only does this amendment mean that foreign nationals can own far more shares in companies incorporated in the UAE, but it also makes the business setup process more streamlined and straightforward.
If you have ever heard about business operations in the UAE, you have likely heard about their tax laws. In the UAE, there is no corporate and income tax, which translates to significantly higher business profits for all companies.
Last year, the UAE introduced a VAT tax on consumer goods. The relatively small (5%) tax is applied to a product at each stage of its production. However, the consumer picks up the cost of an item's VAT, so its introduction does not significantly affect business revenue. In addition, keep in mind that essential consumer goods (including medicines, education, and other social services) are exempt from the VAT.
To ensure that you are doing your VAT pricing correctly and taking advantage of the VAT rebate, it is highly recommended that you work with a corporate services provider in the UAE that specializes in taxation. These experts will be able to assist you with VAT compliance reviews, VAT health checks, and VAT refunds (among other things).
The UAE is perfectly primed to be one of the globe's economic hubs due to its strategic location between the three continents of Europe, Asia, and Africa. This is ideal for foreign nationals who want to start a business here or expand their current operations as the country serves as a vital link between these important markets.
You can easily access trading routes, supply chains, and target markets across all three continents, including countries such as China, India, and those in the European Union.
What’s more, the UAE itself is a fantastic market for new and established companies; from Dubai to Abu Dhabi, Sharjah to Ras Al Khaimah, these Emirates have liberal business policies, world-class infrastructure and resources, and thriving economies.
Furthermore, whether you opt to move to the UAE or just visit regularly to check in on operations, you can be assured that you can get there easily as there are thousands of weekly flights to countries worldwide.
While you are in the process of setting up your new business in the UAE, it is critical that you are aligning with the evolving regulatory landscape. This can be hard when you are on the other side of the world, which is why it is highly advised that you partner with one of the top auditing firms in Dubai, as they will be able to guide you through the rules and regulations and ensure that you are in compliance from day one.
Some of the essential auditing services that these firms can offer include audit remediation, audit readiness, stock audit and verification, and statutory audits. They also can assist with setting up and monitoring management reporting, asset and transaction tracing, and quarterly review reporting.
In some industries, there are certain certifications and programs that are available, such as the Electrical Tariff Incentive Program, Unified In-Country Value, and Emirates Post Certification. If your company qualifies for any of these programs, you want to make sure you have local experts working with you to get in-depth insights on UAE-specific procedures and policies.
Are you considering pursuing UAE foreign ownership? If so, what do you think are the most significant benefits for your business? What do you think are the most crucial considerations that you need to make? How will you decide when the time is right to start the process? Who will you involve to ensure you have expert advice?
Let us know your thoughts and any plans you have for entering the UAE market in the comments below.
Naresh Manchanda is a Partner at MBG Corporate Services, an international organization supporting clients across Asia, Europe and the Middle East and providing sustainable solutions and strategies that drive business transformation. Established in 2002 and headquartered in Singapore, MBG is a 450-strong member team that operates out of Europe, the Middle East and Asia, providing Legal, Risk, M&A, Tax, Strategy, Technology and Audit Services.