Top Reasons for Doing Business in the UAE

The United Arab Emirates has for many years been an ideal destination for starting a new business or expanding an existing one. According to the latest World Bank’s Ease of Doing Business Index, the UAE is ranked at the 16th position among the top 190 global economies. In this article, we will be looking at some top reasons why the UAE is a considerable destination for doing business.

Tax incentives

Since 2018, the UAE has introduced Value Added Tax (VAT), requiring registration for businesses and individuals with annual turnovers exceeding AED 375,000 (USD 102,000).

Businesses with turnovers of over AED 187,500 (USD 51,000) can voluntarily register.

The standard VAT rate is 5%, with some exceptions at 0%.

In 2023, the Federal Tax Authority also implemented a corporate tax in the UAE https://cbs-uae.ae/corporate-tax-inuae/, with a standard rate of 9%.

Corporate tax is applied to company profits based on international accounting standards and doesn’t apply to certain income sources. Entities can obtain a Tax Residency Certificate from the Federal Tax Authority to prevent double taxation in the UAE.

100% Ownership Rights

As of June 1, 2021, new legislation permits foreign business individuals to fully own local companies in various sectors across the UAE, such as in agriculture, the arts, construction, education, healthcare, hospitality, professional services, transportation, and more.

The necessity for a local service agent or partner is now limited to specific activities. Alternatively, foreign investors can maintain complete ownership by registering their businesses in free zones, where local partnership is also unnecessary.

Stable Economy

In 2022, the UAE topped the Global Entrepreneurship Index, establishing itself as the premier destination for starting a business. Its economy thrives on key sectors like manufacturing, tourism, real estate, construction, and transportation.

With consistently low inflation rates, the UAE boasted the world’s lowest at 5.5% from January to September 2022. As of July 2023, its inflation remained low at 3.05%, far lower than the EU’s 7.1%, for instance.

This stability fosters increased investment, ensuring economic robustness and offers abundant opportunities for entrepreneurs.

Stable Political Environment

The UAE has been recognised by the BTI Transformation Index for its high level of political stability, which offers a conducive environment for entrepreneurs and investors to confidently plan their long-term strategies.

The country’s emphasis on transparent policies not only cultivates trust among its citizens and foreign investors but it also assists in curbing corruption and promoting fairness in business operations.

Favourable Geographical Location

The UAE, strategically located between Europe, Asia, and Africa, serves as a prime hub for global business activities due to its proximity to the major markets in Africa and Eurasia. With numerous ports and airports seamlessly connected to key international transport centres, the UAE facilitates the efficient delivery of goods worldwide.

Conclusion

The UAE, particularly the Emirate of Dubai, is highly regarded for business startups. It offers several advantages such as zero VAT on specific goods and services, with a low standard VAT rate of only 5%. Foreign entrepreneurs enjoy the ability to own 100% of local company capital, repatriate profits, access favourable credit, and receive government support. Additionally, the country boasts a stable banking system and efficient international settlements, which all adds up to making it an ideal location for business ventures.

Top Reasons for Doing Business in the UAE