Business Expansion Plan to UAE
UAE is a constitutional federation formed on 2 December 1971 between the seven emirates which includes oil rich Abu Dhabi and tourism & trade hub Dubai. Also other Emirates has its unique economic features for business. UAE is one of the top destination for business owners to expand their business because of growing economy and infrastructure facilities. As there are no corporate and personal income taxes in UAE, the businessmen can grow their companies with great ease. Yearly increasing domestic consumer demand on the import of goods for the local requirements, as well as a significant increase in the volumes of export and re-export, also plays an important role for taking decisions in establishing business in UAE.
Why business expansion to UAE?
Taxation in UAE: UAE is nearly a tax free country. Citizens do not need to pay any taxes on property, income or capital gains and there is no corporate taxes for business except foreign banks and oil companies. Certain taxes like import duties on goods imported from other countries (5%), taxes on the rental property (2% to 5% of annual rent depending on the Emirate) and on the hospitality industry and social security taxes contribute to the small percentage of taxes imposed. Also goods such as alcohol (50%) energy drink and tobacco (100%) is charged with high taxes. Moreover Value added tax (VAT) introduced in UAE from 1st January 2018 and is charged at a rate of 5% on all the goods and services.
Geographical location: The UAE is seen as a prime business hub for companies wishing to access markets around the world. The United Arab Emirates is located in the centre of the crossroads of the trade routes of East and West, Europe and Asia. It helps to organize an international trade flow at highly affordable cost. The modern sea and air transport companies, ports and airports in the UAE, which are connected with all the leading international transport hubs. The ready infrastructure allows you to export as well as import goods from anywhere in the world and this fact can positively influence your decision of business expansion in UAE.
Economic Stability: The UAE economy continues to grow and the overall economic outlook is enormously positive. The oil and natural gas reserves of UAE both rank top ten globally. The UAE is the second largest economy in gulf and the 30th largest in the world and with the 20th highest GDP per capita. The GDP growth is expected to increase by 3.1% by 2021. The non-oil sectors make up 70% of country’s GDP approximately. So it will help the country revenue sources more balanced and will create a sustainable economy. The EXPO 2020 in Dubai is forecast to boost the economy by USD 23 billion which results in future business opportunities across many sectors, mainly in technology, health and construction.
Major businesses suitable for expansion
The rapid economic growth has given boost to the dynamic development of different sectors of industries in UAE.
In consultancy / service industry: Architecture and Engineering, Real estate, Management consultancy, Information technology, Human resource, Accounting and Tax, Travel and tourism, Education Healthcare and Hospitality.
Trading and Manufacturing industry: Metal trading, Electronics and Electrical, Food stuff, Pharmaceutical, Oil and Gas, Automobile, Garment, Construction, Furniture and Machinery related business can expand their business.
Where to register and legal structure?
When you plan on business expansion in UAE, you need to consider certain factors like which jurisdictions to register, flexibility of area for doing business, options suiting your budget. A reputed company formation consultancy, like Flyingcolour, can provide expert business advisory to clients based on understanding the client requirements. The options for business jurisdiction and legal structure for expansion in UAE are as follows:
Mainland
Each emirate has their own mainland registration authority in UAE which is Department of Economic development(DED). To register business in Mainland you need to have a UAE national partner for a commercial and industrial license or a UAE local national as a Local service agent to register a professional license. If you are planning to expand your business locally in UAE as well as international we will suggest you to go for mainland set up as it is having the wide scope of activities , ability to freely trade in the UAE local market and opportunity to work with government bodies for government projects and contracts.
Free zones
There are numerous free trade zones in UAE which are formed in order to attract foreign business owners. These free trade zones is one of the key factors of the development of the international business in the UAE. Company registration in such free trade zone provides foreign businessmen to have complete ownership for their businesses and significant tax and customs benefits. Whether to open a new business, or a subsidiary company or a foreign/local company branch free zones have different packages based on your visa requirements and a minimum office facility which is known as flexi desk to initially go for a cost effective option. Free zone companies can do business freely inside the free zone area and internationally. If you want to deal in the UAE local market you need to appoint a local distributor as per the authority.
Offshore
Offshore companies can be formed in UAE for the purpose of business owners to invoice their international clients to bring their funds to UAE offshore bank account and can use the advantage of tax free environment. Offshore companies are not allowed to do any business inside UAE. No visas are granted under offshore companies and a registered agent is required to register an offshore company. Apart from this for corporate structuring and protection of personal assets also offshore companies are formed.
UAE has proved itself to be one of the most finest platform for business expansion for various organizations around the world, and it continues to do so even today. It is one of the most valuable gateway to world business for every ambitious organization looking for exponential growth!
This blog post is written by Mr. Sajeev Business Advisor at Flyingcolour, a leading business setup, VAT and Accounting Services company based in Dubai always remains on top of information and execution as and when Government comes up with new business activities and processes. For more details, please contact us at +971 4 4542366 or email us at info[at]flyingcolour[dot]com.
