Beneficial tax treatment
There are virtually no taxes in the UAE, both for legal entities and individuals. For example, companies pay zero tax on income and capital gains, zero contributions to pension funds; there are no deductions for social insurance of employees, etc. The only exceptions are companies from the oil and gas industry and foreign banks. The only tax in the UAE is the 5% VAT introduced in 2018. Foreign companies operating outside the UAE are also exempt from this tax.
The UAE currently has double tax agreements (DTA) in place with 115 countries from all over the world.
No currency control
The country has no currency regulations and no restrictions on the repatriation of capital. This demonstrates high confidence in the UAE economy: The inflow of foreign direct investment is on the rise. According to UNCTAD’s (United Nations Conference on Trade and Development) World Investment Report 2020, the UAE foreign direct investment grew by 32% between 2018-2019.
Strong global reputation & high profile of UAE
The reputation of the jurisdiction in the global community plays a crucial role in choosing a country of incorporation.
The UAE takes great care of its international image and has long earned a high business reputation. The UAE government applies huge resources to the development of technology and innovations. In 2020, the UAE ranked first in the Gulf Region and 12th in the world in the Digital Competitiveness Index.
Today, there are around 90,000 millionaires and 50 billionaires living in the UAE - this figure is self-explanatory.
Strategic geographical location
Located at the halfway point between Europe and Asia, the UAE has one of the most developed transport infrastructures in the world. This makes the country the biggest transport and economic hub globally. For example, Dubai International Airport is currently the busiest airport in the world and has been holding the leading position in regard to the number of passengers from all over the world for 6 consecutive years.
The country is almost equally close to both Asia and Europe, forming a business and financial hub that connects these continents. Besides, UAE’s trade volumes with its southern neighbours, African countries, are also growing at a steady pace. Year after year, the UAE continues to be the leading investor in Africa. Among other important allies are the USA, a long-standing partner with close ties to the UAE.
Tax resident status
Any entrepreneur is entitled to obtain the UAE tax resident status [link to 2.2] by registering a company with a physical presence (e.g. flexi desk, shared or separate office space) in the mainland or any of the numerous free trade zones of the country [link to 2.3.].
By becoming UAE residents, business owners are also able to ensure the strictest confidentiality of their information within a framework of the international Automatic Exchange of Information.
The UAE national currency, the Emirati dirham, has been pegged to the US dollar since 1997. The current exchange rate is AED 3.672 for 1 US dollar.
In November 2020, at the height of the COVID-19 pandemic, Fitch Ratings assigned the UAE a Long-Term Foreign Currency Issuer Default Rating (IDR) of “AA-“ with a stable outlook (whereas AAA is the highest rating according to Fitch).
Local legislation benefitting foreign investors
UAE legislation on foreign investment is continuously improved and aimed at protecting the interests of foreign entrepreneurs. Bureaucratic procedures are practically non-existent. The UAE society is extremely tolerant of all religions and world cultures.
Expats make up around 85% of the UAE population. With this in mind, the government had been gradually relaxing its Islamic laws over the years and took a firm stance towards liberalisation. In November 2020, alcohol consumption was allowed everywhere, not just in designated areas; the long-awaited 100 per cent ownership of local companies was also allowed, just to name a few examples. Foreign nationals can own real estate, register businesses, become tax residents – enjoy the same freedoms as local population.
Are you planning to set up a business or move to the UAE? Contact one of our consultants by phone, Zoom, skype or leave an enquiry and benefit from a free consultation!