One of the wealthiest constituents of the United Arab Emirates, Dubai has grown to be one of the best destinations to start a business.
In this article, we will be covering:
- Overview of Dubai
- Why choose Dubai to set-up an offshore company?
- What are some restrictions/considerations to take note of before deciding to register in Dubai?
- Outline of the registration process and procedures
- Summary
Overview
Decked with skyscrapers, extraordinary sights, and home to Burj Khalifa – the tallest building in the world. Dubai with its numerous luxurious hotels and designer shopping malls is an entertainment haven for tourists from all over the world in this captivating city-state.
With technological advancements and initiatives to increase state-of-the-art infrastructures in this city, more and more foreign investors are attracted to invest and set up offshore companies in Dubai. Currently ranking fourth in the world, Dubai’s economy is a thriving business hub that attracts entrepreneurs and investors looking to set up their offshore businesses here.
The following are a few reasons that contribute to the popularity of the city as a business hub:
1. Attractive Taxation & Business-Friendly Policies
One of the key features that attract investors to consider Dubai as their offshore location is the 0% tax rate on both personal and corporate incomes. This legislation also includes offshore companies.
The jurisdiction also has in place double taxation treaties with 115 trade partners that include countries such as Japan, Hong Kong, South Africa, Germany, the United Kingdom, and Singapore. This ensures that any profit made will not be taxed twice, minimising tax-related expenses for companies.
Special economic zones are known as free trade zones that are governed on a special set of legislations that are designed to help foreign-owned businesses by offering tax concessions as one of their benefits making it attractive for foreign investors to set up their businesses.
Furthermore, the UAE government has passed legislation related to Foreign Direct Investment (FDI) in hopes of facilitating the acceleration of investments in 2018, from which Dubai has reported having attracted US$12.7b in FDI in the first quarter of 2019.
2. Inexpensive and Easy Incorporation Processes
Another benefit that Dubai offers is the ease of application process. For Dubai, the entire process can be taken place remotely and can be done in a matter of a few weeks at most. It is also relatively inexpensive as compared to other tax havens.
3. Credibility
Doing business in Dubai enhances your company’s credibility as the jurisdiction is highly recognised and does not carry the stigma of a ‘tax-haven’.
Its credibility has also increased throughout the years carrying the title of the world’s eighth-most important financial centre by the Global Financial Centres Index, making it a decent competitor amongst the top financial hubs in the world.
4. Strong Economic Performance and Political Stability
Dubai is one of the world’s fastest-growing economies with a GDP growth per annum of 16.7%. It also reported having one of the highest GDP per capita in the world. The UAE government has made plans to diversify its economy from the oil industry by launching the Green Economy Initiative, where legislations in environmental and constructional policies will be passed in the industries of energy, agriculture, investment, and sustainable transport. In addition to the measures implemented to improve the sustainability of their economy, the stability of the economy is also contributed by the strong financial reserves and a solid banking sector present in the UAE. At present, the UAE is working on the Etihad Rail Project that aims to make a significant leap in figures for land transport, thus making further positive impacts to their economy.
In terms of political stability, the UAE is said to have one of the most politically stable systems in the Arab world and is also one of the region’s less corrupt countries, where law and order are generally well-maintained.
5. Language and Diverse Cultural Melting Pot
The official language of Dubai is Arabic but English is widely used in the city, with business operations and official documents usually offering both the languages. The use of English makes it very convenient for most overseas investors.
In addition to languages spoken, Dubai is also home to residents belonging to a plethora of cultures, creating a culture of growth by becoming the ‘new melting pot’ of cultures. This offers businesses a unique environment to operate in, which also gives rise to a diverse and variety of skilled labour in the workforce.
6. Strategic Geographic Location
Lastly, Dubai is in a strategic geographic location that is situated in the middle of the East and West parts of the world – and is a switching point for trade with a region in Africa, Europe, the Middle East, Asia, and India. All of this makes Dubai a well-connected location, by both air and sea.
In fact, Dubai’s air travel industry is one of the strongest in the world, with the UAE’s state-owned aircraft carrier Emirates being the top 5 in the world, and the Dubai International Airport is the only airport from the Arab region to make it to the top 50 in the OAG Megahubs Index 2019’s ranking of the most internationally connected airports in the world, bagging the 24th place ahead of its competitors in the region.
Types of Companies
- Mainland Company Formation
- Free-zone Business Set-up
Restrictions
Like with every legislation, there are a set of restricted activities that the offshore companies are prohibited from carrying out in the jurisdiction. They are:
- Trading in Dubai and the UAE is not allowed.
- The offshore entity is not allowed to rent local premises in the UAE
- No real estate investment in the UAE
- Restricted activities in the Free Zone include banking, insurance, military, media, IP, etc.
There are more restrictions and legislations that need to be carefully considered before choosing Dubai to be your preferred location for an offshore investment. It is hence critical to seek expertise from the professionals, such as our team at Desfran.
Procedure for Registering a Company
The process of registering a company in Dubai is simple and relatively straightforward. The steps for the process of registration include:
- Selection of the name for the trade
- Filling up an application form and submission to the authorities
- Submission of relevant documents
- Review of application by the authorities and approval
- Once approved, the opening of a bank account for the offshore company in Dubai
We understand that it may be difficult to ensure a thorough analysis of these documents, or how it can be helpful to have an expert opinion from someone who is familiar with the industry. Hence, to ease the process of registration and thorough analysis and legal compliance of the documentation, it is recommended to engage the expertise of our team at Desfran, led by leading management professionals.
Summary
Dubai is undoubtedly booming as a business hub with promising growth over the years and has become very popular among foreign investors with its attractive taxation policies, stable economy, and political stability, and the convenience that comes with its geographical location. However, there are restrictions and certain legislations that are very important to understand and take note of when coming to a decision.
At Desfran, our team of expert consultants is here to provide you with our professional expertise regarding offshore services. Led by one of the world’s leading management teams, our experts draw on their wealth of knowledge to offer comprehensive management advice. We are aware of the latest developments and trends in the financial markets and are equipped to guide you to expand your business.
Request for a consultation with Desfran today.
