All Aboard the Orient Express: Reasons to Invest in the UAE
An increasing number of entrepreneurs, professional investors, HNW individuals, and freelance specialists are viewing the UAE as a promising destination for investments, business startups, or relocation. Let's explore the reasons that attract talented people and substantial capital to the country.
A New Financial Hub
One of the main reasons the global business focus is shifting towards the Middle East is the development prospects of the UAE. Dubai and Abu Dhabi are already among the largest international financial centers and are also crucial logistical hubs in Asia.
Low Taxes
There's a belief that the UAE is a tax-free jurisdiction. Although all companies must annually pay for a business license, remit VAT on goods and services at 5%, and, as of June 1, 2023, also pay a unified corporate tax of 9%, the tax rates on the income of individual tax residents and the main taxes for businesses registered in the country are virtually zeroed out. Even with the newly introduced payments, the tax burden in the country remains one of the lowest in the world.
It's worth noting that, for example, the unified corporate tax (9%) applies only to companies whose annual profit exceeds 375,000 dirhams, or just over $100,000. The UAE also offers special tax incentives that allow for the reimbursement of corporate VAT, for instance, for business trips, hospitality expenses, and the purchase of office supplies. Altogether, these refunds can save significant funds for companies.
Liberal Business Legislation
Unlike several other Asian countries, the UAE allows foreign investors to own 100% of a company without the mandatory participation of local citizens.
The Emirates do not complicate the lives of foreigners – they do not prohibit the full repatriation of capital and profits, nor do they impose special currency or customs restrictions. All this is part of the UAE's state policy aimed at simplifying international trade and reducing operational costs for businesses. The goal of this open-door policy is to make the local market as attractive as possible to foreign investors and competitive on an international scale.
Work of Regulators and The Special Economic Zones
The UAE has a multi-level system for regulating financial services, with several key regulators playing significant roles. The main ones include the Central Bank of the UAE, which oversees the activities of banks, financial companies, payment systems, and insurance companies, and the Securities and Commodities Authority (SCA), which regulates markets, company listings, and securities brokers. The Dubai Financial Regulator (DFSA) and the Abu Dhabi Financial Services Regulatory Authority (FSRA) operate in the free economic zones of Dubai and Abu Dhabi, respectively.
Both financial centers - DIFC in Dubai and ADGM in Abu Dhabi - are specialized jurisdictions that employ English law, which is particularly important for business as the British legal system, more than any other in the world, guarantees complete transparency in legal interpretation and practical application. Working in free trade zones requires a special type of license, but, among other advantages, gives businesses the right to additional tax incentives.
Despite the apparent complexity of the regulatory system, its activity is aimed at making the lives and work of foreign investors easier. In recent years, the UAE has taken significant steps towards financial innovation, including the creation of so-called regulatory sandboxes, or experimental legal regimes, that liberalize legislation for specific types of businesses, for example, in the fintech sector. This has already helped the country become a leader in the fintech startup sector in the region.
Regulators also pay special attention to incorporating virtual assets and cryptocurrency into financial transactions. This further underscores the UAE's innovative approach to financial technologies.
Thus, local regulators are characterized by their quick and appropriate responses to new challenges and opportunities in the world of technology and money.