The “Ease of Doing Business” rating is the World Bank’s annual report. The World Bank assesses many countries using a simple business creation system. However, the report also recognizes countries using opportunities and infrastructure to ensure economic growth for business in the province.
With UAE ranked 11th in this field, they not only meet the requirements of a modest business formation, but they also offer excellent rewards and infrastructure to companies looking to invest in this affluent country.
Why is UAE the Best Place for setting up a new Business?
The UAE is one of the largest economies in the world, 1 and 2 in the Middle East and North Africa.
The existence of a 100% owned free trade zone, tax-free, excellent infrastructure, relatively stable country risk prospects, and a very favorable geographic location almost halfway between east and west are attractive aspects for foreign investment.
According to The Economist, about 80% of Fortune 500 companies (including all top 10) are already present in the UAE. The 25 Free Zones in the UAE already have several multinational and regional companies – including more than 6,400 companies on it. 120 Different Countries in Dubai Jebel Ali Free Zone.
One of the challenges of business setup in UAE is the need for local sponsors who own 51% of the business (if not in the free zone). Ability to fulfill contracts; more limited rights and opportunities for creditors (bankruptcy laws are not in line with economic developments); and some of the risks inherent in the region due to geopolitical issues. The languages spoken include Arabic (official), Persian, English, Hindi, and Urdu.
The UAE attracts a highly-skilled workforce that recruits a growing number of international companies, professional services firms, and financial institutions. Expats enjoy tax-free wages, internationally accredited schools, high health standards, and excellent recreational facilities, including many championship golf courses.
UAE Offers Great Incentives To Foreign Investors
The UAE investment climate is becoming an increasingly good tool for foreign direct investors: the Abu Dhabi-led federal government has made significant strides in strengthening the role of the private sector over the past five years.
However, the general legal framework favors domestic investors over foreigners, partly reflecting a historically favorable macroeconomic environment given the country’s significant and unpredictable oil revenues.
It has created considerable liquidity for local and regional Gulf investors and made it difficult to find new sources of FDI outside the region. On the plus side, the lack of income tax compensates for a restrictive investment environment.
Due to the substantial revenue generated from the hydrocarbon resources of the UAE, the government does not need to immediately increase revenue through direct taxes. There are also various tax benefits for companies and their employees. See the Tax section.
- Liberal Policies
The entry of various types of licenses and liberal compliance regulations for international investors in mainland Dubai is a reliable reason to make employment in the UAE easier. The introduction of faster approvals, reduced royalties, and trade permits has attracted many foreign investors to the UAE in recent years.
- World-Class Infrastructures
In the UAE, industrial or commercial establishments get the cheapest power connection. Additionally, online services have made registering a business in UAE a straightforward and sensible solution. Whether it’s high-speed internet, asset registration, access to government portals, online loans, online taxation – the UAE has it all.
- Friendly Tax system
There is a small amount of tax for companies in the UAE. The UAE has a comprehensive judicial system that meets the latest standards. Separate courts and legal systems have formulated to handle disputes for foreign investors only.
- Great Real Estate Market
A critical step by the UAE is the launch of a property investment opportunity initiative. This move leads to the liberalization of the real estate market in the country and increases investment opportunities. This action focuses on allowing partial ownership of the real estate and an accelerated collection process.
Foreign investors are only allowed to carry out activities in the UAE after registering and getting a license by the relevant authorities in the UAE. In principle, foreign investors can establish a suitable business presence either in the continental UAE (also known as “domestic”) or offshore business presence.
The presence of an “offshore” business usually refers to registration in one of the UAE free trade zones. This type of business registration in a free zone should not be confused with the regulatory system for offshore companies (also called “international companies”) in certain free zones. About legal forms, the UAE Companies Act provides rules for the operation of foreign companies.
Federal law regulates seven categories of corporate organization: limited liability company, subsidiary, partnership, joint venture, joint-stock company, private joint-stock company, and joint-stock company. Due to certain limitations, decisions that overseas companies normally accept are usually limited to limited liability companies (“LLCs”) or branches.
Other options, e.g., Partnerships and joint ventures, etc., are usually disliked by foreign investors. Under the UAE Companies Act, foreign ownership cannot exceed 49%, while UAE nationals own the remaining 51%.
The UAE Commercial Companies Act is currently under revision, and the new law allows 100% foreign ownership (subject to approval by the relevant authorities) for specific land industries. This branch is a continuation of the foreign parent company. It is 100% owned by the parent company and does not oblige UAE nationals to participate in subsidiary businesses.
A representative office is mainly similar to a branch office, except that the representative office may only promote activities of the parent company and may not carry out activities that generate income.