Chinese English

Why Set Up Your Company in the UAE in 2021

MEDIA / Articles / 2020 / Why Set Up Your Company in the UAE in 2021
In recent times, the UAE has emerged as one of the most significant IFCs in the world. Numerous investors and entrepreneurs choose the UAE as headquarters for their business, structure their wealth in this credible jurisdiction, utilise the favourable foreign investor incentives and many more.

The UAE has a vibrant free economy with a significant proportion of revenues arising from exports of oil and gas. Successful efforts have been made to diversify away from dependence on hydrocarbons and a solid industrial platform has been created together with a strong services sector. The establishment of international business companies, free zones companies and other investor friendly policies has been an important feature of this diversification policy.

Bearing in mind the above, it is forecasted that a stream of foreign investments will be made in the UAE in the new year in line with the anticipated successful vaccines for Covid 19, growing investor/ consumer confidence and the long awaited EXPO 2021.

There are numerous reasons to be confident about the UAE’s future, the main one being its advantageous environment for economic substance (ESR) and ultimate beneficial ownership. Adding to this, many investors choose UAE for its diversity, geographical location and the ease of doing business.

The following points discuss briefly why you should invest in the UAE.

1. A whitelisted and transparent jurisdiction

Since 2019, UAE is off the EU blacklist for non-cooperative jurisdictions. Being whitelisted is due to the fact that the UAE has made major changes with regard to laws for running and setting up international business companies. Being a white listed jurisdiction, UAE has now the ability to attract even more foreign direct investment (FDI).

UAE corporate entities have the advantage of trading with jurisdictions all over the world with increased confidence. A good example of this is the use of UAE companies in holding structures for entities that are based in countries, where there is great uncertainty and volatility.

2. UAE in comparison to traditional tax jurisdictions

The fact that many jurisdictions have remained and other have been added to the EU’s blacklist, such as Panama, has led to a favourable effect towards UAE. Many companies that are registered in countries that have now been placed on the blacklist are now looking to move their domicile to other jurisdictions.
As a result of the new EU blacklist, companies have limited options in whitelisted jurisdictions, thus many choose to redomicile in UAE given its strong history of supporting the needs of businesses.
Many companies decide to redomicile for other reasons than residing in a blacklisted jurisdiction. Those reasons include a more favourable tax environment, the access to specialist capital markets and international financial centres as well as less scrutiny and stringent regulations.

3. UBO privacy laws are a big plus

As we all know, privacy of data is very important and has created some tension lately, especially with the wide introduction of GDPR policies. In order to comply with corporate transparency laws, certain information has to be disclosed when international agreements are being made between countries. More specifically, EU member states require companies to reveal their data to the public. However, this is not the case with UAE, UBO regulations instruct companies to keep a private register of UBOs and inform the Registry for changes effected. This is a great advantage for companies, which wish to maintain a layer of privacy.

Nevertheless, each corporate registry has adequate and prompt due diligence requirements and checks and balances in line with OECD and anti money laundering rules and regulations.

4. Covid 19 response: case study for success

The global pandemic placed an enormous pressure on healthcare systems, however the UAE in comparison has responded swiftly which is reflected on the significant low cases and deaths.

As the government has made all the necessary moves to eliminate the spread of the virus, a considerable slow economic growth had been noted. The Ministry of Economy has made efforts to attract new investments in the UAE in order to recover its economy. You can access the online portal called Stimulating the Business Environment to Address COVID-19 Virus Effects. This portal can help investors by providing them with a wide range of information such as, the latest pandemic developments, a set of guidelines for doing business during COVID-19, as well as reports and analysis on the pandemic’s impact on investment.

Furthermore, efficient and user friendly e-government service websites as well as corporate registers have assisted greatly in keeping the virus under check as investors and consumers can continue working in the safety of their own house during lockdown.

5. UAE vision for digital and technological transformation

The Global Competitiveness Report 2018 published recently by the World Economic Forum (WEF) ranks the UAE as the 27th country in the world in terms of competitiveness.

The UAE has established a Council of Competitiveness to enhance efforts to achieve sustainable development through the setting up of legislative frameworks and the provision of developed infrastructure that will further enhance the country’s status as a regional and global hub for investments. The Council continues its communication with government agencies and the private sector through workshops and meetings to coordinate efforts and explore ways to further enhance the competitive advantages of the UAE.

The UAE is well known for its digital transformation and technological future. In the UN’s E-Government Survey 2020, UAE has maintained a position in the top 25 countries in the world with regard to digital transformation.

6. Security, stability and quality of life

The UAE is enjoying political stability in an area known for political turmoil and great uncertainty. This has enabled the implementation of sound economic policies reinforcing the country’s social structure to develop one of the most tolerant, prosperous, secure and safe societies in the world. Dubai and Abu Dhabi have been ranked the top two cities in the Middle East region for quality of life, according to latest editions of global surveys. Long-time investors include a wide range of multinational companies headquartered across the globe.

7. Infrastructure second to none

Infrastructure in the UAE is second to none. Telecommunications, including mobile telephony and land lines as well as internet access are at least as good as that of the world’s largest international business hubs. The road network is constantly upgraded and ports and airports are of world class standards. The UAE is creating one of the world’s biggest and most efficient cargo handling centres. To date, the government has invested heavily in infrastructure development, and it has opened up its utilities and other infrastructure to increase private sector involvement.

8. Proximity to growth regions

The UAE’s strategic location between Asia, Europe and Africa is a major advantage to investors, particularly to some of the world’s fastest growing economies in Asia. India and China alone comprise almost 40 percent of the world’s total population with a combined GDP in excess of US$6 trillion, providing significant economic and trading opportunities.

9. Tax efficient business environment

The fact that there are no restrictions on current and capital account transactions helps to implement these objectives as does the fact that foreign entities repatriate dividends, profits, interest and royalties without restrictions, with the exception of foreign banks which are required to obtain the Central Bank of UAE’s approval.

The UAE aims to promote free trade with minimum restrictions on foreign trade and investment. The policy of the UAE government to encourage foreign investments is evidenced with new and impressive industrial and commercial developments frequently announced.
As far as taxes are concerned, the UAE does not impose corporation, personal income, capital gains and withholding taxes. VAT was introduced in the UAE at 5 percent in January 2018 for onshore activities.

10. Multinational human resources

Investors still benefit form an abundant supply of human resource skills, readiness of professionals migrating to the emirates form nearly every country on the globe, as well as increasing number of UAE nationals that are joining the private sector.

Do you wish to stay informed?

Thank you for your interest in Freemont Group, the specialists in company formation, asset protection and legal and advisory . Feel free to contact us with any inquiry you might have. We will provide you with a free initial consultation, and a customized solution for your personal situation.