United Arab Emirates (UAE) opened its doors to foreign investors in 1972. Since then, the region has transformed drastically. It is apt to say that the UAE government has worked hard to attract investors worldwide through its strategic and progressive thinking.
The region has never shied away from experimenting with open trade policies, low taxes and zero restrictions on foreign ownership. The business-friendly policies have helped the area to grow financially.
According to the Institute of International Finance, in 2021, UAE had $46.4 billion in foreign capital inflows, with FDI accounting for nearly $21.8 billion. This was way ahead of Saudi Arabia’s at $19.5 billion! According to the Emirates news agency WAM in the last ten years, the UAE had an increment of 116% in its FDI.
But what makes UAE a hot spot for businesses now?
Interestingly, multiple things are working in UAE’s favour as many factors are driving UAE’s growth. One of the key aspects is Dubai’s introduction of free zones like Dubai Multi Commodity Centre (DMCC), Dubai CommerCity, Dubai HealthCare City, etc. The advantages of setting up a business in free zones is multifold. But apart from them, some of the factors are listed below:
Launch of new program – Thabat:
Recently, the UAE’s Ministry of Economy launched a new programme Thabat. The idea is to promote entrepreneurship and empower family businesses and in turn take family-owned companies’ contribution to $320 billion (Dh1.17 trillion) by 2032.
End of service gratuity insurance scheme:
In order to strengthen the rights of employees – particularly in case of unpaid wages – the Ministry of Human Resources and Emiratisation, amended its regulations by replacing a bank guarantee with an insurance scheme, where a relatively low insurance premium provides coverage in lieu of unsettled financial dues, including end-of-service gratuity payment.
Workforce Protection Programme
Workforce Protection Programme is set to be implemented by the Jebel Ali Free Zone (JAFZA). This will allow companies to retrieve high amounts of bank guarantees and invest them elsewhere in the business.
DIFC saving fund
With the recent introduction of its new employment law, set to come into effect at the end of August, the Dubai International Financial Centre (DIFC) is in the forefront of these changes. The DIFC is working on developing a savings fund called DIFC Employee Workplace Savings (DEWS), which will eventually eliminate the current end-of-service gratuity system by offering the beneficiaries a portfolio of global funds to invest their money in.
Perfect gateway between the West and the East
Strategically located amid fast-growing regions, UAE leads by example in innovation, diversity, and leadership. Situated between Asia and Europe, UAE has easy access to both markets. This led to the increasing presence of international players in the UAE market to leverage its geographical proximity.
Appropriate residency options
Migrating to Dubai as a foreign investor has never been easier as the government has completely overhauled the residence visa system. Investors can now become residents in the UAE by applying for a Green or Golden Visa. These visas offer residency for up to 10 years with an option to renew upon expiry. Both visa holders can also sponsor their family members.
Relaxed and business-friendly taxation policies:
The UAE’s economy is diversified and liberal. Foreign entrepreneurs are increasingly attracted to setting up a business in the UAE. The Department of Economy and Tourism has issued nearly 24,000 new business licenses this year in the first quarter. UAE’s introduction to its liberal tax policies, such as Ultimate Beneficial Owner, Economic Substance Regulations, Value Added Tax, Anti-Money Laundering and Corporate Tax. These measures give business owners the assurance that operations can be carried our efficiently and effectively.
Choice of the right business location
This is one of the strategic decisions you should make while opening a company in the UAE. The benefit of 100% foreign ownership has been one of the USPs of the UAE free zones. However, foreign entrepreneurs can now open a mainland Limited Liability Company (LLC) in Dubai with 100% ownership. The previous requirement of having a UAE national sponsor holding 51% shares in the company is done and dusted. Even though 100% ownership is possible on the mainland in the UAE, just like free zones, choice of location still is an integral part of the strategy while setting up the business in the UAE. Business owners can avail themselves of benefits from almost 40 Free Zones in Dubai.
Investors delight: Safe heaven?
Safety and well-being are distinguishing characteristics. Security and political stability are significant factors that have brought many international investments and businesses into UAE. Dubai has almost negligible to no restrictions on the repatriation of capital and profits.