Companies Move Headquarters To Dubai
06 August, 2015
Investing in the UAE
The UAE has long maintained a policy of encouraging foreign investment.
From a financial perspective, the stable UAE dirham pegged to the US dollar, the absence of income and corporate taxes, exchange restrictions and the ability to repatriate capital and profits make it a very attractive proposition when considering setting up a business in the UAE. There are minimal trade barriers and tariffs within the region, allowing an investor the freedom to trade goods at competitive prices.
The development of free zones (FZs) in Dubai provides many locations within which a foreign investor can set up a 100 percent owned business with each FZ focusing on certain types of investment. An easily available skilled workforce, modern communication, sea and air transport network, excellent infrastructure and the geographical location of the UAE all serve to provide the foreign investor with a stable and reliable investment climate.
The UAE developed a reputation as a strong regional business hub and more and more business is attracted, creating healthy market competition and a wide choice for consumers in the UAE and the region whose spending habits are increasing year on year. The UAE is also experiencing a growing number of visitors and this contributes to the excellent quality of life enjoyed by local and expatriate residents alike.
Over the past years, many multinational businesses have chosen to locate their regional headquarters in the UAE, which has led to Dubai gaining a reputation as a regional centre.
The UAE is a white listed onshore jurisdiction that offers offshore jurisdiction services as well as opportunities that exist only in mature industrial and financial hubs. International businesses moving to the UAE find themselves in a thriving market with excellent infrastructure between the west and the developing east, able to generate new business. A pro-business government encouraging foreign investment has developed the country into a cosmopolitan centre welcoming a diverse specialist and competitive workforce.
Dubai is well established as the prime destination for multinational corporations to set up their regional base and serve the high growth markets in the Middle East, Africa and South Asia most efficiently. Its global reputation as a wealth generator and investment stronghold continues to drive the city's growth. Dubai is also an ideal launch pad and complete growth ecosystem for large, medium and small enterprises across diverse sectors. Local authorities work alongside new ventures and existing companies to ensure their smooth journey towards solid and sustainable success. They assist and guide on all aspects of business decisions, from identifying opportunities across key sectors and determining the best legal structure to connecting investors to a vast network of government and private sector facilitators and clients.
In a nutshell, the UAE has excellent conditions for foreign investors; both regional and international have sought opportunities to place capital in the country as it earned a reputation as a safe haven. According to the office of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, a total of US$11bn of international investment flowed into the economy in 2013, US$9.2bn in 2012 and US$7.8bn in 2011.
Tax efficient double tax treaties
The UAE has concluded nearly 80 double tax treaties, many of them with OECD countries.
UAE's extensive double tax treaty network enables investors to reap the tax benefits of using a UAE based entity to hold investments worldwide, while also increasing the attractiveness for foreign investors to set up business in the UAE.
UAE is a zero tax country. Although countries in the past were often reluctant to allow significant benefits in treaties with low or zero tax countries, many recent treaty partners have realized the advantages of making it attractive for inward investments. Some of the UAE's recent treaties have been very favourable for the UAE investor despite UAE being a tax free country.
In many treaties which use the exemption method of taxation there are ample opportunities for UAE subsidiaries or headquarters of European American and Asian holding entities to set-up, meet substance criteria, become tax efficient and reduce substantially overall group taxation.
Common tax exemptions in many treaty countries are exemptions for profits derived from a so called permanent establishment ("foreign branch exemption") and exemptions for profits derived from a qualifying subsidiary ("participation exemption"). For an investment in a tax free country like the UAE, the application of an exemption in the country of residence is clearly beneficial, as the company will effectively benefit from the fact that there is no domestic taxation of its business.
"Although almost 12.000 kilometres away, the South American nation is now expanding its presence in Dubai", according to Sidney Alves Costa, Middle East director of ApexBrasil, the Brazilian Trade and Investment Promotion Agency.
"In recent years, the Brazilian presence here has increased a lot. We have 34 companies present here in different sectors such as food, we have regional operations of Embrear, the world's third largest manufacturer of airplanes, we have two Brazilian banks present here, we have companies in sectors of cosmetics, spare parts and medical devices" he said.
Last year, Brasil Foods (BRF), the world's largest poultry exporter, also announced plans to set up a US$120 million factory in Abu Dhabi's Khalifa Industrial Zone (Kizad).
"This shows that the UAE is one of the most important markets for our production for chicken it makes sense to process it here and export to regional markets" said Costa. The main concern for investors from Brazil is that they do not know much about the region, he says, but that is changing.
"We have around 9 or 10 companies that are debating whether to come here and we hope to enter 2014 with at least 40 companies".
According to Costa, although Brazil has established its reputation in the UAE's food sector, the country has much more to offer. "We have extremely qualified construction companies that have solutions for some needs that even US and European firms do not have and people are not aware of this".
(Gulf Business, July 2013)
Dubai sees potential with South Korea
"South Korea is one of the leading Asian partners for Dubai and the UAE, visible across critical sectors ranging from energy and infrastructure to automobiles and consumers electronics", Fahad Al Gergawi, CEO of Dubai FDI says.
South Korean investments in the UAE has been steadily growing over the past few decades and hit UAE dirhams 826 million in 2011 when Korea's state power company was entrusted with building the UAE's first nuclear reactor. Major investment outcomes are also expected in the near future.
With Dubai getting ready to host the World Expo 2020, South Korean construction and engineering expertise has an unrivalled opportunity. On another note, South Korea is known to promote its small and medium enterprises to compete on a global stage, much like Dubai.
"Preparations for the World Expo 2020 along with the expanding free zone network and the integrated multimodal logistics hub at Dubai World Central are elevating domestic demand and supply chains in Dubai's growth to a new level. We will invite South Korean investors to explore this new and exciting business landscape and offer them Dubai FDI's expertise in facilitating foreign investment", Mr Al Gergawi added.
(Gulf Times, June 2015)
Oneworld MidEast Ltd
Oneworld MidEast Ltd (OME) is rendering a wide range of fiduciary and business services to our international clientele. We provide clients the whole spectrum of corporate structures offshore, free zone, mainland and specialized entities depending on each client's circumstances and targets. Free zone and mainland entities benefit from an extensive UAE tax treaty network and offshore arew easy to set-up and flexible to use.
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