UAE - Next global destination for your business
The UAE is the Middle East's third largest economy, and one of the wealthiest countries in the region on a per capita basis. Other than its abundant oil & natural gas reserves, UAE has been attracting great Tech and Trade investments.
UAE Economy
The economy of the United Arab Emirates( UAE) is the 4th largest in the Middle East, with a gross domestic product (GDP) of US$498 billion (AED 1.83 trillion) in 2023. An expanding manufacturing base, and a thriving services sector are helping the country to diversify its economy.
Foreign Direct Investments
The UAE was ranked 1st in the West Asia region since it received 47.1% of the total FDI inflows to region, amounting USD 48.3 billion. The UAE also was ranked 1st in the MENA region as it accounted for 32.4% of the total FDI inflows to region, amounting USD 70.2 billion.
Opportunity Mapping
Business opportunities are not just open to the citizens of the United Arab Emirates but also to foreign investors as well. There are opportunities in various sectors such as Manufacturing, E-commerce, Consulting, Book keeping, Accounting, Automotive, Retail business.
India in UAE
India-UAE trade rose to $85 billion in 2022. Furthermore, the UAE was India’s third largest trading partner and second-largest export destination in FY2022-23. Conversely, India was the UAE’s second largest trading partner. The UAE is the fourth largest investor in India, Its cumulative FDI inflows between April 2000 and September 2022 stood at around $15.2 billion. Indian companies having base in UAE are TCS, Wipro, Reliance, Bank of Baroda.
Corporate Structure
UAE is an attractive destination for businesses worldwide with multiple Free Zone establishments. We here, introduce you to Jafza.
Free Zone Establishment (FZE)
An FZE is a single shareholder limited liability company that can be incorporated by an individual or non individual shareholder (company). There is no foreign ownership restriction, and companies are governed by independent Free Zone Authority.
Free Zone Company (FZCo)
An FZCo is a multiple shareholder limited liability company that can be incorporated by an individual or non individual shareholder (company). There is no foreign ownership restriction, and companies are governed by independent Free Zone Authority.
Public Listed Company
The Jafza PLC allows for the set up of a company that is essentially a Limited Liability Company meaning that the liabilities of the company. It can have 2 or more shareholders. A PLC must list shares on a stock exchange in accordance with market laws and may allow public to subscribe.
Foreign Entities in UAE
Foreign companies licensed to work in the state based on the provisions may not start their business in the state unless they are registered in the Foreign Companies Register in the Ministry of Economy. The offices and branches of the foreign companies shall be the headquarters of its business and its business shall be subject to the provisions of the law. The foreign companies, its offices, and branches shall have an independent budget, independent profit /loss accounts, and shall have an auditor.
Taxation System
The United Arab Emirates is a federation of seven Emirates, with autonomous federal and local governments. The UAE has historically been a low-tax jurisdiction.
Corporate Tax
The corporate tax rate is at 9% of the net profit made by the businesses. In order to extend support to small businesses and start-ups, the corporate tax rate will be '0' % if the net profit is up to AED 3,75,000 .
Dividend Tax
The proposed regime of corporate tax in the UAE will exempt all types of domestic dividends earned from UAE companies. This will include dividends paid by a Free Zone Person who benefits from the 0% CT regime. Dividends paid by foreign companies are also exempt from taxation.
VAT
The general VAT rate is 5% and applies to most goods and services, with some goods and services subject to a 0% rate or an exemption from VAT. The 0% VAT rate applies to goods and services exported outside the VAT-implementing Gulf Cooperation Council (GCC) member states, International transportation, the supply of crude oil/natural gas.
Taxation of Non Resident entities
In certain Emirates, branches of foreign banks are governed by special banking tax decrees, under which they are taxed at 20% of their adjusted taxable income. Under UAE CT Law, branch of a non-resident person could be regarded as a Permanent Establishment in the UAE and the income attributable to such branch could be subject to UAE CT. Additionally, the UAE does not have a branch profits tax. Repatriation of profits between branches and their head offices are also not subject to withholding tax (WHT) or other forms of repatriation tax in the United Arab Emirates.
Foreign entity options
Investors conduct thorough due diligence to make sure the firm structure they choose best serves their commercial goals and assist them in bringing their concept to life.
Branch Office
Branch of a company is a legal entity of the parent company which is 100% owned by the parent company and operate under the same name and conduct the business activities. It also does business under the parents company name. A branch must employ an Emirati national as a ‘ Service Agent’.
Subsidiary Company
Subsidiary is a legally autonomous company that operates under the rules of the UAE and the Emirate in which it is based. Even though it is treated as a separate entity, the foreign corporation will operate as a shareholder and hence have decision-making authority over it. It may benefit from additional protection as a result of the UAE's double tax treaties.
Joint Venture
A joint venture is similar to a partnership in that it is formed by at least two UAE-nationals. In this case, only one of the partners’ names can be used in the company name. A JV is commonly formed either contractually or through the formation of a limited liability company under Federal Law No. 2 of 2015 (the Commercial Companies Law).
UAE Business
UAE delivers efficiency, access to growth markets, security and a forward-looking ecosystem for accelerated growth. Dubai brings people, process and technology seamlessly together to create an agile foundation for every industry. Oil and gas are one of the UAE’s main industries. After all, it was what transformed the country into the economic powerhouse it is today. However, other sectors are ripe for growth, too. For example, renewable energy is huge as the country looks to break its dependence on fossil fuels.
