Setting up business
Introduction
Dubai is the ideal gateway for international companies to develop their business through the Middle East. Strategically located at the crossroads of the East and West, Dubai’s ambitious growth plan and diversification strategy has secured its reputation as the region’s premier international business centre.
Dubai’s economy continues to grow in spite of the current economic conditions, and the emirate’s entrepreneurial free zones are increasingly contributing to its bottom line. International companies continue to recognise Dubai as an ideal location for developing business in the Middle East.
To add to this, the emirate’s progressive infrastructure offers investors and businesses first class facilities which are considered among the best in the world. The telecom and internet links, ports, roads and airport have secured this reputation for exceptional resources. As a result, the emirate is a magnet for companies seeking to develop business not just in the Middle East, but also throughout the emerging markets of the Subcontinent, Central Asia, the Eastern Mediterranean and North and East Africa.
Dubai is politically stable, tolerant, welcoming and enjoys a very low crime rate. The lifestyle is cosmopolitan, with high-quality residential and office accommodation (including the option of buying freehold properties in several communities) as well as excellent education, health and shopping facilities.
Main incentives
| • | No income taxes |
| • | No corporate taxes |
| • | No resttriction on capital repatriation |
| • | 100 percent ownership in Free Zones |
Establishing a presence
The principal ways by which a foreign entity might consider establishing a presence in Dubai and the laws affecting investment are:
| • | 100% ownership for a Branch or representative office |
| • | LLC Commercial Company 51% owned by a UAE national and 49% by a foreigner |
| • | 100% ownership for Professional business |
| • | 100 ownership for Free Zone entity |
Procedure for setting up:
| • | Obtain a permission from the relevant ministry |
| • | Obtain a licence from the Department of Economic Development |
| • | Register with the Dubai Chamber of Commerce |
Free zones
With an unrivalled combination of incentives, facilities and services, Dubai offers access to a market of outstanding potential for overseas companies in a wide range of sectors. Dubai’s free zones have made a significant contribution to the successful growth and diversification of the emirate’s economy in recent years. Establishing a business entity in one of the emirate’s innovative free zones can be an attractive option for foreign investors due to a number of commercial incentives:
| • | Operations are treated as offshore or outside the UAE |
| • | Entitlement to absolute foreign ownership of the enterprise |
| • | 100 per cent import and export tax exemptions |
| • | 100 per cent repatriation of capital and profits |
| • | No corporate taxes for a specific period of time – renewable upon the expiration of the initial period. |
| • | No personal income taxes |
| • | Assistance with labour recruitment and additional support services, such as sponsorship and housing. |
| • | Flexible investment options |
| • | Efficient transport and distribution facilities |
| • | State-of-the-art facilities and working envi ronment |
In addition to this, the resulting cluster economies and their micro-economic frameworks formed in the Free Zones lead to beneficial conditions for labour pooling, supplying and buying. Choosing a location in close proximity to other businesses operating in the same sector increases each individual firm’s output and profit due to potential economies of scale.
Currently there are some 28 free zones in Dubai across a broad spectrum of sectors, including Jebel Ali Free Zone, which specialises in manufacturing and re-export and has created a thriving business community. There is also the Dubai Airport Free Zone which is home to some of the world’s leading high-tech and luxury goods companies such as Chanel, Dell, Rolex and Rolls Royce. The Dubai International Financial Centre is the region’s capital market, offering world-class regulations and standards to investors and issuers of capital. Dubai Healthcare City provides a self-regulated environment for high-quality healthcare, medical education and research while Dubai Knowledge Village provides a centre of excellence for innovation and the emirate’s learning community. And, Dubai Internet City has one of the largest IT infrastructures in the region designed to support the development of ICT companies in the emirate.
An application should be obtained and made directly to the chosen free zone.
Dubai’s infrastructure
Accessibility is a key component to Dubai’s success: located at the crossroads between East and West, it is ideally positioned to attract visitors from around the globe. Furthermore, infrastructural improvements mean that it is easier to get to than ever.
With a view to stimulating the economy and keeping infrastructure projects on time, Dubai in its budget for 2009 issued in Januar y has announced 42% increase in public spending 45% of which has been set aside for infrastructure and public transport development which is a 33% on 2008.
Dubai Metro, a driverless fully automated metro was officially opened on 09/09/09 as scheduled. The Red Line is partially operational and it covers 10 stations.
Dubai International Airport has expanded; Terminal 3 opened in October 2008 exclusively for Emirates airline. This underground terminal has more than doubled the passenger handling capacity and will ease passenger flow through the airport. Direct flights to Dubai from the UK have also increased to 138 per week, approximately 20 per day, fuelling the increase in demand from UK consumers. And in the first nine months of 2008 the emirate experienced a huge increase in visitors from the UK, up 9.2 per cent, compared to the same period in 2007.
Development work has begun on Al Maktoum International Airport which is set to be the largest in the world. Internally, improvements to roads and the creation of new bridges and an expansive metro system will further enhance Dubai’s offering.
When completed Dubai World Central (DWC) will act as catalyst to further boost regional tourism growth. More than just an airport DWC will be the world’s first logistics hub connecting air, sea, rail and road, taking less than one hour to transport cargo from port to plane. Al Maktoum International Airport will be at the centre of DWC and is set to be the size of Chicago O’Hare airport and London Heathrow combined. The airport’s capacity is expected to reach 70 million per year by 2015.
MICE
Dubai is the leading exhibition destination in the Middle East and Africa, spearheading a regional sector with annual revenues of £1.7 billion. Dubai’s visionary expansion of the events and exhibition offering helps attract new audiences to the emirate, stimulates trade and creates new business opportunities.
As one of the world’s fastest-growing exhibition destinations, Dubai attracts over 425,000 business travellers every month. In 2007 Dubai registered record double digit visitor growth across many of its leading events, indicating its unparalleled popularity with business travellers.
To secure its position as the world’s leading MICE destination, Dubai is enhancing it’s offer by investing £1 billion into developing two major integrated commercial developments – Dubai Exhibition City (DEC) and Dubai Trade Centre District (DTCD).
This development project will be the region’s first commercial destination to incorporate business, event, trade and retail facilities. These will further enhance the existing business visitor offer at the emirate’s major exhibition facility Dubai Exhibition World. The development will cover three million m sq with 19 exhibition halls and conference facilities, restaurants, offices and apartments, with an addition of 80 four and five-star hotels with over 400 meeting rooms.
Other major developments include The Palm Jumeirah which will unite outstanding conference and meetings facilities with exceptional leisure opportunities. The world’s best loved cruise liner, QE2 is destined to become a highlight of the emirate’s MICE offer. The record breaking vessel will reside in a specially constructed berth on the Palm Jumeirah where she will become a floating hotel and must-visit attraction for many thousands of visitors and business tourists alike.
Business Culture
As one of the world’s leading tourist and business destinations, Dubai attracts an international workforce and now more than 80% of the population is from overseas. English is widely spoken in the Middle East and in Dubai it is the language of business. In many respects, business is conducted in the same way as in most western countries and the commercial landscape reflects the emirates overall progressive approach. However, business people in the Middle East prefer to deal with someone they know and trust and personal relationships are more important when conducting business than in the western countries.
Organisations such as British Business Group offer support to companies starting out in Dubai. Based in the British Consulate in Dubai the group provides a spectrum of assistance, from communicating with decision makers to sharing best business practices and arranging networking events for its members (www.britbizuae.com). UK Trade & Investment is also based at the British Consulate in Dubai and offers a service, for a fee, for potential businesses such as market study etc. (www.britishembassy.gov.uk/uae) (www.uktradeinvest.gov.uk) . The Dubai Chamber of Commerce is also a very good point of reference for businesses wishing to find information (www.dubaichamber.ae) as well as the Department of Economic Development (www.dubaided.gov.ae)
Business Opportunities
UK Trade and Investment identifies the following opportunities in Dubai for UK investors:
| • | Travel and tourism |
| • | Financial services |
| • | Professional services |
| • | Transport and logistic services |
| • | Construction |
| • | Education and healthcare |
