Not sure about whether you should register company in Dubai? In this guide, we highlight eight reasons you should incorporate your business in Dubai while also highlighting the steps to do the same.
Benefits of registering a business in Dubai:
1. Strategic Location and Connectivity:
With its location in the United Arab Emirates (UAE), Dubai is connected to the major emerging markets including South Asia and East Africa. Hence, Dubai is considered to serve as a gateway between the East and the West.
Besides its location, Dubai is also well-connected to the world owing to its established and vast transportation network including airports, seaports, and roads. There are presently two major airports in Dubai and three major seaports that businesses can take advantage of. This transportation infrastructure allows for better and efficient facilitation of trade.
- Tax Benefits:
The government of Dubai does not levy any corporate income tax on all businesses other than oil companies and foreign banks. Besides this, the businesses are only subjected to a Value Added Tax (VAT) rate of 5%.
To add on, foreign investors and business owners are exempted from paying personal income tax, withholding tax, and capital gains tax, thus, lowering the tax burden even further.
Thus, the overall taxes that businesses have to incur is relatively low and therefore, Dubai is an attractive jurisdiction. Owing to this, Dubai is gradually gaining a reputation as a ‘tax haven’ country. However, due to the government’s strict monitoring and inspection of businesses in the country, it is still not associated with the negative connotation that other tax haven countries have and is currently on the ‘white list’ of the Organisation of Economic Cooperation and Development (OECD).
The government has also developed an extensive network of tax treaties, preventing businesses from being charged taxes twice. These treaties are established with various countries including China, the United States of America, several European Union member countries, and more.
- Stable political and economic environment:
Dubai has a relatively stable political and economic environment that welcomes and promotes the development of businesses. This can be seen through its scores in various indexes and rankings.
With a rank of 21st out of 180 countries in the Corruption Perception Index 2020 by the Transparency Organisation, UAE faces relatively lower levels of corruption than in other countries.
Moreover, as per the 2020 Index of Economic Freedom by Heritage Foundation, UAE has a rank of 14th out of 178 countries in terms of having a free economy.
- Free trade zones:
In the United Arab Emirates, there are primarily three free zones, namely, the Ras Al Khaimah (RAK), Jebel Ali Free Zone (JAFZA), and the Ajman Offshore Zone. In all these special areas, businesses are exempted from import and export duties, have to meet fewer compliance requirements, and more. Businesses can be completely owned by foreign individuals and complete repatriation of capital gains and profits is permitted.
Overall, there are over 30 Free Trade Zones in Dubai with high-quality infrastructure facilities including office spaces, warehouses, and more, available for business use. Moreover, these free zones have been divided in a way to support different business activities.
- Banking facilities:
In Dubai, there is a large number of banks available for businesses to choose from. These banks provide businesses with various benefits including internet banking, multi-currency banking, investment opportunities to international markets, high levels of confidentiality, and more.
- Straightforward incorporation process:
The United Arab Emirates has a ranking of 16th out of 189 countries in terms of ease of doing and starting a business as per the World Bank’s Doing Business Report of 2020. Thus, the business incorporation process is rather straightforward and hassle-free.
- Well-developed infrastructure and workforce:
The government of Dubai has invested adequate resources to establish a well-developed infrastructure for transportation, communication, amenities, and more. This is done to attract foreign direct investment to the country.
Besides, the liberal labour laws issued by the government accompanied by the large immigration to the country also provides businesses with access to a large labour force.
- Privacy and security:
In Dubai, the strict legal system ensures that any business information including the personal information of its various stakeholders, and more is not disclosed to the public.
Moreover, businesses face a lower risk of uncertainty owing to the politically stable environment in the country. The assets of businesses are, thus, secured and have a lower probability of being seized by the government. Besides, the government has passed various laws protecting Intellectual Property (IP) which may be advantageous for businesses.
How to register a business in Dubai?
Now that you have understood the reasons to incorporate your business in Dubai, you must understand the steps that need to be undertaken.
Step 1: Planning and Strategy:
- There are different types of legal entities including sole proprietorship, partnership, limited liability company, offshore company, and more.
- Based on your business activities, needs, and long-term business goals, you must select one suitable business entity.
Step 2: Pre-registration requirements:
- You must first reserve your preferred business name with the Dubai Department of Economic Development (DED).
- You must then prepare all the required documents including the Article of Incorporation, proof of address, bank statements, and more.
Step 3: Register your business:
- The prepared documents must then be submitted to the DED for approval.
- Once approval is granted, you will receive the Certificate of Incorporation along with the Memorandum and Articles of Association.
Step 4: Open a corporate bank account:
- Once your business is registered, you should open a corporate bank account with a reputable bank, providing you with all the facilities you require.
Step 5: Register business for tax:
- You must then register your business with the Federal Tax Authority to obtain a VAT number needed to facilitate business in Dubai.
Step 6: Staying compliant
- Post-registration, you must ensure that your business remains compliant with the government policies by making a timely submission of financial statements, filing for annual tax returns, and more.
- You may also be required to obtain certain business licenses and work visas, depending on your business needs.
Contact us now to know more about why you should register company in Dubai and how you can set up your business there. Our dedicated team of experts will revert within the next 24 hours.