The UAE economy is proving to be extremely resilient in a difficult global economic climate and opportunities to do business in the country are many. The UAE’s currency, the dirham, which is pegged to the US dollar, is secure and freely convertible; there are no restrictions on profit transfer or capital repatriation; import duties are low (less than 5 per cent for virtually all goods) and, in the case of items imported for use in the free zones, non-existent; labor costs are competitive; corporate tax and personal taxes are nil and numerous double taxation agreements and bilateral investment treaties are in place. In addition, the financial risk is minimal. These factors, combined with a strategic, accessible location for major regional markets, an excellent reliable infrastructure and an extremely pleasant, stable and safe working environment are key elements in attracting foreign investment.
Recently, the UAE ranked twenty-seventh among 142 countries in the Global Competitiveness Index (2011–2012), where it was the only Arab economy categorized as innovation-driven, and fortieth among 183 countries in the ease of doing business (Doing Business 2011); forty-seventh among 183 countries in the Index of Economic Freedom (2011); and twenty-eighth among 178 countries in transparency and accountability (Corruption Perceptions Index 2010). In addition, the UAE is a contracting party to the General Agreement on Tariffs and Trade (GATT) since 1994 and a member of the World Trade Organization (WTO) since 1996. It is also a member of the Greater Arab Free-Trade Area (GAFTA) in which all Gulf Cooperation Council (GCC) states participate.
Setting up Business
All businesses, whether industrial, professional, trading or services, must be licensed to operate in the UAE. Licensing procedures vary from emirate to emirate and the relevant details are available from the individual Chamber of Commerce.
Chambers of Commerce in each emirate are invaluable sources of information and assistance for anyone intending to do business in the country: they keep investment databases, issue and authenticate licences and other documentation, arbitrate on disputes and provide business facilities, such as meeting and conference rooms, and simultaneous interpretation.
Free Trade Zones
Establishing a business entity in one of the UAE’s Free Trade Zones (FTZs) can be an extremely attractive option for foreign investors. The major advantages in setting up in a free zone are:
100 per cent foreign ownership of the enterprise
100 per cent import and export tax exemptions
100 per cent repatriation of capital and profits
Corporate tax exemptions for up to 50 years
No personal income taxes
Assistance with labor recruitment, and additional support services, such as sponsorship and housing.
An independent Free Zone Authority (FZA) governs each free zone, and is the agency responsible for issuing FTZ operating licenses and assisting companies with establishing their business in the FTZ.
Investors can either register a new company in the form of a Free Zone Establishment (FZE) or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad. An FZE is a limited liability company governed by the rules and regulations of the Free Zone in which it is established. Except for acquiring nationality in the UAE, the provisions of the CCL do not apply to FZEs, provided that the Free Zones have special provisions regulating such companies.