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Doing business in dubai

New Company Formation in Dubai

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Doing business in dubai

  1. 1. Doing Business in Dubai Lalit Lahoty Partner Axis Auding & Accounting, Dubai 17 October 2014
  2. 2. About Myself: Lalit Lahoty CEO, Axis Auditing & Accounting, Dubai Paradigm Pioneers Group of Companies, UAE +971-56 2138873, +971-55 9072850 Past Experience: VP & CFO: Fujitsu Consulting, India Sr. Officer: Bharat Petroleum, India
  3. 3. INDEX My experience with Dubai Doing Business in Dubai Demographics Language & Religion Tax Framework Is Dubai a TAX HEAVEN? UAE Economy Alternate Strategies for entry
  4. 4. DUBAI: My Experience You cant google it! : Lots of possibilities, often unwritten. : Statutory Authorities – powerful, act as facilitators for a lot of business needs. : We set-up for Visa purposes – our team was mobile, could work in whole of GCC. : We got special approvals from Free Zone Authorities which facilitated business in UAE. Easy of doing business. : Had a number of team members moved to Dubai. A salary of £90k in Dubai nets you the equivalent of around £150k in London. : We were able to take up some regional Projects under UAE Office. Profits from UAE Office can be used effectively for business purposes – better planning. : We were able to make effective procurements – no tax issues.
  5. 5. Doing Business in Dubai Opportunities Access to a Diversified Economy: 2nd largest in the GCC Access to wider GCC Region Growing hub for world trade and re-exports enjoying Well established ports and infrastructure/banking Favourable tax environment Convenient time zone Stable political situation Fixed Currency Highly skilled expatriate workers Free-zones facilitate entry and access Challenges 7 Emirates, 36 Freezones, Federal and Emirate laws may be often different and need to be understood Main land entities need to have a Local Sponsor. The UAE is not an English common law jurisdiction Ease of Doing Business Index, UAE ranks 23rd out of 183 economies The Global Competitiveness Report, ranks the UAE 12th out of 144 economies
  6. 6. Demographics Dubai is unusual in that its population is comprised mainly of expatriates A quarter of the population reportedly trace their origins to neighboring Iran Dubai is also home to some 200,000 British and other western expatriates
  7. 7. Language and religion The official language is Arabic but English, German, Hindi are also widely spoken Islam is the majority religion of the Emiratis and while a vast majority of the locals are Sunnis
  8. 8. Tax framework Taxation Environment • No VAT levied in the UAE • No withholding taxes • No transfer pricing rules • No personal income taxes • No corporate taxes in Free Zones • No requirement to file corporate tax returns in the UAE • 5% import tariff on most goods levied ONLY ONCE at the first port of entry to the GCC • Corp. taxes are levied in the UAE only on Oil & Gas transactions and transactions of foreign Bank branches • The UAE has signed double taxation treaties with over 70 countries
  9. 9. Certain financial intermediaries are subject to special laws Services and industries relating to national resources are also subject to separate legislation The Federal Laws do permit sole proprietorships, partnerships and JVs as well – however these are not commonly deployed Alternative Strategies for Entry 100% owned by foreign company Restricted activities Not licensed to do conduct business/market directly UAE national service agent must be appointed 8-12 weeks establishment time usually required Similar to a branch but may not undertake income generating activities 8-12 weeks establishment time usually required Must be 51% owned by UAE national (s) Profits may be shared differently from the capital contributions Capital requirements vary by Emirate Potentially subject to federal and emirate taxes (varies up to 55% in principle) Subject to local laws, including emiratisation Potential for local taxation Governed by own regulatory authorities Activities within zones tend to be industry specific Formation is usually a 2 stage process – initial approval followed by provision of a Trade License May be 100% foreign owned No corporate or personal taxes 100% repatriation of capital Exempt from import and export taxation Access to infrastructure and warehousing 4-6 weeks lead time for establishment Cant do business outside of the Freezone in the UAE Client Entry Strategy UAE Branch Office Representat ive Office UAE Company (typically LLC) Free zone Entity Other
  10. 10. Is Dubai a TAX HEAVEN?
  11. 11. Dubai is not a “TAX HEAVEN” Dubai is not included in any “black list”. It is a real economy. The UAE is one of the top countries in the list of the International Organization for combating illicit funds (FATF) and meets all the regulation requirements regarding combating illicit money. UAE has DTA with over 70 Countries, including most of the Western Countries. Dubai is not involved in international agreements on the exchange of information with other countries. It is not expected that this status will change, because Dubai gains no tax benefit from participation in such agreements. Dubai provides a lifestyle better than Monte Carlo. Dubai provides infrastructure better than Modern Europe. Dubai provides Privacy better than Switzerland!
  12. 12. The UAE EconomyAbu Dhabi Dubai Major exports 2010 % of total Major imports 2010 % of total Crude petroleum 28.3 Jewels & Precious metals 20.7 Re-exports 40.6 Machinery & electrical equipment 14 Gas 5.5 Vehicles & other transport equipment 9 Base metals & related products 6.2 Leading markets 2010 % of total Leading suppliers 2010 % of total Japan 17.8 China 16.9 South Korea 13.4 India 14.3 Thailand 6.8 US 7.8 India 6.1 Germany 5.7 Country Metrics Population 6.7 million Currency AED Peg USD1 : 3.675 Key Languages Arabic, English, Hindi GDP USD298 bn Expected Growth 3-4% FDI Inflows 3.8% GDP Exports $780 bn Imports $590 bn ADX Market Cap $100 bn Growth opportunities GDP growth of 4.4 % for 2012 Safe haven within the wider region One of just 3 countries in the MENA region that has not witnessed significant demonstrations Resilient economy, better structured Asset prices are far less “frothy” and there is no sign of a credit bubble Real estate assets still stand up to 50% lower than their peak values Lending growth has started to return gradually Oil ties the economy to Asia more than the West UAE is the 4th largest oil producer in the region High oil prices continue to provide shore-up budgets Oil exports are predominantly tied to Asia and not the West Key Themes
  13. 13. Questions ?