Dubai as the preferred business location
Corruption and bureaucracy Corruption is not part of the UAE business culture, and the country was rated at an impressive 28th out of 180 nations in Transparency International Corruption Perception Index. The UAE has also undertaken measures to reduce red tape surrounding foreign investment approval processes.
In terms of physical infrastructure, the UAE’s highly developed network of roads linking all seven emirates is the major means of business and leisure transport, although with a large percentage of the country’s international trade conducted by sea, all seven emirates have modern port facilities.
In terms of Labour force, it is easy and cost effective to employ both UAE nationals and expatriates, with wide access to a skilled and experienced workforce. UAE governments from across the seven emirates continue to invest heavily in training the national workforce to play a greater role as competitive members of the UAE economy.
To support the growing foreign investment in Dubai, the government has created several ‘Free Zones’ where foreign investors can enjoy 100 percent foreign ownership of their companies. The absence of income tax for both mainland registered companies and those registered in the free zones remains one of the biggest incentives for foreign companies establishing in Dubai.
Dubai has free and open trade with more than three-quarters of goods entering the emirate duty free. The average tariff rate is just 4 per cent, while free trade zones offer added incentives including exemptions from taxes and duties. Dubai’s open-border foreign labour policy has also proved a major factor in the liberal trade regime, allowing private sector businesses to recruit expatriate workers at internationally competitive wages.
In terms of local corporate taxes, only banks and oil companies pay corporate tax. Net taxable income of foreign banks is subject to tax at a flat rate of 20 per cent, implemented in Abu Dhabi and Dubai. Alongside all the other benefits enjoyed by companies operating in the free trade zones, there is no corporate tax for 50 years (a concession that is renewable). There are no withholding or capital taxes. Double taxation agreements exist in several countries.
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