The setting up, relocation or expansion of any business is a decision investors and business people should not take lightly – unless of course there are ample returns and profits to be made which makes such a proposition worthwhile. Setting up shop in a foreign land is even more daunting a prospect, filled as it is with so much uncertainty (see commerce in China). However, it helps to know thousands of others have gone before you and successfully made the transition. The United Arab Emirates or (UAE) is where foreign businesses both new and old are reaping huge rewards.
UAE is centrally placed to take advantage of emerging markets to the east and west of the country is a major reason why businesses want to locate there. But there are other important reasons, too, not least a stable government which actively supports a liberal business regime renowned the world over for its minimalist red tape and bureaucracy. It’s a relationship which is gaining ever greater currency given the impact of the global downturn.
Before any move can be properly contemplated, the financial imperatives for doing so must be fully scrutinized Luckily the UAE comes complete with a business banking infrastructure which is sound and filled with the expertise you’ll more than likely need. A UAE bank like HSBC, which has a long and illustrious association with the region stretching back many decades.
They’ll help with payments and cash management, factoring, shipping guarantees, letters of credit and much, much more. In other words, you won’t have to worry about your international banking needs. What you might worry about is where exactly is the best place to set up a business and what form should it take? And basically, perhaps simplistically, there are two choices – free zone, or partnering with a UAE national.
The basic difference between the two is one of ownership because it also depends on whether your intended market is a local one or is international. If you’re aiming to sell or serve the local market then you’ll need a partner who is also a UAE citizen. He, or she, will have to own 51% of the business, while you, as a foreigner, can only ever own up to 49%. These are the rules.
The situation is completely different when setting up a business in a free zone. There are dozens of them spread throughout the UAE and they’re sector-specific, too, with all the required infrastructure in place, ready to use. The question often asked is what does the UAE get out of it all? The answer is straightforward – reduced unemployment locally, the raising of the skills base, greater productivity levels, and the generation of taxes through the setting up and licensing of businesses.
What you get in return is a taxation system so relaxed that it demands no personal tax or corporation tax from you! There are no foreign exchange controls either, or trade barriers or quotas to worry about. Add in competitive energy, real estate and financing costs and you’re in the kind of business environment you’ve always dreamed about. It’s a win-win situation for everyone.