Must-know matters About Industrial Dubai

How Dubai Became One of the Fastest-Growing Cities in the World?

Dubai has been identified as one of the world's fastest-growing cities, with a population increase of more than 500% in recent decades. Here's how a small fishing village on the outskirts of the desert grew to become the most populous city in the UAE.

Around 50 years ago, oil was discovered in Dubai, which aided in its development to what it is today. This issue may not surprise you, but it only tells half the story. Many countries in the Middle East have discovered oil reserves, so why has Dubai mainly seen such a boom?

Dubai was once a fishing village that grew due to its proximity to Iran, eventually becoming an important trade route to the Persian Gulf. This initial economic boom was cut short in 1929 by the Great Depression, which saw the collapse of the pearl export industry. Residents fled to other parts of the country in large numbers, and infrastructure investment slowed to a halt. Other areas of the United Arab Emirates were expanding due to the profits from vast underground oil field reserves. Still, it wasn't until a chance discovery of offshore oil in 1966 that Dubai's fortunes began to change as well. Dubai's population increased by 300% between 1968 and 1975.

Dubai's population has increased to 2,785,000 in the last 30 years. This represents a remarkable 569% increase, despite the fact that oil accounts for only 1% of the GDP (Gross Domestic Product) in this country. Dubai's maritime activities are one of its main sources of income and, arguably, one of the UAE's most valuable commercial assets. Because of its location at the entrance/exit of the Persian Gulf, it is an important trading port and currently hosts the busiest port in the Middle East.

Can foreigners start a business in Dubai?

In most cases, the answer is yes. However, there may be restrictions depending on the type of business you want to start, your nationality, and the country where you live for tax purposes.

In some cases, you may need to collaborate with a local sponsor who will own 51% of your company. They are not involved in decision-making and are paid a pre-agreed-upon fee for their services.

While you can benefit from the UAE's 0% corporate tax rate as a non-resident, whether you can benefit from this rate on your income depends on your country of tax residency. After a brief consultation, BIZ can provide advice.

Whether in a free zone or on the mainland, you will almost always need to provide:

• A filled-out application form
• Incorporation Articles (if necessary)
• Copies of all shareholders' passports
• A summary of the intended business activities

How Much Does it Cost to Set Up a Company In Dubai?

Do you want to start a business in Dubai? Before forming your company, you must first decide which free zone you want to operate in, which can be challenging given that Dubai has nearly 30 free zones.

The four most significant fees associated with Dubai business setup and operations are:

Company Registration Fee

The company registration fee is a one-time payment made to the free zone authority at the start of the registration process. The company's legal structure will determine the exact price and the free zone chosen. The costs of registering a company in a Dubai free zone are not exceptionally varied; they typically range between AED 9,000 and AED 10,000.

Fee for Licensing

One of the most critical steps in operating in one of Dubai's free zones is selecting your business license. The three most common business license types are trading, services, and manufacturing. Unlike company registration fees, license fees are recurring costs ranging from AED 10,000 to AED 50,000 per year.

Office Charge

Renting an office space in Dubai requires obtaining a business license. Each free zone in Dubai provides a variety of desk spaces to meet your business needs, such as service, smart, and Flexi-desks, which typically range in price from AED 15,000 to AED 20,000.

Share Capital

The minimum share capital amount varies significantly by free zone and can range from AED 1,000 to AED 1,000,000, depending on the business activities and licenses. The average share capital requirement for Dubai free zones is AED 50,000.

Is Dubai good for startups?

Over the last four decades, Dubai has become a global business hub as the UAE's leading city. According to the World Bank's 2019 ease of doing business report, the UAE ranked 11th out of 198 global economies in the ease of doing business and 25th in starting a business. Dubai provides numerous opportunities for startups to thrive. Registering a company in Dubai is relatively simple compared to other global economies. Foreign investors pay no corporate taxes and can repatriate 100% of their profits. So, what makes Dubai the best city for new businesses?

Secure and Safe Environment

The city's well-developed banking system allows foreigners to open and operate businesses in Dubai without fear of security. Twelve banks from the UAE appeared on the 2017 list of the Middle East's 50 safest banks, with headquarters in either Dubai or Abu Dhabi. Both international and local banks provide quality and secure banking services to startups in Dubai. Banks that operate here are supported by reputable private groups, the UAE/Dubai government, or leading global banking institutions.

Infrastructure for Transportation and Logistics

Because Dubai is the central trading hub in the Middle East, new businesses are established there. With its intricate web of quality infrastructure, Dubai connects to a market of over 2 billion people in Asia, Africa, and the Middle East. The city is highly accessible. More than 120 shipping lines serve it, and 85 airlines fly to more than 130 destinations worldwide from Dubai. With no trade barriers, quotas, or exchange controls, its diverse import requirements provide numerous product supply and re-exportation opportunities for new business establishments in Dubai.

Numerous Free Zones

There are up to 30 different Free Zones in Dubai. Because of the tax-free environment, flexible ownership, and ease of incorporation, most foreign companies setting up shop in Dubai consider doing so in these zones. Engaging any business setup consultants in Dubai will make it simple for you to establish a presence in this region.

Stable exchange rates

The United Arab Emirates Dirham (AED) is one of the world's most stable currencies. The AED, which has been pegged to the U.S. dollar since 1973, is advantageous to all business establishments in Dubai due to its stable exchange rate of 1 USD to 3.67 AED. The stability of the AED ensures that business startups in Dubai can transfer to their home countries without fear of currency fluctuations.

Multicultural Setting

Dubai's culture is highly diverse. Because of its economic growth, the city attracts qualified expatriates from all over the world. The low cost of starting a business in Dubai encourages investors worldwide to set up shop there. Modern immigration has resulted in a multicultural environment that is ideal for startups.

Beneficial Immigration Regulations

Dubai has an expatriate-friendly visa regime that makes obtaining residency for business owners and their employees simple. A residency usually lasts two to three years and is easily renewable.

Is tax free in Dubai?

The tax system in the United Arab Emirates - or, more accurately, the lack of taxes paid - is one of the main draws for many expats to the region. Employees, for example, pay no income tax, and there is no system for corporate or inheritance taxes, among other things.

There was also no VAT until January 2018. This tax on the sale of goods and services was implemented at a low rate of 5%. There is also an excise tax levied on specific products deemed harmful to human health or the environment by the government, such as energy drinks and tobacco.

Foreigners' Tax System in the UAE

The UAE has no income tax for those who work in the UAE, regardless of residency status. On the other hand, those who are not residents of the UAE may still be required to pay income tax in their country of residence, depending on their own taxation laws.

Around 137 countries have double tax treaties with the UAE, including:

Algeria, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Czech Republic, Egypt, Estonia, Finland, France, Georgia, Germany, India, Indonesia, Ireland, Italy, Kazakhstan, Republic of Korea, Latvia, Lebanon, Luxembourg, Malaysia, Maldives, Malta, Mauritius, Montenegro, Morocco, Mozambique, the Netherlands, New Zealand, Pakistan, Panama, Philippines, Poland, Portugal, Romania, Serbia, Seychelles, Singapore,

There are no taxes levied on international pension plans for UAE residents.

The United Arab Emirates (UAE) has agreed to the Common Reporting Standard (CRS), the global standard for the Automatic Exchange of Information (AEOI) system. CRS is essentially a legal standard that allows countries to exchange tax data with one another. This can be useful for investigating tax evasion, for example.

What are the advantages of setting up a business in the Dubai Free Zone?

There are several reasons why many aspiring business owners choose Dubai and its free zones. The following advantages are most likely the primary reason:

• Government ownership is not jeopardized. Investors have complete control over the matter of possession.
• Companies operating within Free Zones are exempt from duty-free shopping.
• Profits and capital are repatriated in full.
• Tariffs, taxes, and duties do not apply to imports and exports. The warehouse is free to use.
• Any foreign investor can run a company in a free zone independently.
• Corporations are also exempt from corporate tax for 15 years.
• Throughout the operation, confidentiality is maintained.
• Various activities, including property ownership, are available to investors. He can easily open bank accounts for himself.
• Company employees, other support staff, and housing facilities can obtain visas without difficulty.

What are the free zones in Dubai?

Free Zones are special economic zones that provide customs duty exemptions and tax breaks to investors, and each is governed by its own set of rules and regulations. They are intended to encourage foreign investment by providing 100% ownership to all nationalities and facilitating startup processes, labor and immigration procedures, and other legal services.

The UAE has 45 free zones in operation:

Abu Dhabi (Abu Dhabi)

• Airport Free Zone in Abu Dhabi (ADAFZ)
• Global Markets in Abu Dhabi (ADGM)
• Khalifa Port and Industrial Zone - ADPC (KPIZ)
• Abu Dhabi Industrial City
• ZonesCorp / Higher Corporation for Specialized Economic Zones
• Free Zone of Masdar City
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Dubai

• International Free Zone Administration (IFZA)
• Free Zone at Dubai Airport
• Auto Zone in Dubai
• Biotechnology and Research Park in Dubai (DuBiotech)
• Free Zone for Dubai Car and Automotive City (DUCAMZ)
• Design District in Dubai
• Dubai Flower Market
• Gold and Diamond Park in Dubai
• Healthcare City in Dubai
• Industrial City of Dubai (DIC)
• International Academic City of Dubai
• International Financial Centre of Dubai
• Internet City in Dubai (DIC)
• Knowledge Village in Dubai
• Logistics City in Dubai
• Media City in Dubai
• Multi Commodities Centre in Dubai
• Outsourcing Zone in Dubai
• Silicon Oasis in Dubai
• The Dubai Science Park
• Dubai Technology Park
• Textile Village in Dubai
• Dubai Free Zone for Technology and Media
• Zone of International Media Production
• Humanitarian City International
• Free Zone of Jebel Ali
• Free Zone Jumeirah Lakes Towers
• Dubai South (DWC)
• Dubai Manufacturing City

Sharjah

• Free Hamriyah Zone
• Sharjah International Free Zone
• Free Zone of the United States of America Regional Trade Center (USARTC)
• Free Zone of Sharjah Publishing City
• Sharjah Media City Special Economic Zone (Shams)
• Free Zone of Sharjah Publishing City (SPC Free Zone)

Ajman

• Free Zone of Ajman
• Free Zone of Ajman Media City

Al Khaimah

• Economic Zone of Ras Al Khaimah (RAKEZ)
• RAK Maritime City Free Zone Administration (RMCFZA)
• Investment Authority of Ras Al Khaimah
• Ras Al Khaimah Free Zone
• Media Free Zone in Ras Al Khaimah

Fujairah

• Free Zone of Fujairah
• Creative City of Fujairah

Al Quwain

• Umm Al Quwain Free Zone (UAQFTZ)

Free zones under construction

• Maritime City of Dubai
• Carpet Free Zone in Dubai
• Auto Parts City in Dubai
• Trucks and Heavy Equipment Zone
• Technology Park Mohammad Bin Rashid
• International Arbitration Center in Dubai

An overview on United Arab Emirates’ Market

For the past 12 years, the United Arab Emirates (UAE) has been the top U.S. export market in the Middle East and Africa region, serving as a global hub for over 1,500 American companies doing business in the Middle East, Africa, Europe, and Asia. The UAE's dynamic economy is diversifying as it strives to become a knowledge economy over the next decade. The UAE's openness to international business and strategic location as a regional gateway create business opportunities, making the UAE an attractive market for U.S. exporters.

The pandemic dealt the UAE economy a double blow, driving down oil prices and reducing the country's oil revenues while also significantly impacting the non-oil economy, which was dependent on aviation, tourism, and trade. As a result, real GDP fell by 6.1% in 2020 before recovering with a 2.1% growth rate in 2021 and a 3% growth rate in 2022. Amid this upheaval, UAE officials enact significant reforms to attract investment and capture first-mover advantages in various sectors.

Governments at the national and Emirate levels invest heavily in economic diversification and growth. With approximately $1.3 trillion in oil reserves and sovereign wealth funds, the UAE has resources to help it navigate the volatility of the oil market and other challenges without the structural liabilities that some of its neighbors must bear. The UAE aspires to become a regional trade, logistics, tourism, and digital hub.

The UAE hosts world-class trade events, and attending or exhibiting at one can be an excellent way to learn about and expand in the UAE and the region.

Top trade shows with the U.S. Pavilions include the following:

• ADIPEC (Energy), October 31-November 4, 2022, Abu Dhabi
• Arab Health (Healthcare), January 30 - February 4, 2023, Dubai
• IDEX International Defense Exhibition (Defense), February 20-24, 2023, Abu Dhabi.
• Dubai Airshow (Aerospace and Defense), November 12-16, 2023, Dubai.

What are the main areas of trade in the United Arab Emirates?

High purchasing power and financial stability, well-functioning logistics, and the absence of significant taxes (except for 5% VAT on several internal operations) ensure the availability and profitability of trade in the Arab Emirates market. The country was ranked 11th in the world in exports and 14th in imports of goods at the end of 2020. It is the undisputed leader in these indicators among Middle Eastern markets. The UAE is a gateway to the Arab world and African countries and a historically significant trade intermediary between Europe and Asia.

The UAE population's constant need for high-quality goods is driven by high purchasing power and a growing consumer market.

• Foodstuffs: Various food products and beverages, as well as agricultural products
• Precious metals and jewelry: Precious metal ores, ingots, alloys, precious stones, and various jewelry
• Light industry: Machinery used in the food, processing, and textile industries.
• Construction materials: All materials and components used in construction and installation.
• Landscaping materials: tools, appliances, and various products for decorating local areas, such as fountains, gazebos, and landscaping plants.
• Vehicles and spare parts, measuring and electronic equipment, "smart" devices, and their components

The UAE Looks to Increase Exports Driven by Dubai’s Non-Oil Trade

The UAE has traditionally relied on oil to power its economic growth. This type of dependency, however, is quickly becoming obsolete. With Dubai emerging as an innovation powerhouse, the UAE's new story is about creating a bold and confident country that exports more, has a strong economy, and strives for self-sufficiency.

Supporting the country's vision, Dubai has been at the forefront of non-oil exports. Dubai's non-oil external trade increased by 10% to 48 million tons in the first half of 2021, with exports rising by 30.8% year on year to 10.1 million tons and re-exports increasing by 10.6% to 7 million tons.

The expansion demonstrates Dubai's ability to turn challenges into opportunities through strategic planning that leverages the economy's stability and flexibility.

The UAE has stated that it intends to increase investment inflows into the country to Dh.1 trillion over the next nine years to double its exports, foreign trade, and economic growth. The Dubai Chamber of Commerce and Industry (DCCI) is launching several new initiatives to help the country achieve its collective goals.

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