Dubai is one of the leading financial centres in the world. It is in the top ten financial centres by London based Global Financial Centres Index (GFCI) in 2019 second half rankings. Dubai competes with major established global financial hubs like New York, London, Hongkong and Singapore to take the top spot.
Dubai’s open culture and tolerance have welcomed many foreign business and expatriates to make it home. Dubai’s location and stability in the volatile Middle-East region mean the companies can take advantage of the safe and conducive environment to run the businesses without worries. There are many free zones dedicated to different sectors of the industry with many perks to the companies. This advantage has attracted many foreign companies to set up business in Dubai free zones. Similar advantages benefit the companies in mainland Dubai, which serve the local UAE market. These provide an excellent opportunity for financial sector companies set up business in Dubai. Below are the main reasons for company formation in Dubai.
Dubai and largely UAE are governed by stable governments for many decades. As the Emirate of Dubai has comparatively lesser oil resources, the policy of the Government tilted towards developing other sectors which included finance, tourism, real-state and logistics. These sectors contribute to the significant part of the economy. The Government has naturally adopted business-friendly policies by developing many free zones with their own corporate-friendly rules and regulations, hassle-free business incorporations, swift visa process among many other benefits.
Dubai is the Gateway to Middle-East for many foreign and local companies. Many companies serving the Middle-East and North African region primarily operate from their base in Dubai. Due to its sophistic sea route connectivity to countries in the Persian Gulf, Dubai has become a logistics hub with carriers operating from many ports. The Government of Dubai has signed many bilateral treaties with countries worldwide, and this has enabled the businesses to avoid double-taxation. Financial companies can develop their business by serving players operating from Dubai and higher customers of other Middle-East and African markets. Many financial companies from Dubai extend their reach from farther Middle-East to the South Asian region.
DIFC Free Zone
Dubai International Financial Centre (DIFC) is a free zone created for the exclusive benefit for companies in the financial sector. DIFC is one of the major trade hubs driving the growth in Dubai. The free zone contributes to around 4% of the Emirate’s GDP. It is home to more than 2200 registered firms with 14% YOY growth in company incorporation rate.
The free zone offers many benefits for companies like can avail 100% foreign ownership without the requirement of the local sponsor. Corporate taxes for tenant companies are waived-off for 50 years. There are no restrictions on foreign exchange, and companies can repatriate all of their profits to their home countries.
The tenants of DIFC include many well-known international and local financial companies. The free zone also offers other facilities which include famous lifestyle brands, art galleries, restaurants and hotels.
The Government has recently announced expansion plans for the free zone under the program ‘DIFC 2.0’ with a proposal to expand the current area to 7m square feet in the next 15 years.
Financial companies need to operate in a market protected by a fair and transparent legal system. The well-defined and non-bias Judicial system defined on the grounds of International law is the essential requirement of the Financial companies to operate. DIFC free zone has independent Jurisdiction with its own civil and commercial laws. DIFC has its courts with serving judges from many international courts. These courts settle all the disputes within the free zone. There is also an independent International arbitration centre called DIFC- LCIA Arbitration centre modelled in London Court of International Arbitration.
Nasdaq Dubai or Dubai International Financial exchange as previously known is a financial exchange based out of DIFC free zone. Many local and international companies e listed in this exchange and the trading takes place at defined standard times. Financial institutes can take advantage of the opportunities in trading and listing companies by starting a business in Dubai.
Fintech & Innovation
DIFC’s ‘Fintech Hive’ is an accelerator program for fintech start-ups operating form the free zone. The DIFC free zone includes more than 100 Fintech firms. The objective of the FinTech Hive is to connect the new age innovators in the financial services technology with banks, financial institutions, and service providers offering a dynamic ecosystem to develop and present their products.
Start-ups in Dubai
More than 30 start-ups were operating from Dubai in 2017, which served the Middle East and African markets. The number of start-ups significantly increased in the past years with the help of many incubators in different free zones and global entrepreneurs looking to serve broader markets. Private Equity and Venture Capital firms can benefit from the start-up ecosystem and be part of the growth.
Dubai Expo 2020
Dubai is hosting a renowned event world Expo in 2020, starting from November. The event expected to attract large crowds for many different countries. There is a Government drive to improve the infrastructure for the event. All sectors will benefit from the grand event. The exhibition and its aftermath believed to positively impact the tourism and real estate industry for many years. Many companies have set up the business to cater to the new demand in these sectors. It equally provides many opportunities for financial companies.
We at Commitbiz can help companies in setting up a business in Dubai and provide them with all the legal inputs. Our expert consultants can assist businesses in all aspects of post-business setup, including market insights, accounting services and utilities. Please contact our experts to resolve your queries.