The UAE is a great place to do business because of its significant consumer wealth and business-friendly rules and most importantly tax-free operations.
Ask a businessman what would he wish from a genie and the answer would be “do away with taxation”. This hardly comes as a surprise given that taxation is the only thing that comes in the way of business and big-time profits. Business taxes come in different hues: property taxes, payroll taxes on employee wages, taxes and fees for permits and licenses and so on. Consequently, businesses in most countries have less money left for expansion and growth.
The Disadvantage of Doing Business in Countries with High Taxes
Businesses that operate in higher tax countries are always at a competitive disadvantage to those that operate in tax-free countries. The 2015 Small Business Taxation Survey released by the National Small Business Association (NSBA) found that one-in-three small firms spend an excess of 80 hours per year and more than one-in-four companies spend in $10,000 annually on the administration of federal taxes alone. Adding to the burden is the need to pay an external tax practitioner to handle their taxes. Additionally, federal taxes significantly influence the decisions they take much to the detriment of the business. To thrive to their potential, these businesses desperately need reduced corporate and individual tax rates coupled with reduced deductions.
The Alternative to Tax Menace
Thanks to global integration and advancement of technology companies now have a better chance of fighting the tax menace out. They now have the advantage of relocating to areas that provide a tax-free and conducive environment to thrive.
Of the countries open to the concept of expatriate entrepreneurs the UAE is one of the best places to do business because of its consumer wealth and business-friendly rules. In the UAE, Dubai has emerged as the most preferred business destination and so all major conglomerates have a presence in the city. Though setting up businesses in Dubai is bound by some regulations, like it is compulsory to partner with a local, so that only 49% of the shares are owned by the expatriate and the rest by the local, these regulations are not applicable to companies that plan to come up in the city’s free zone area. The free zone companies are owned completely by the expatriate investor. Besides, the free zone areas offer highly advanced infrastructure, exceptional facilities and stay visas for investors.
Another advantage is the business-friendly labor laws. The laws are simple and straight which makes it easy to hire and fire employees. Likewise, it takes no time to set up a business in the city. The approximate time required to set up a business is 7 days. Acquiring visas and business license according to the industry are comparatively easy. However, the free zone rules stipulate you to work within the zones and across the borders and you are barred trading within the UAE.
Having said that it must be mentioned that there are a number of limitations to a free zone business in Dubai. Understanding the limitations can help expatriates steer clear of major impediments needed to set up a business. However, it is not possible for expatriates to research in full.
Commitbiz has rich experience in incorporating companies in the UAE. Leverage our business management solutions to make your business set up in Dubai hassle-free and successful.