The United Arab Emirates or the UAE offer a unique combination of a high quality lifestyle, a fast growing economy and high standards of comfort and safety. The UAE authorities have built the country a reputation as a global business hub by creating different zones for business incorporation and trading. For example, the UAE free trade zones, or simply free trade zones, were developed to boost international business and are usually industry-specific or attached to ports or airports.
These free trade zones offer the opportunity to set up an offshore company in a location with highly developed infrastructure for the banking and financial sectors, business, tourism and entertainment. In addition to facilities for children and young people such as kindergartens, schools and international universities, the free trade zones offer a high standard of living, security and stability. A major restriction is the ban on trading in the UAE market. An offshore company in a free zone can only operate in the local business market through a local dealer.
Another very good reason to choose the UAE as the right place to start your business is that offshore companies benefit from attractive legislation to protect investor interests and special tax regulations with 0% VAT, corporation and income tax. Like many Middle Eastern countries, the UAE earned most of its wealth from the oil industry. Although the UAE's oil industry is no longer the main source of income, the country can still afford to live a tax-free life to attract international businesses and workers that further enrich and diversify the economy. The Vice President and Prime Minister of the United Arab Emirates once stated that his country would never introduce an income tax to tackle the deficit. In addition, no tax is levied on capital gains, inheritance or rental income.
Offshore companies based in one of the free trade zones must comply with the laws of that zone. Incentives can also vary; Most free zones offer 0% corporate tax as one of their many incentives, provided the company does not deal with residents of the jurisdiction.
Following IMF suggestions that applying VAT could help diversify the UAE's economic resources, it has been announced that 5% VAT will be introduced in the UAE from 1 January 2018. Certain food items, education and health items, bicycles and social services will be exempt from VAT.
The UAE's economy is steadily growing and is projected by the IMF to expand at a rate of 1.5% in terms of real GDP in 2017 . It is currently the third-largest re-exporter in the world, and the Abu Dhabi Fund for Development is considered to be one of the largest stabilisation funds in the world. What's more, Dubai has undertaken various measures to develop all sectors of its economy, thanks to which oil revenue now accounts for less than 20% of total income, with the rest coming from the business and financial sector, air travel, tourism, transport logistics and education.
The UAE accounted for 62% of all private equity investment in the Middle East and North Africa by value and 34% by volume of deals in 2016. These positive changes were driven mainly by a great increase in investment in technology-related sectors — FinTech, IT and ecommerce in particular. The number of disclosed private equity investments reached 244 (the highest figure since 2008), with the largest deal of 350 million USD raised by Careem, a regional provider of transport services headquartered in the UAE.