Entering the UAE market
We’ve all heard, or perhaps even experienced first-hand, the glamour of Dubai. Mere mention of the UAE conjures up images of decadent hotels, dessert safaris, retail spaces like no other, and the many components that make up a truly luxurious lifestyle. For us business-oriented folks, this translates into one thing: a thriving economy. So should you enter the UAE market? Read on to find out.
First of all, it’s important to know precisely what we mean when we say UAE. An abbreviation for the United Arab Emirates, it comprises seven states: Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Quwain, Ras al-Khaimah and Fujairah. Of these, Dubai is perhaps the most well known in our side of the world and Abu Dhabi is a close second.
The advantages of expanding to the UAE are numerous, with perhaps the most obvious one being the tax relief you could enjoy. Currently, there is no federal corporate income tax and no personal income tax. (However, do keep in mind that the tax authority plans to introduce five percent VAT in early 2018, according to recent news reports, and that each Emirate has its own tax laws.) Other benefits of doing business in the UAE are:
· Total repatriation of profits and capital
· No foreign exchange controls
· Forty free zones
· Welcoming investment climate
All this sounds great, but is entering the UAE really that easy? Well, there are a few points you should keep in mind before you make the move:
1. Test drive first
Research is crucial no matter where you want to expand, but when it comes to the UAE, our advice would be this: do not underestimate the cultural differences. Belgium and the UAE are worlds apart (quite literally!), and cultural differences affect everything – from something as simple as greeting people to something as big as striking business deals. For this reason, it’s a good idea to visit the Emirates first and get a first-hand feel.
Unsure even after the visit? Don’t fret, because the law there actually allows you to test the market before you dive in via representative offices. You can promote your goods or services through this office before you establish a formal presence. A lot of foreign investors do this.
Similarly, a growing trend in the UAE is that of trade shows, which are essentially exhibitions and conferences where you can display your business and assess potential customers. If you’ve decided to expand to this region, you can even use these trade shows to find the kind of services you need to set up here.
2. Benefit from the free zones
A free zone, also known as a free trade zone (FTZ), is an area that gives investors a tax-free, customs duty-free environment. Businesses in a free zone can enjoy foreign-owned licenses (i.e. you don’t need a local sponsor). You’re also allowed to own property here, can set up and leave at your discretion, and enjoy a host of other benefits. Some prominent free zones are Dubai Media City, Knowledge Village, and Dubai Internet City.
3. Be ready for competition
The advantages of taking your business to the UAE are no secret, which is why you should be prepared to face stiff competition. However, a bit of competitive positioning will help you jump over that hurdle rather quickly. Be sure to maintain the quality of your products or services as you enter the market, and go armed with your technological advantage. In such a bustling hub of commerce and trade, we’re sure you will make your mark!