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Why Do Companies from Many Countries Expand Their Business to the UAE?

Over the last decade, the United Arab Emirates has turned into an international trade and business center. Many successful companies from other countries choose the country to expand their business. According to official data, 48, 616 new companies were registered in Dubai in the first three quarters of 2023. This is 42.9% more than the number of companies registered in the Emirate in the previous year. The number of companies from Great Britain, Japan, Hungary, and Kyrgyzstan has dramatically increased in the UAE over the last year. What makes the country so attractive for foreign entrepreneurs? Let’s find out!

Business expansion in the UAE

Top 5 reasons to launch a business venture in the UAE

As of the beginning of 2024, large transnational corporations such as IBM, Deutsche Bank, Amazon, Ernst & Young, Google, and Cisco have offices in Dubai. Foreign companies choose to establish presence in the UAE for many reasons. Below we discuss the key ones.

A stable economy and an advanced financial system

The UAE is well-known for its stable economy and a reliable financial system. These factors ensure attractive conditions for foreign investors who trust the UAE administration. According to reports, non-oil international trade increased to record-breaking 3.5 trillion dirhams in 2023. This demonstrates the stability and dynamism of the country’s economy as well as its decreasing dependence on oil and gas exports.

In its latest report, the World Bank improved the UAE’s GDP growth forecast for 2024 from 3.7% to 3.9%, and S&P — to 5%. The Central Bank of the United Arab Emirates is even more optimistic: it forecasts a growth of 5.7%. The Bank draws on the data from the sectors of economy unrelated to oil exports. In October 2023, the Purchasing Managers’ Index that reflects the activity in the manufacturing sector reached 57.7. This is the maximum figure since June 2019.

In its report on the performance of the country’s financial system published on March 11, 2024, the Central Bank claims that ‘thanks to the widespread adoption of modern technologies in all sectors of the economy, the UAE’s financial system is safer and more efficient than ever before’. As of the end of 2023, the number of local banks (excluding investment banks) remained unchanged – 22 institutions. The number of their branch offices decreased to 489. The number of foreign banks was 22 and they had 66 branch offices. In addition to that, almost 200 other financial institutions work in the UAE.

We also must note that the Government of the UAE is working hard to implement the Projects of the 50, a program whose goal is to turn the country into a large international financial hub and economic center.

Low fiscal burden

Another advantage that foreign companies find in the UAE is a low fiscal burden. Companies can reinvest the additional capital that they save by paying little in taxes in business development.

The country has introduced a corporate income tax of 9% recently. However, only a company with an annual turnover that exceeds 375,000 dirhams (~US$ 102,000) has to pay the tax. Besides, the VAT rate is 5% in the UAE, which is rather low.

Free Economic Zones

There are multiple specialized zones in the UAE that open wide opportunities for lowering the fiscal burden. Their number is 46 as of 2024 but new FEZs appear from time to time. The Zones are found in Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras Al Khaimah, and Umm Al Quwain.

Free Zones bring the following main advantages:

  • Zero or low taxes: one of the key benefits is the exemption from the corporate income tax for 50 years. Besides, no personal taxes are charged in the Free Zones and no taxes on capital repatriation.
  • 100% foreign company ownership: a foreign investor is entitled to own 100% of his/ her company shares.
  • Simple company registration procedures: setting up a company in a Free Zone usually involves little bureaucracy.
  • Exemption from customs duties: unless FEZ-based companies export their goods and services to the mainland UAE, they are exempted from customs duties.
  • Advanced infrastructure: high-speed Internet connection, transportation networks, logistic centers, and other infrastructural objects are readily available in the UAE FEZs.

Each Free Zone focuses on a certain industry in the UAE. For instance, Dubai Media City specializes in the media industry and such companies as CNN, Reuters, and ITP are stationed there. Dubai Internet City Free Trade Zone specializes in IT and hi-tech and IBM, Microsoft, Canon, HP, Philips, and Google have offices there.

Please find out about the cheapest Free Zone in the UAE by following the link.

A large number of DTA treaties with other countries

The UAE has signed Double Taxation Avoidance (DTA) treaties with many countries. This fact guarantees that companies engaged in international business operations are not taxed twice in two jurisdictions at a time.

As of the beginning of 2024, the UAE have DTA treaties with 142 countries. In addition to that, the UAE adheres to the principles of fiscal transparency and it exchanges fiscal information with other countries.

A strategic location

The Emirates give easy access to the markets of the Middle East, South Asia, and Africa. The country is especially attractive for those entrepreneurs who are looking to do business in these regions.

Thanks to its location at the intersection of many world trade routes, the UAE is an important transit point for many companies. The seaports in the country are among the busiest and best-equipped seaports in the world. They provide efficient logistic solutions and help distribute goods throughout the world. 

Besides, a meeting is scheduled for May 15, 2024 to discuss the creation of a maritime and railway transport corridor linking countries in the Middle East, South Asia, and Europe. It is designed to link rail routes and connect ports along the way stretching from India to Europe via the UAE, Saudi Arabia, Jordan and Israel. The United Arab Emirates is also a participant of the Chinese ‘One Belt, One Road’ project. Due to this fact, the trade turnover between the countries amounted to US$ 95 billion in 2023. And the governments of the two countries plan to increase it to US$ 200 billion by 2030.

The UAE continues to strengthen its reputation as a global business hub, offering international companies unique opportunities for expansion and development. With its economic advantages, tax policies, a strategic location and innovative approach to business, the country remains an attractive destination for investors and businesspeople from all over the world. As of March 2025, total investment in the UAE reached $ 2.5 trillion.

Are you ready to launch your own business venture in the UAE? If so, please apply for a personal consultation on registering a company in the UAE. Our experts will be happy to tell you about all the advantages and opportunities that you can find in the country. Don’t miss the chance to become part of a rapidly growing business community in the UAE!

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