Why switch your offshore company to the UAE?

By Olga Melnik
Thu 10 May 2018 04:39 PM

From tax advantages to confidentiality and minimal bureaucracy, there are plenty of great reasons to set up your business offshore. However, while many countries offer these benefits, some offer a more advantageous environment than others.

And whatever marker you judge it against, it’s not hard to make the case that the UAE – already home to around 300,000 thriving SMEs – is at the forefront.

Why make the change?

Let’s take a look at some of those key markers.

Tax: The UAE recently ranked first in the World Bank Paying Taxes report, and it’s easy to see why. The UAE still proudly boasts zero tax on both personal and corporate incomes – including both import and export tax. The only significant tax to be aware of here in the Emirates is VAT – introduced in January 2018 – which stands at a flat 5%.

Economy: The Emirates is home to the second largest economy in the Arab world behind only Saudi Arabia. And the UAE’s economy is as diverse as it is large – its Vision 2021 strategy, according to Economic Diversification in the Gulf Region, Volume I, takes ‘several streams, most notably the concentration on the development of the SMEs sector and traditional manufacturing industries’ and notes that ‘significant investments have also been made in high-tech industries such as renewable energy and aviation.’

What we should take away from the above is that, whatever sector you do business in, this policy of diversification means you can expect to be working in the most vibrant, supportive and profitable environment possible.

Doing business: The UAE regularly ranks highly on the World Bank’s Doing Business Index, which measures countries against 11 key indicators of business regulation to establish the ease with which it is possible to form and run a company. In 2018 it was ranked 21st globally and is ranked top among the Arab countries for the fifth year in a row. The UAE scores highly for its minimal tax and auditing requirements and lack of cumbersome bureaucracy.

This means setting up a business in the first place is incredibly easy to do. In fact, the company formation process is so simple that it can often be completed in a matter of weeks – particularly if you use the services of a company formation specialist. In some cases, it may even be possible to register your business without visiting the UAE.

Switching your offshore company to the UAE

Very few, if any, countries in the world can compete with the UAE on every one of these fronts. That’s why those of us who already live and work out here are confident that you can only benefit from switching your offshore company to the UAE.

Here’s how the Emirates stacks up against some of the world’s most popular hubs for offshore businesses:

Cyprus: Cyprus ranks 53rd in the World Bank’s 2018 Doing Business Index, some way behind the UAE in 21st. The report notes that recent changes have made paying taxes particularly difficult in Cyprus, with an increasing number of audits required. If you switch to the UAE, on the other hand, you will often require no auditing and benefit from 0% corporate and 0% personal income tax – in comparison to 12.5% and up to 35% in Cyprus.

Malta: Malta ranks even lower in the World Bank’s report, down in 84th place. The World Bank highlighted several obstacles to the ease of doing business in the country, noting that obtaining certain permits and accessing credit can be particularly difficult. There is also a notable difference between the tax regimes of Malta and the UAE, with Malta levying a tax of up to 35% on both personal and corporate income.

Singapore: Singapore offers competition to the UAE in terms of doing business – ranking above it in the World Bank’s report. However, when it comes to taxation, it’s not even close. The UAE ranks first in PricewaterhouseCoopers’ Paying Taxes Report, above Singapore in 7th. Compare the two regimes side by side and it’s not hard to see why. Where the UAE levies zero corporate and personal income tax, Singapore’s can reach 17% and up to 22% respectively.

Mauritius: The Mauritian tax rate of up to 15% on corporate and personal income once again fails to compete with the UAE’s 0%. The country also ranks lower in the Doing Business Index, notably scoring lower than the UAE in areas regarding the enforcing of contracts, dealing with permits, and paying taxes.

Luxembourg: Luxembourg taxes corporate income at 26.1%. That’s higher than Europe’s average rate of 18.8% – which of course still fails to compete with the UAE’s 0%. Personal income is taxed heavier still at up to 42%. When it comes to the ease of doing business, the UAE also comes out on top, with Luxembourg ranked a lowly 63rd in the World Bank’s report. The report shows that you would find it particularly difficult to obtain credit in Luxembourg in comparison to the UAE.

Netherlands: The Netherlands is also home to an above average corporate tax rate at 25%. The personal rate, however, is more than double that at up to an alarming 51.95%. When it comes to ease and cost of doing business, yet again the UAE is in the lead, ranking almost ten places higher than the Netherlands in 32nd – which scores poorly in areas of bureaucracy such as obtaining permits and enforcing contracts.

Switzerland: Switzerland – perhaps Europe’s most popular destination for offshore businesses – once again falls short of the UAE in many key areas. In terms of cost and ease of doing business, Switzerland ranks lower than the Emirates, coming in 33rd place in the World Bank’s report. In terms of taxation, the UAE’s 0% tax rate on corporate and personal incomes once again looks the more attractive for your business when compared to Switzerland’s 18% (corporate) and up to 11.5% (personal).

Doing business in the UAE

Registering a business in UAE really is straightforward. A company formation specialist can guide you through the whole application process, from choosing your business activity and company name, to registering with the relevant authorities, opening bank accounts and processing visas. All that’s required from you is a few hours of your time and some basic documents.

So, if your company is currently registered in Singapore, Malta, Cyprus or anywhere else, don’t feel trapped, or put off by the thought of moving elsewhere.

There really is no excuse for getting left behind.


Olga Melnik, Head of Business Development at Virtuzone

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Last Updated: Sun 13 May 2018 05:24 PM GST

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