Thinking Dubai? | Q&A

The South African economy represents less than 1% of the world economy, its economy and government are unstable, lacks direction with no policy certainty, and has some of the toughest trade and taxation legislation in the world. All of which makes growing your business very very difficult. Dubai on the other hand provides for a stable economy, numerous expansion opportunities as part of their vision Dubai 2040, world-class infrastructure as well as having ideal proximity for international trade with a favorable time zone of GMT +4. Dubai is open to all countries and nationalities. You are welcomed with open arms.

Dubai is currently ranked 6^th out of 144 countries surveyed. It is extremely safe and the chances of being a victim of crime are very limited. Numerous reports by travels of losing their cell phone just to have it returned to them at their hotels is testimony to this.

A Free Zone is an economic area that has been given licensing rights by the Government to act as a registrar and business development hub. This has been done to develop and strengthen the economy of Dubai and to accommodate international business and trade into the region as well as enhance global competitiveness. There are more than 30 Free Zones in Dubai region each providing its own structures, trade activities, and industry focus i.e. internet, healthcare, logistics, finance, or aviation others are more generic catering for a broad range of activities such as services, consulting, and trading each with its own sub-activities.

With so many to choose from making the right decision can be difficult. Each person, therefore, has to choose based on his / her own requirements taking into account:

• Location
• Whether activities with specific trade focus are important such as import or export
• If general trading would be sufficient
• Establishment time for setting up your company
• Your budget as pricing varies significantly

Benefits include:

• 100% ownership of your company
• 100% repatriation of your capital and profits
• No corporate or personal income taxes
• Open a corporate bank account
• Visa application for you and your family
• A vibrant and growing economy

A Mainland company is a traditional company setup outside the jurisdiction of Free Zones and administrated by the Government (Department of Economic Development). Such a company is allowed to do business in the Emirate with no restrictions as well as in a Free Zone and Internationally. Setting up a company in the Mainland requires that you deal directly with the various Government Departments instead of having an intermediary such as a Free Zone

Offshore companies have much in common with their Free Zone counterparts. However, the application of an Offshore company is different. Offshore companies may only have an office address and registration in the UAE without being entitled to operate business activities directly in the UAE except for acquiring fixed property. The directors and shareholders of an Offshore company are also not allocated any residency visas. The main benefit of an Offshore company is the eligibility to own real estate in the UAE,  is rather inexpensive to set up, and has no requirement to lease an office.

The Mainland and various Free Zones have their own requirements relating to supporting documents required to set up a company. These documents may include:

• Business plan
• Attested degrees and other related documents
• Passport copies
• Passport photos
• CV’s of directors and managers
• Completed application forms
• Choosing a relevant activity
• Ultimate Beneficial Ownership (UBO) shareholders, directors, managers passport copies, and utility bills.

Dubai residency can be obtained in numerous ways, including:

• Starting a business / incorporating a company
• Real Estate Investment of at least AED1 million
• Public Investment of at least AED10 million
• Being a person with specific talents
• Being an outstanding student

A person in possession of a valid residency visa may also sponsor his / her family in obtaining a 3-year residency visa.

The Dubai government has realized that remote working is becoming more prevalent and have made available specific Freelance visas for individuals who want to freelance and are not employed nor have they set up a company. By obtaining such a Visa you can open a bank account, work for yourself, invoice, and enjoy all the benefits of Dubai without having to register a company.

It depends. Certain Free Zones require that when you register a company with them that you have to take up office space, or at least a Flexi desk. In this case, you will have to incur additional costs on office rental which you may or may not use. Other Free Zones include in their company registration fees a “Virtual office” with no need to take up physical office space. Should you require office space you can lease from them at an additional cost. Setting up a company usually allows for a maximum allocation of 3 Visas. Should you require more visas you would have to lease physical office space to increase your quote. Also check your specific business activity as this may require the leasing of physical office space.

Dubai provides an outstanding quality of life and retirees can obtain a 5-year retirement visa.

Full repatriation of funds is possible as Dubai does not have any regulations in place to curb the flow of money except for the usual global required anti money laundering provisions.

Your company

Once your company is registered and you have been issued with your license papers you will be able to open a bank account with any of the banks in the region.

You

Once you have received your stamped Visa and Emirates ID Card you will be able to open a bank account in Dubai.

South Africans are taxed on their worldwide income as well as having to contend with numerous anti-avoidance provisions in the Income Tax Act. Individuals, companies, or trusts need to consider the implication of taxation for their unique circumstances. Some of the sections in the Income Tax Act you will have to take into account include:

• Income Tax Act:
  • 7, 9D, 9H, 10B, 25B, 31, 80A to 80L
• Capital Gains – 8^th schedule:
  • 64B, 80(3)

It is also advisable to consider the relevant Double Taxation Agreement between South Africa and Dubai as well as any Place of Effective Management issues.

Statutory requirements are imposed either by the Dubai government or your licensing Free Zone. Depending on your business module you may have some specific regulations to adhere to. Some of the most pertinent include:

• VAT
• • Vat registration is only required once turnover exceeds Dirhams 375 000.
• Economic Substance Regulations

• • Depending on whether you provide a related activity you may or may not be required to adhere to these requirements.
• Audit
• • Depending on your licensing authority an audit may or may not be required.

• Able to open a personal bank account
• Being able to sponsor your family for residency visas
• Obtain a UAE drivers license
• Being able to rent a property long term
• Zero taxes
• Living in one of the safest cities in the world
• Eligible to acquire insurance and medical aid

Any area or community in Dubai has its own culture and uniqueness. However, we would recommend that if it is your first time in Dubai to try and give the following areas preference. They are well situated, have many amenities, and will allow for an easy transition into the city. When you are more comfortable and at ease, you can always try other areas which you find interesting. Try these:

• • Dubai Marina and JBR Beach – Close to the beach and relaxed atmosphere
  • City Walk – for that Urban feeling
  • Meraas BlueWaters – Looking for luxury and something new
  • Al Ittihad Park – Gateway between the Palm Jumeirah and the Mainland
  • Business Bay and Down Town Dubai – Now you are getting serious
  • Dubai Creek for that old City Vibe