NEWSLETTER,U.A.E Archives

NEWSLETTER,U.A.E

Abu Dhabi Launches Phase 2 of Investor Journey Programme

November 1, 2022

The Abu Dhabi Department of Economic Development (ADDED) has recently signed nine agreements for onboarding nine leading institutions into the Investor Journey programme. With these agreements in place, investors and entrepreneurs can now apply for business bank accounts, business operational support, telecommunications and corporate insurance services directly on the ADDED portal itself.

The new institutions onboarding this program are First Abu Dhabi Bank (FAB), Emirates Development Bank (EDB), Finance House, Al Maryah Community Bank, Emirates Integrated Telecommunications Company (du), Telecommunications Group (e&), Islamic Arab Insurance Company (SALAMA), Emirates Zone Companies Representation, and Datack International Business Management.

Various needs of existing and prospective businesses, entrepreneurs and investors are addressed by the ‘Investor Journey’ of ADDED that took off in 2021, through seamless integration and an ecosystem of advanced services to new business ideas for company formation in Abu Dhabi.

Investors can access the services, transactions and procedures of various government bodies on a single platform and can have an unmatched digital experience.

Sameh Abdulla Al Qubaisi, the Director General, of Economic Affairs, ADDED noted, “Expanding the network of ‘Investor Journey’ partners and integrating new services is part of our efforts to further strengthen Abu Dhabi’s robust business ecosystem by working closely with best-in-class partners in various sectors to enrich investors’ experiences. These efforts are paying off, and we remain focused on continuously improving our regulations, systems, and services. As digitalization is a major trend in today’s economy and everyday life, we believe employing cutting-edge technologies will empower investors and entrepreneurs, who play a major role in achieving objectives of sustainable development.”

BAbu Dhabi Media Office reported that the 9 new joiners being associated with more than 25 other government and private sector entities and agencies would further promote and expand the business ecosystem of Abu Dhabi and make the private and public sector partnerships stronger. The ‘Investor Journey’ program will also facilitate business set up in Dubai UAE.

Gulf Information Technology Exhibition, Gitex Global 2022 witnessed the participation of ADDED and the unveiling of Phase 2 of ‘Investor Journey’ integrating more services and business setup tools and features.

The ADDED portal is provided with an informative simulator to help investors smoothly navigate through their business journey with an interactive map powered by the UAE’s leading real estate portal to easily identify and choose the location and commercial space.

Abu Dhabi Global Markets (ADGM), made a strategic economic partnership with ADDED and announced the launch of Abu Dhabi Financial Week (ADFW), which will take place from 14 to 18 November 2022. The success of ADGM’s FinTech Abu Dhabi Festival inspired the event.

NEWSLETTER,U.A.E

IMC: Your Partner for Creating Successful VAT and Other Indirect Tax Strategies

September 20, 2022

The UAE, following in other countries’ footsteps is increasingly focussing on indirect tax including VAT. VAT is a transaction based consumption tax that needs continuous monitoring for effective and timely compliance. Tax assessments, audits and enforcement measures are also becoming increasingly sophisticated, with a focus on common errors and industry specific issues.

The UAE, for the first time, introduced Value Added Tax (VAT) on 1 January 2018.

Frequent changes in tax policies and tax laws have become the norms of the day and are often seen sending confusing signals to the hugely stressed internal tax teams. Businesses are anxious about how these new indirect tax laws would affect them and how they could remain compliant ahead of time.

At IMC, our seasoned tax professionals are pretty much aware of this rapidly evolving VAT norms and regulatory environment in UAE and can design tailor-made solutions for you to address VAT issues timely and satisfactorily.

How IMC VAT Services Can Help You Run Your UAE Business More Effectively and Smoothly

Transaction mapping exercise

As VAT is a Transaction based tax, the transaction mapping exercises will help businesses document each relevant transaction type for the purpose of validating the classification and evidence requirements. This can be used to support systems automation for VAT determination and reporting purposes.

VAT diagnostic review

By conducting VAT Diagnostic Reviews, our team of VAT experts Review to both interview analyze your supply chain (goods and services) and help you understand better your VAT risks and opportunities.

VAT Documentation review

Periodic Review of VAT documentation retained for each categories of supply that helps you identify risk and recommend action. We also review documents from input VAT deductibility, which is critical for your business.

VAT refund request review

Review of the VAT refund request template for the tax period and corresponding VAT return in order to identify risks and suggest corrective actions before submission of the VAT refund request.

VAT return review

We periodically carry out a detailed review of your VAT return and simultaneously provide you with knowledge gained from broader compliance activities and industry specific risk areas to highlight key issues and recommend actions.

Remediation assistance

We will work as partners to develop a strategic approach to address any remediation that you would need from time to time.

Why choose IMC?

Integrated team of high caliber tax professionals

Our VAT services team is comprised of highly qualified and dedicated tax professionals with proven experience across different sectors.

Deep and diverse Industry experience

Our team has hands-on experience across diverse sectors and has successfully assisted clients on several complex tax issues

NEWSLETTER,U.A.E

Transfer Pricing: How it Would Affect the UAE Business?

September 13, 2022

Introduction

Corporate Tax (CT) implementation in UAE was announced on 31st January 2022 by the Ministry of Finance and it was confirmed that one of the mechanisms substantiating the new tax law would be the introduction of Transfer Pricing (TP), based on the Organisation for Economic Co-operation and Development (OECD) principles.

The transactions and entities that would come under the scope of transfer pricing are to be announced in due course along with the reporting and compliance requirements.

What is transfer pricing (TP)?

TP is an intra-company market mechanism used for accounting and taxation purposes and allows for internal pricing transactions within businesses and between subsidiary companies operating under common ownership and control. The TP practice involves both domestic and cross-border transactions. For taxation purposes, the transfer price is essentially at an ‘open market’ or ‘arm’s length value for preventing tax evasion.

What is the role of OECD in transfer pricing (TP)?

OECD has been striving for the prevention of tax avoidance through its ‘Base Erosion and Profit Shifting’ (‘BEPS’) action plan for several years by establishing measures to prevent multinational businesses from evading tax by artificially shifting profits to different low or no-tax jurisdictions.

The UAE, in line with most of the developed countries, has stood by the BEPS program and the adoption of the OECD rules for TP has been a logical move as part of the introduction of CT.

What is OECD’s guidance on transfer pricing?

The essence of OECD transfer pricing guidance revolves around the ‘arm’s length principle that represents an international consensus on the valuation of cross-border transactions between associated enterprises as per OECD. Under prevailing market conditions, a value is stated to be equivalent to arm’s length if it is the same as the price that would be paid between two unrelated entities without any influence over each other.

Detailed guidance is provided by OECD on measures to test, analyze and compare the transfer price for establishing the arm’s length valuation. The prescribed formats for documentation purposes are also provided by the OECD and include Master file, Local file and Country by Country Report (CbCR).

Valuation of TP can be quite complex and needs sufficient data that influences the price to be gathered from both external and internal sources. There are five methods advocated by OECD to determine the arm’s length price.

Which UAE business will be affected?

Theoretically, all businesses will be within the scope of the transfer pricing rules however, in practice, the major effects of the TP regime will be felt by the multinational companies that are involved in transferring goods or services between group establishments. These businesses, in all likelihood, will be required to maintain the records stipulated by the OECD including the preparation of additional annual reports demanded by the FTA.

One-time transactions e.g. sale of high-value assets may also come under the TP rules and may need to be critically reviewed for evaluating TP implications even if the businesses generally don’t undertake intra-group transactions that come under the TP rules.

Family businesses in the UAE providing financial support to each other may be under greater scrutiny and may need to review their TP policies and adapt some of their practices to comply with the TP regulations.

Free zone businesses may need to take into account certain TP considerations and may need to make some additional assessments accordingly. The applicability of the arm’s length principle to such free zone businesses would need to be analyzed once the detailed TP rules are available to satisfactorily address situations where the Free Zones based companies carry out business with mainland UAE entities.

How should UAE businesses get prepared for the transfer pricing (TP) regime?

It is believed that most of the businesses in the UAE have already carried out a high-level impact assessment of the forthcoming TP regime and identified transactions to be affected by it.

Once the detailed TP requirements are issued by the FTA, businesses must undertake an optimization exercise to align existing TP policies with the OECD guidelines followed by implementation of the revised TP policies, as appropriate, by amending policy documents and contracts.

Upon successful implementation, businesses must focus on the compliance aspect and prepare the TP Master file/ Local files/ returns, wherever applicable.

THE TAKEAWAY

The proposed UAE CT regime has kept a provision for TP for ensuring that the price of a transaction is not influenced by the relationship factor between the parties involved.

NEWSLETTER,U.A.E

Shareholders’ Agreement: Not Legally Binding However Crucial for UAE Startups

September 13, 2022

Under UAE Federal Law No. 5 of 1985 (Civil Code), contracts may either be in written or verbal form and do not need the Shareholders’ Agreement (SHA) mandatorily. However, for the avoidance of any future dispute about the agreed terms and conditions between the parties, proper documentation of an SHA in written form is often recommended for UAE startups.

As the startup population in the UAE continues to grow exponentially, besides having in place their Memorandum of Association (MoA) and Article of Association (AoA), they must strongly consider entering into an SHA at the time of company formation in Dubai UAE.

How SHA differs from AOA and MoA?

The SHA often called a stockholders’ agreement is an arrangement amongst the shareholders that describes how a company is to be operated and outlines shareholders’ rights and obligations. The agreement also documents the information about the management of the company including all protections and privileges of the shareholders.

Unlike the MoA and AoA define the fundamental objectives, rights and responsibilities of directors and shareholders of the company, the SHA keeps the focus solely on the protection of shareholders’ rights and fair treatment.

What makes SHA crucial?

The SHA is not for public record and is privately agreed upon amongst the shareholders. Following are some reasons which make the SHA crucial

Crisis Prevention
The SHA offers crisis prevention under certain circumstances and helps mitigate potential disputes through appropriate SHA frameworks that provide solutions for the effective handling of future disputes. SHA can be used for contingency planning and risk mitigation as and when necessary.

The unanimity of Purpose and Responsibilities
The SHA helps in bringing unanimity of purpose and responsibilities and creating a mission statement for the business enterprise. It arouses positive feelings and mindsets, provides a basis for strategies for attaining the defined objectives and resolves divergent views amongst the shareholders.

Protection of Interests
As a startup grows and expands, the ownership and management of the company may also change because of the takeover. The SHA can help protect shareholders’ interests by provisioning takeovers, M&As etc. and mitigating future risks and conflicts if any.

Facilitates Share Transfer
SHA documents the ownership of shares which is the single most vital element of a business. As all the terms and conditions of future issuance of shares, caps on % shareholding, share transfers, and mandatory shareholders’ voting on such matters are all documented in the SHA, it facilitates the share transfer process without creating conflicts amongst the shareholders safeguarding founders from losing control over their company. Both majority and minority shareholders’ interests are addressed in the SHA with provisions of their rights and obligations.

Resolves Disputes
A dispute resolution framework, once properly and correctly documented can offer the greatest advantage to all the shareholders as it can help resolve disputes between them amicably thus ensuring the highest level of business effectiveness of a company.

What key clauses UAE startups must include in the SHA?

A properly documented SHA must include the following key clauses.

Applicability and Purpose
This clause defines the applicability of SHA and outlines the objectives and purpose of this document as the scope. This needs to be reviewed and revised periodically as the company grows and expands.

Management and Operations
Appointment and removal of directors including other key top-level managerial positions e.g. Chairman, Managing Director etc. are addressed in this clause.

Exit Clause
This clause outlines conditions under which a founder shareholder can opt for a buyout and exit the company.

Capital Contribution
Capital contribution by individual founders is addressed in this clause along with their obligations. Shareholding %age is normally decided in proportion to this contribution.

Profit Sharing
This clause outlines the profit distribution policy of the company detailing how the PAT or net profit is going to be shared amongst shareholders.

Transfer of Shares
This clause safeguards the company’s control by restricting the transfer of shares to unwanted third parties.

Critical Decisions
This clause defines the role of investors and lists critical events and circumstances requiring only important members and not dormant investors. The manner of participation is also addressed in this clause.

Pre-Emptive Rights
This clause needs the company to offer the new shares to the existing shareholders first and in the proportion of current shareholding.

Anti-dilution Clause
This clause provides existing investors with the right to maintain their %age of shareholding by purchasing a proportionate number of new shares when new shares are issued in future.

Deadlock Resolution
This clause documents procedural steps in the event of any deadlock situation concerning an agreement over any decision-making in the company and steers it to an amicable resolution.

Dispute Resolution
It is the last option available to the shareholders however often preferred over the deadlock resolution that affects the company more adversely. This clause documents the procedure to be followed to resolve any dispute that may ensue between shareholders.

The Takeaway

A company locked in internal conflicts becomes unproductive and is destined to fail. This is why even though not legally binding, the SHA is receiving increased attention from the new generation of entrepreneurs.

Startups in UAE are increasingly aware of the intrinsic value of this document providing clarity on the rights, liabilities and responsibilities of the shareholders to mitigate the risk of any potential disputes that may arise from time to time and can jeopardize the future of the company.

The essence of SHA lies in its flexibility as this document can be tailored to meet the requirements of unique and specific circumstances of individual startups. SHA essentially documents the relationships of shareholders and the company sets out the rights and privileges of shareholders and builds the foundation of how the company is incorporated and managed.

As the AoA document is legally binding, it is always held in preference and always supersedes the SHA. Hence while drafting the SHA, startups must be mindful and ensure that SHA is in perfect alignment with the AoA document and all its terms and conditions leaving no dispute over any conflicting points or clauses in the two documents.

The professional team of a reputed business consultants firm can advise and assist prospective startups, willing to a business set up in Dubai UAE on the key provisions to be included in a shareholders’ agreement on all the legal, financial and operational matters.

NEWSLETTER,U.A.E

DIFC: Announces the Launch of First Global Family Business and Private Wealth Centre

September 13, 2022

In a press release dated 8th August 2022, Dubai International Financial Centre

(DIFC), the leading financial centre in the Middle East, Africa and South Asia (MEASA) region announced the creation of a hub for global and regional family-owned businesses, UHNWIs and Private Wealth Centres.

This initiative complements DIFC’s 2030 strategy objectives, which would enable DIFC to become twofold in size enhancing its economic contribution to the national GDP. The strategy has been meticulously crafted offering support for sustained economic growth to elevate the status of Dubai as a leading global hub for financial institutions and businesses.

A complete range of services and accreditation facilities will be offered to businesses and advisors who comply with the rigorous DIFC standards, laying foundations for improved succession planning as businesses pass on to future generations.

This is the first Global Family Business and Private Wealth Centre (Centre) in the region and worldwide with unique offerings and especially at a time when the Middle East will witness the transfer of huge assets worth approximately AED3.67 trillion or USD 1 trillion, to the next generation over the coming decade.

The initiative is in complete alignment with the commitment of the UAE government to support family businesses, which are continually playing the most pivotal role in spearheading the growth of the country’s economy.

Estimates reveal that in the Middle East only 20% of family businesses are managed by the third generation making it vital to educate this generation who are constantly challenged with wealth management, family dynamics, governance, succession, ownership and strategy for ensuring sound and successful family businesses in the long term.

Global family-owned businesses, ultra-high net worth individuals (UHNWIs) and Private Wealth will be brought under one roof through this new scheme and while all are in one hub, it would facilitate the preservation and growth of the sector. Ease of access to a full range of support services would also enable smooth and sound legacy and succession planning of all businesses.

Experts believe that this strategic move would enable the Centre to attract greater numbers of family businesses and UHNWIs from the region and many other parts across the world for DIFC company formation who wish to establish a business presence in Dubai.

DIFC operates independently and through this effort, will provide advisory and concierge services; education and training; high-end networking; undertaking research and issuing publications and providing dispute resolution assistance. Family businesses and wealthy individuals will also be able to benefit from the expertise of a range of partners for making strategic business decisions and will become more confident in running their businesses.

DIFC is the MESA region’s largest financial ecosystem and its common law framework, legal and regulatory infrastructure and flexible range of business structures in compliance with Family office regulations in UAE will benefit all the members.

His Excellency, Essa Kazim, Governor of DIFC, noted, “Aligning with the UAE Government’s commitment to helping family businesses play a prominent role in our society, DIFC is pleased to be launching the world’s first Family Business and Private Wealth Centre. The UAE has a vast number of family businesses, owned by citizens and residents who contribute to the country’s economy. In the next decade, those families and others in the Middle East are expected to transfer AED3.67 trillion to the next generation, which illustrates the urgent need to provide them with specialist, consolidated support to help them.”

“The launch of the Global Family Business and Private Wealth Centre is another key milestone in the development of DIFC’s wealth and asset management sector. In addition, it embodies DIFC’s long-term commitment to offering quality private wealth management services at par with global standards. The new Centre will play a unique role in guiding family businesses about governance, succession, ownership, wealth, family dynamics and strategy. Our role is crucial to ensure the long-term growth of family businesses,” highlighted Dr Tarek Hajjiri, newly appointed CEO of the Global Family Business and Private Wealth Centre.

The Board of Directors of DIFC Authority accorded the necessary approval and the Global Family Business and Private Wealth Centre was launched on 1 September 2022.

NEWSLETTER,U.A.E

UAE and Kenya to Sign Comprehensive Economic Partnership Agreement

August 11, 2022

As the UAE and Kenya plan to remove trade and investment barriers on a wide range of goods and services to promote non-oil bilateral trade, an agreement has recently been reached between the two nations to launch a Comprehensive Economic Partnership Agreement (CEPA), the first of its kind between the Gulf and an African country.

The UAE Minister of State for Foreign Trade, Dr Thani bin Ahmed Al Zeyoudi and Betty Maina, Cabinet Secretary, Ministry of Industrialisation, Trade and Enterprise Development of Kenya announced CEPA after signing a Joint Statement in Nairobi. The negotiations will begin soon in the coming months.

The economic integration between the two nations will open up huge business opportunities to the importers and exporters in both countries and while the Kenyan companies can benefit from the strategic geographic and logistical position of the United Arab Emirates, the UAE companies can leverage the vast agricultural and other natural resources of Kenya.

The UAE-Kenya non-oil bilateral trade grew to USD 2.3 billion in 2021 and the signing of this CEPA will further enhance the value of trade and investment between Africa and the Middle East. While oil is Kenya’s main import from the UAE; intermediate products, stones and glass, vegetables, consumer goods, and raw materials are the main products that the UAE imports from Kenya. There are many Kenyan entrepreneurs eagerly looking to establish a business base in Dubai and can hire services of a reputed business set up consultants in Dubai to do so.

Kenya is the largest economy in east Africa with a GDP growth forecast of 5.5% in 2022. While agriculture and tourism are the two most dominant and flourishing sectors in the country, financial services and competitive manufacturing sectors do also look promising. Adoption and development of green technology are also high on the agenda of the Kenyan economy.

Dr Thani Al Zeyoudi added, “There is a tremendous opportunity for closer economic integration between our two nations, especially in agriculture, tourism, infrastructure, technology and renewable energy. Announcing our intention to begin negotiations on the UAE-Kenya CEPA reflects our shared commitment to achieving greater economic progress through trade and investment. Our efforts to establish strategic economic partnerships worldwide through our CEPAs will fast-track our growth and prosperity for the next 50 years.”

Before commencing the high-level CEPA negotiations with Kenya, the UAE recently completed three CEPAs this year, namely with India, Israel and Indonesia under the ‘Projects of the 50’ initiative to help grow the national economy by 2.6% by 2030 as noted by Dr Thani earlier.

As highlighted by the Minister of Economy Abdulla bin Touq, the UAE plans to sign a total of 27 similar trade deals for enhancing trade and foreign direct investment into the country and attracting foreign investors for company formation in Dubai UAE.

UAE featured among the top 20 recipients of foreign direct investment during 2021 as FDI inflows increased 4% yearly to USD 20.7 billion.

Kenya is among the 8 countries that the UAE wants to deepen and strengthen ties with. Dubai chamber considers the Kenyan market as a strategic one both for Dubai and the chamber.

NEWSLETTER,U.A.E

Dubai Enacts New Real Estate Law to Boost Foreign Investment

August 11, 2022

The millionaire community across the globe are increasingly recognizing Dubai as the most preferred place to relocate as the city strives to elevate its status to a global destination for real estate investment.

On July 19 2022, Sheikh Mohammed bin Rashid Al-Maktoum, the Vice President of the UAE and the Ruler of Dubai introduced a new law to promote the growth of real estate investment funds in Dubai and granted certain privileges to these funds under this new law. The privileges set out in this new law will act as incentives for attracting more funds into the emirate, Dubai Media Office revealed.

A real estate fund is one type of mutual fund that mainly invests in securities floated by public real estate companies. A real estate investment trust, however, invests directly in income-generating real estate and is traded like a stock.

All real estate investment funds licensed and regulated in the Emirate of Dubai by government authorities, private development zones and free zones, including Dubai International Financial Center (DIFC) come under this new law. Properties which are located within the premises of the DIFC are excluded from this law.

The new law makes a provision for the establishment of a register, called the Real Estate Investment Funds Register, for registering the details of all qualifying property funds that are to benefit from the privileges outlined in the new decree-law. Dubai Land Department will be the custodian of this investment funds register.

Real estate funds to be eligible for inclusion in the Register, must own not less than AED 180 million (USD 49 million) of real estate assets and should not be suspended from trading in the Dubai Financial market at the time of submission of the application to register. Payment of a fee of AED 10,000 to the Dubai Land Department must be made during the application for such registration. The regulators including Securities and Commodities Authority, and Dubai Financial Services Authority must also issue licenses for these funds.

The property funds registered in the register will be authorized to acquire properties which are located in the designated areas for foreign ownership in the Emirate of Dubai.

The new law mandates the establishment of a Committee for Property Investment Funds which will be responsible for identifying areas and properties that funds are permitted to invest in. The committee grants full ownership and usufruct rights to the registered property funds. These funds may also opt for long-term lease rights, up to 99 years in certain non-designated areas specified by the committee formed under this new law.

Registered property funds will be levied a land transfer fee of 2% based on the market value of the property payable equally by both the buyer and the seller.

As per the new law, the Governor of the DIFC can roll out other privileges in favour of property funds operating within the boundaries of the financial centre.

The founders of a property fund are permitted to make property contributions in-kind if a fee of AED 50,000 is made while transferring ownership from the founders to the property fund.

Dubai Land Department will engage a valuator recognized by the Real Estate Regulatory Agency during property valuation who shall carry out such a valuation as per the guidelines specified by the land department.

The new law came into force on 22 July 2022, the date it was published in the official gazette.

NEWSLETTER,U.A.E

DIFC Innovation License: Helps Tech Startups to Network and Expand the Businesses

August 9, 2022

What is DIFC?

Dubai International Financial Centre (DIFC) is the leading sector-specific commercial business hub and special economic zone in the MEASA region and presently offers services to entrepreneurs and start-ups including technology companies.

The DIFC is the most important international financial centre in the UAE for business, financial technology and lifestyle. The centre was founded in 2004 and over the years has become one of the top 10 financial centres in the world.

Entrepreneurs looking for a technology business setup in Dubai free zone can now explore DIFC financial free zone as it enables tech companies to source better talents and access premium service providers within the centre. DIFC is globally recognized and regarded ranking among the top 8 onshore financial centres across the world. The centre has a diverse ecosystem with a high population of multinational firms, banks, investment funds, wealth management firms and NBFCs.

A Venture Capital Fund Manager regime has been launched by the centre focusing on the co-existence of VC funds and technology companies so that it becomes easier for tech startups in the DIFC to access funding.

What is DIFC Innovation License?

The DIFC innovation license is a tech startup license with several incentives and acts as a launching pad for the innovative and cutting-edges technology startups and entrepreneurs encompassing fintech, edutech, regtech, and all other technology-based companies willing to do business in the MEASA region.

The DIFC Innovation license offers highly subsidized commercial licensing fees and high-quality co-working spaces at attractive rates. The license provides an opportunity to explore the technological innovations across the MEASA region and become a part of this innovation ecosystem and diversified communities of service providers, banks, financial institutions, angel investors and venture capitalists in the region. The license helps innovative technology companies willing for a DIFC company formation to establish, grow and expand their businesses and access the lucrative Middle Eastern, African and South Asian markets.

All businesses that are technology driven and have the potential to grow and contribute to the economic development of Dubai and the UAE, can apply for this license.

How to Obtain a DIFC Innovation License?

Obtaining a DIFC innovation license is pretty straightforward and involves the below-mentioned process steps.

Submission of request with DIFC authority for accessing DIFC portal
Tendering application along with a detailed business plan
Submission of KYC
Issuance of in-principle approval after pre-screening
Registration of the business structure with the Registrar of Companies
Issuance of innovation license
Issuance of establishment card for processing visa

The entire process is done electronically and takes around 10 working days.

What are the Benefits Offered Under DIFC Innovation License?

The key benefits that are offered under this license are

One-time registration fee of USD 100 only
Subsidized licence fee of USD 1,500 per year only
Data protection fee of only USD 250
Access to co-working space (flexible desk) spaces for only USD 500 per month per flex desk plus VAT
Waiver of minimum share capital requirement of USD 50,000
Permit to obtain up to 4 visas on the co-working desk space and 50% subsidy on additional visas

The Takeaway

DIFC innovation license shows the commitment and dedication of the Dubai government to innovation and creativity as it plans to attract small and medium-sized technology startups and support them with networking and business growth opportunities.

The business setup process, however, can be complicated at times without the expertise of Company formation specialists in Dubai who can help the entrepreneurs in deciding whether the DIFC innovation licence is appropriate for their tech startups and even guide them through the application process.

NEWSLETTER,U.A.E

Entrepreneurial Brain Drain: Indian Businesses Shifting Base to Dubai

July 13, 2022

Overview

International finance and industry experts are upbeat about the economic future of Dubai as the latest Dubai FDI Monitor data ranks this emirate first in the GCC and third worldwide in FDI attraction.

“Dubai is now among the world’s most attractive FDI locations. Global investors have placed their confidence in our business ecosystem,” highlights H.H.Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council of Dubai.

It is high time to forget the picture of the old desert city of Dubai as the new Dubai wears the hats of AI, Blockchain, Crypto, Startups, Fintech and other emerging technologies. Even the developed worlds, the US and Europe are shifting their blockchain platforms to Dubai.

As Dubai rapidly transforms into a sustainable and resilient economy offering myriad growth opportunities, waves of new investments are pouring in and paving the way for new businesses who like to put their footprint in the city through a business setup in Dubai. The emirate today grows into a hotbed for international start-ups looking for unlimited business prospects and opportunities.

“Dubai is well-positioned from a geographical perspective. It’s a hub and has a lot of connections with the rest of the globe. Dubai is multinational in nature, which makes it a vibrant environment, where there is a mix of cultures, and this is also used to check if the idea of a start-up can work from different perspectives,” comments a top management executive from Accenture, Middle East.

The government of Dubai has long been acclaimed for its proactive and fast decision-making process as well as effective policy implementation. Innovation and creativity are always on the top of the agenda of the government authorities who are inclined on enhancing new-age futuristic technologies.

Why are Indian Entrepreneurs Moving to Dubai?

A friendly business landscape, low tax environment, high global connectivity and an opportunity to engage skilled global talents are driving Indian entrepreneurs to turn their heads to Dubai for relocating their businesses.

The new Visa rule offering the golden Visa scheme has been another major catalyst for Indian businesses to consider Dubai as the most ideal destination for setting up their business. Being a long-term residence visa allowing foreign entrepreneurs, startups and talents to live, carry out businesses, work, or study in the UAE for up to 10 years is luring many Indians to explore Dubai for a bright and glorious business journey.

Fast and easy business setup, robust infrastructure, lower taxes on starting and running a business, and a friendlier policy environment are some of the key features under the Golden Visa scheme that are attracting increasingly more Indians to Dubai.

There are also many reputable firms of Indian origin and cross-border presence offering PRO services in Dubai and facilitating hassle-free, easy and fast company set-ups in the emirate that acts as an additional stimulus for Indian businesses to shift base.

With increasing regional economic competitiveness, Dubai is getting ready to become the crypto capital of the world with a regulatory environment conducive to the growth of this sector. Sheikh Mohammed Bin Rashid, the ruler of Dubai, recently rolled out the first legislation governing virtual assets and assigned an independent regulator to promote Dubai as a regional and global cryptocurrency trading hub.

Indian exchanges are expressing their willingness to capitalize on this opportunity.

The negative stance on cryptocurrencies in India is discouraging the crypto businesses and more recently an imposition of a flat 30% tax on all crypto gains has become a huge negative for this sector.

Two founders of the Indian cryptocurrency exchange, WazirX, recently shifted base to Dubai and raised speculations about other crypto and Web3 startups including their management shifting to Dubai.

A few crypto exchanges from India have plans to capitalize on the favourable crypto ecosystem of Dubai and may shift their base.

Recent Web 3.0 events held in Dubai in March 2022 also witnessed a highest-ever surge in Indian attendees to almost 75%.

Intelak is a technology and innovation hub based in Dubai that supports start-ups, both in early and late stages with mentorship, business tools and resources to set up businesses and give shape to their perceptions and thoughts.

Intelak hub facilitates collaboration with big companies, brands, and industry leaders. Just having a great idea doesn’t take anyone far unless appropriate funding, backing and support are made available to turn a dream business idea into reality through the support from Intelak.

Important to note that the Indian startup population is almost 30% of the total startup population in Dubai which hosts a large network of incubators offering help to the start-ups to make any good business idea to fruition.

Incubators create conducive environments for small and medium emerging businesses by offering early funding, providing co-working spaces, imparting training and workshops, networking events, and providing access to investors. The city presently boasts several enabling platforms for entrepreneurs and start-ups including TechStars Dubai, Turn8, In5, FinTech Hive, Astrolabs, and many more.

The Fineprint

Besides the benefits of the recently revised Visa administration offering Golden Visa, the other most important reason that is driving Indian startup founders to shift their base to Dubai is significantly less taxation for business set up and operation. Outsourcing PRO services in Dubai is often recommended for Dubai business aspirants as it can help companies to avoid many pitfalls and unpleasant future surprises.

Indian investors have placed their unfailing trust in the business ecosystem of Dubai, making it among the most tempting overseas locations in the gulf. The emirate, with business-friendly initiatives, continues demonstrating its commitment to the needs of investing communities.

NEWSLETTER,U.A.E

Dubai: Transforming into a Breeding Ground for Startup Funding

July 13, 2022

Current Scenario

Access to easy financing has long been the most serious challenge encountered by entrepreneurs while working towards the growth and expansion of their businesses. The GCC nations, however, have introduced several business-friendly policies in recent times and attracted large businesses and in turn, venture capitalists (VCs) and angel investors to the respective countries.

The VCs and angel investors prefer innovative markets providing outstanding regulatory environments and favourable economic policies and having a strategic geographical location for easy access to global markets. As Dubai fulfils all these preference criteria, it has become a breeding ground for startup funding by VCs and angel investors.

Dubai focuses on and also strives on becoming a one-stop destination for startups, and in recent years, Dubai’s startup ecosystem has witnessed a significant spike in the numbers of investors and entrepreneurs.

In 2022, Dubai has topped the list in Global Entrepreneurship Index, leaving behind developed world economies including the United States, Canada, Japan, the United Kingdom and a few notable EU countries, and bearing the testimony of an advanced and agile trade and investment framework.

Dubai’s progressive policy reforms, proactive and business-friendly regulations, and sector-specific business districts have been instrumental in creating this global entrepreneurial leadership. A regularly flowing and constantly filling-in investment pool, however, would be the key to retaining this title and sustaining the growth of startups in the emirate.

The latest Dubai Chamber statistics reveal that MENA Region is home to 587 companies having an average annualized return of a minimum of 20% in the past three years and these scaleups have mopped up almost USD 9.1 billion through VC funding, an increase of 47% since 2020.

60% of VC funding of MENA scaleups has been contributed by the UAE’s scaleups and

Dubai retained the hot spot by claiming the majority of funding and being home to most of the technology companies in the region. MAGNiTT, a venture data analytics platform also reported the highest ever VC funding in the GCC region and Dubai is in the driver’s seat.

The in5, an enabling platform for startups also witnessed billion-dollar investment in 2021 mainly accrued from VCs and angel investors.

Dubai with sector-specific business ecosystems having Dubai Media City, Dubai Design District and Dubai Internet City offers huge business appeal to large multinationals and thus attracts VCs and angel investors. The local startup community in Dubai is thriving and in turn, creating more funding opportunities.

Startup Funding Opportunities

Every stage of business growth for a startup requires fund infusion to keep their activities running. Usually, during the early stages funding comes from family and friends, but as the company grows to the pre-seed and seed stages, access to bigger investments becomes a must for long-lasting growth.

The incubators e.g. in5, FinTech Hive, TechStars Dubai, Turn8, Astrolabs etc. then come into the picture and establish linkage between the entrepreneur and potential investors and business experts for continuing business activities.

Trusted mentors from similar fields also play vital roles by providing access to networks that hold membership of important people e.g. HNIs. As startups mature from their infancy to a growth phase, angel investors can also become a viable and popular route for funding in exchange for equity ownership and infusing large sums of capital into the startup.

Future of Funding

Hassan Al Hashemi, Vice President of International Relations at Dubai Chamber, noted, ” We have become a hub for VC investors.” He also pointed out various government initiatives such as free zone incubator programs that offer a business-setup framework, co-working space, knowledge and partnerships. Hashemi also emphasized, “We will continue supporting a growing number of startups and contribute to the country’s digital economy.”

The rise in startup funding has been globally trending with a rise in the global unicorn number that registered 1,070 startups within the unicorn community.

Under the entrepreneurial drive, Dubai is also promoting an increased number of companies with USD 1 billion valuation enhancing investment opportunities and unlocking huge potential for business entities.

VC firms are also planning for integrated-hub to enable startups display their innovative ideas to potential investors. The startups will also be aided with legal and technical advice besides being mentored from time to time.

Creating Industry-focused networking community is also on the agenda of VCs and industry experts believe that with a flourishing startup ecosystem, Dubai has become successful in making the city attractive for venture capitalists and angel investors to channel their funds.

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