With the signing of the historic Abraham Accords, the United Arab Emirates has opened its doors to Israeli investors, who can now avail themselves of a myriad of lucrative opportunities by setting up businesses in the emirates.
The move coincides with the introduction of a wide range of economic reforms in the UAE, regarding which Israelis would be wise to educate themselves on before investing.
Here are a few key pieces of information for prospective investors:
New law allows 100 percent foreign ownership
The UAE has always been a lucrative prospect for foreign businessmen, due to the government’s pro-business policies. However, the UAE has been reluctant to allow foreigners to hold 100 percent of mainland companies’ shares, especially companies with a limited liability structure (LLCs). The government has now made significant amendments to the Commercial Companies Law through Cabinet Resolution No. 16 of 2020 allowing foreigners to fully own such companies. The previous requirement to have a UAE national as a local sponsor holding 51 percent of the shares has been scrapped.
Presence of progressive free zones
The UAE’s free zones have been at the forefront of the deals inked with Israeli companies following the Sept. 15 signing of the Abraham Accords. These zones have their own set of highly flexible regulations. They are regulated by free zone authorities and are unaffected by many aspects of UAE corporate law—a big benefit for the Israeli investors.
Free zones allow 100 percent ownership, total repatriation of capital, and the entire process of business setup can be completed in a matter of days. Most of the free zones in the UAE are industry-specific, providing a robust ecosystem for company formation. Many of the UAE’s free zones are world-renowned, such as KIZAD, Twofour54, JAFZA, DMCC, DIFC, Dubai South, DAFZA, Dubai Silicon Oasis, etc.
Great growth prospects for start-ups and SMEs
Dubai has long recognized the contributions of start-ups and SMEs (small and mid-sized enterprises) in propelling the economy to greater heights. SMEs contribute more than 90 percent of Dubai’s local GDP, and their growth prospects are highly promising. Free zones and government-funded organizations such as Dubai SME and Dubai Startup Hub provide immense financial backup.
Israeli start-ups may find plenty of opportunities to set up shop in Dubai as the government here has given special focus to encouraging innovation. Free zones such as Dtec, DIFC and DMCC provide a favorable environment for setting up such businesses. Also, setting up an office space in mainland UAE has become cost-effective due to the immense popularity of co-working spaces. Entrepreneurs can rent a Flexi desk in well-designed business centers that come with world-class amenities.
Benefits of a tax-free environment
Incorporating in Dubai is a great way to lower tax liabilities. The UAE doesn’t impose income tax or corporate tax on investors. The only taxes the UAE levies are the Value Added Tax (VAT), which is a mere five percent, and the Excise Tax (applicable only for companies trading in alcohol, tobacco or carbonated energy drinks). This lower tax burden is a serious competitive edge.
Exceptional living standards
By forming a company in Dubai, Israeli entrepreneurs can gain access to the high-quality of living standards the city offers. Dubai has always been hailed as one of the safest cities in the world. Israel and the UAE have also agreed upon a mutual visa-waiver program, rendering travel between the two countries much easier, enabling investors to build more and better business relationships and enhance profitability. The Investor Visa, Golden Visa and the newly introduced Retirement Visa also make Dubai an attractive opportunity for Israelis.
Jitendra Gianchandani is the chairman of Jitendra Business Consultants, a leading business setup service provider headquartered in Dubai.