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The UAE attracted a record $30.7 billion in foreign direct investment last year, more than any other GCC country. Even more impressive, it was the second largest destination worldwide for greenfield foreign direct investment, beaten only by the United States.
Greenfield projects are when a company establishes new facilities in a foreign country from the ground up. The UAE announced 1,323 of them last year, a 33% jump from a year earlier.
And there are no plans to slow down. Dubai said it will double its economy by 2033 and attract 650 billion AED ($176.97 billion) in FDI over the next decade. A flurry of initiatives are intent on seeing this through. Take for example the Dubai Economic Agenda (known as the D33).
The plan is to support 30 private companies in their bid to become unicorns (i.e. become worth more than $1 billion) while incubating the growth of scores more. The goal? To make Dubai a top three global city.
This all begs the question, what exactly makes the UAE such a prime destination for FDI? And what sets it apart from its GCC neighbors? Below are the top reasons why UAE tops the GCC for foreign investment.
Read more: Top Investments for UAE Expats in 2024
The Dubai International Airport (DXB) is one of the busiest in the world. DXB offers non-stop flights to over 270 destinations across 102 countries, according to Flight Connections.
That’s made Dubai a bustling hub, with airlines constantly adding new routes. DXB welcomed a record-breaking 87 million guests in 2023 and was the world’s busiest airport for the ninth consecutive year, far surpassing its GCC neighbors.
DXB along with Abu Dhabi International Airport (AUH) have advanced cargo capabilities and state-of-the-art facilities, ideal for commerce, trade, and tourism.
The UAE has two of the top 50 container ports globally – 61 percent of all cargo destined for the GCC arrives via the UAE’s seaports. Jebel Ali port is particularly impressive, boasting the world’s largest man-made harbor.
Its deep water berths and efficient logistics systems help it process millions of tonnage per year. These world class ports link business and commerce to every corner of the world.
The abovementioned ports are also directly linked to a growing number of sophisticated free zones. The zones offer all sorts of great benefits to businesses, like 100% foreign ownership, tax exemptions, and streamlined customs.
Plus many are industry-specific, offering tailored services to match specific business needs. They’re prime locations for networking and collaboration within and across sectors. You can check out the different zones here.
When it comes to starting a business, the UAE generally makes it less of a headache than its GCC neighbors. Its online portals have a ton of resources for navigating the investment environment and getting the right contact details. Even better, sites like the Basher platform allow investors to set up shop online.
It’s not surprising then that the UAE clocks in at number 16 on the World Bank’s latest Ease of Doing Business Rankings, higher than any other GCC country (the next highest, Bahrain, is 43). That’s because the UAE has simplified many core procedures that tend to stop businesses in their tracks (it ranks number 3 in dealing with construction permits and number 1 for getting electricity).
The UAE’s 9% corporate income tax rate is lower than every GCC country except Bahrain, and lower than most of the world. Even so, the UAE is offering tax relief programs for small businesses in order to encourage startups and younger businesses.
If you’re a UAE business with revenues below AED 3,000,000 ($816,904), your tax liabilities can be fully exempt. There’s also VAT refunds available, no income tax, no inheritance or withholding tax, and no restrictions on the repatriation of profits. In other words, it doesn’t matter how much money you earn on your personal investments, you’ll keep all the money.
Read more: Is The UAE No Longer Tax-Free?
Businesses that invest in the UAE can also count on being able to scale up. The country is offering a suite of lending initiatives to help smaller firms get credit. Dubai SME offers seed loans and loan guarantees. Other initiatives, like the Khalifa Fund offer interest-free loans, and the Mohammed bin Rashid Innovation Fund has government-backed credit guarantee schemes. The country’s commercial banks are similarly stocked with initiatives designed to support SME financing in UAE.
Read more: The UAE Lending Initiatives for SMES
Businesses in the UAE need not rely solely on global markets to thrive. The UAE has a rapidly growing domestic market with rising disposable income. The country’s per capita income of over $53,000 in 2022 according to the World Bank puts it among the world’s highest.
Zero income tax allows for discretionary spending. Plus, with the currency pegged to the US dollar, the exchange rate is predictable. That helps make imports relatively affordable for most of the population. This is all great news for businesses looking for a domestic customer base.
References:
The Ministry of Investment of the United Arab Emirates (UAE)
Corporate Tax in UAE
Disclamer:
Funding Souq Limited (DIFC) is regulated by DFSA. The post is for educational purposes only and the Firm does not directly or indirectly provide these services
