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Interesting

United Arab Emirates – 43 years of success


10/12/2014

On December 2nd, the United Arab Emirates celebrated the 43rd anniversary of its foundation. This relatively young state conjures up images of Dubai for almost everybody, as this is the most well known “brand”, and many people believe that the two are one and the same thing. The reality, however, is that this is a union of 7 emirates (Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain), 6 of which merged in 1971, with the seventh, Ras al-Khaimah, joining during 1972.

The first thing most people think of in regard to the Emirates is incredible wealth, arising from oil and providing the local sheiks with their luxury lifestyles. The reality is not so straightforward, as it is only really Abu Dhabi which is rich in oil, while Dubai is not blessed with mineral wealth at all. The motor driving the Dubai economy is powered by tourism and services, together with the commercial trade which has developed here. At the same time, in addition to the tourist spectacles, Dubai has become one of the most important trading centres in the Middle East, linking countries such as China, India, Iraq, Iran and Pakistan. If we add together the populations of all these countries, we reach a figure of 3.5 billion, or roughly half of all the people in the world. This alone shows the huge significance of the place.

Most people know about the two largest emirates, Abu Dhabi and Dubai, but over the last few years others, such as Ras al-Khaimah, have remained very much in the background. Very few people know that this emirate is home to one of the world’s largest porcelain producers, RAK Ceramics, which exports porcelain and sanitary ware to more than 160 countries around the world. Thanks to the cheap raw materials and Asian workers, the products manufactured here can be extremely competitive on the world market.

We can also find very favourable possibilities in the field of company formation in this emirate, where a totally tax-free enterprise, which can even open an account with a local bank, can be formed relatively cheaply and quickly. It is undeniably an advantage for companies from the Emirates, that they do not sound “offshore.” The majority of companies here are established in one or other “Free Trade Zone”, and the tax-free status is a serious cultural tradition.

Personal income tax, corporate profit tax and VAT are all unheard of in the Emirates. Having said that, the state budget is generously bolstered by various duties. Each company is subject to a fixed annual licence fee which can not be avoided. A significant sum also accrues from the foreign workers employed here, each of whom has to contribute several hundred dollars a year to the Emirates’ coffers for the renewal of their work permits. Although the fee for each individual may seem trivial, when you calculate the total for each of the 3.5 million foreign workers paying….

Thanks to its regional position and economic policy enticing companies with tax incentives, the Emirates economic relations are continuing to thrive. The United Arab Emirates recently signed an agreement for the avoidance of double taxation with Hungary, thus offering even greater possibilities for businessmen from the two countries.

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