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Abu Dhabi 2016 | EXECUTIVE GUIDE | REVIEW: DOING BUSINESS

A quick guide to what makes Abu Dhabi a great place to do business and the essentials any investor should take into consideration before taking the plunge.

The backdrop of Abu Dhabi makes for a colorful setting to do business, a unique place in the Gulf that hosts over 150 different nationalities, and welcomed $19.59 billion in FDI over 2014 according the Abu Dhabi's Statistics Center (SCAD). These figures give an idea of the global reach of the Emirate and its attraction to other labor and trade markets. The ease of doing business report, an annual assessment by the World Bank, has the UAE at 31st out of 189 economies worldwide, and first in the Arab world. This year will see a moderated, but still respectable, growth of 1.7%, down from 4.4% in 2015, as published by the IMF in April of this year.

By mid 2014, the population of Abu Dhabi was 2.6 million, of which 20% were nationals. The UAE is predominantly a Sunni Muslim state, although Shia Islam is freely practiced by 15% of Emiratis and the government operates as a constitutional monarchy.

Taxation

Having a business is not as black and white as it might first appear. Contrary to popular belief, there are taxation laws that are operational within the Emirates. Companies are taxed for oil and gas exploration and production, while there is a 20% income levied on foreign banks. There are no personal income taxes, yet. A regional VAT is being introduced to the GCC, which will hit stores in 2018 at a moderate 5%. There are taxes for foreign-owned companies, which must operate within free zones, but the locale of the free zone offers them a tax break for an agreed upon number of years, usually between 15 and 50, which can be renewed. There are also municipality (local government) fees, and varying rates on utilities that differ between expats and nationals due to subsidies.

Owning and running

Similar to developed economies, there are several models of business: Limited Liability Company (LLC), Public Joint Stock Company, Private Joint Stock Company, General Partnership, and Commandite Companies. What is often most attractive for the international business community is the free zone business model. Every Emirate has its own versions of free zones, offering complete foreign ownership. Companies that are based outside of free zones are subject to being 51% majority owned by a UAE national. There are some technicalities where GCC citizen ownership influences the percentage. All companies are at least required to be underwritten by a national.

Free zones have two modes: Free Zone Establishment (FZE) and Free Zone Company (FZC). The two differ in a few characteristics, but most easily definable through shareholder numeration; an FZE will have a sole shareholder, whereas an FZC will have between two and five.

Ultimately, these free zones companies are subject to specific laws by their respective free zone authority (FZA), such as ZonesCorp for industry, or twofour54 for the media sector, although these authorities can give assistance to companies in the form of providing facilities and equipment, or simply provide mentorship to new companies and help in visa application and so forth. Free zone entities must gain approval from their respective authorities and then apply for a trade license and registration. Companies may establish themselves wholly in the zone or simply set up a branch. Free zone applications tend to be expedited.

Abu Dhabi has six free zones: Abu Dhabi Airports Company, ZonesCorp, Khalifa Industrial Zone Abu Dhabi (Kizad), Masdar City, twofour54, and Abu Dhabi Ports, which also operates Kizad.

Business etiquette

Simply follow conduct as you would in any other professional environment and be smart, punctual, and respectful. As a very diverse society, there is no strict, uniform way to do business. It is important to note, as outlined in the helpful hints section, that you should wait to have a hand offered to you before extending yours to a female Emirati. This is not necessarily offensive, but is a social faux pas.