In the Know

"Over the past decade, Abu Dhabi has become one of the world’s fastest growing economies."

When business people come to Abu Dhabi, what are the key points that they need to understand?

Over the past decade, Abu Dhabi has become one of the world’s fastest growing economies. As a result of its oil and gas resources, Abu Dhabi is a significant global exporter of goods and services, linked to the world’s largest economies through trade. Abu Dhabi has shown remarkable growth and is highly instrumental with its progress. Presently, the Commercial Companies Laws do not specify any accounting standards framework for the preparation of the financial statements. The Central Bank of the UAE has made it mandatory for banks to prepare their accounts as per International Financial Reporting Standards (IFRS). Listed companies also prepare their accounts as per IFRS. In the absence of any specific standards framework in UAE, most of the practicing firms apply IFRS in the preparation of audited financial statements, and apply International Standards of Auditing in the conduct of audit of financial statements.

What are the major advantages of registering a company in Abu Dhabi?

According to major economic indicators, Abu Dhabi currently enjoys an enviable position; economic growth is accelerating, per capita income is one of the highest in the world, and Abu Dhabi’s citizens are wealthier and healthier than ever before. If one has a viable business plan and wants to tap into of one of the safest, most affluent, and fastest growing markets in the world, Abu Dhabi is the right place to establish presence. Whether you are planning to set up a new business in the Emirate or open a branch of a company based outside the country, the procedures are transparent and flexible. In most cases, it takes only a few days to complete the procedures if you fulfill all the requirements of the relevant authorities. Abu Dhabi is the economic center of the UAE and it is the capital. It fully expects to become a world showcase for planned growth in the future. Abu Dhabi is the largest Emirate in terms of land and the second largest in terms of population. It is well known for its significant oil and gas reserves, and is a regional banking and investment center. The government provides a broad economic base to include a diverse range of industrial and commercial activities. It is beginning to encourage commercial activities and not solely rely on its oil and gas reserves. The rate of investment very much includes utilities and infrastructure, which need foreign investment in areas such as water, power, gas, satellite communications, and computer hardware and software. It is very much interested in banking and other subsidy sectors, also promoting tourism. Abu Dhabi has also established a customs- and tax-free zone, with particular emphasis on industrial free zones. The Emirate is also a popular choice for foreign investment and business, being at a crucial junction for gas and oil transit through the Gulf. Abu Dhabi has recently placed particular efforts into economic diversity, focusing on the financial and banking industry as well as increasing tourism. This, combined with its traditionally open attitude to Western cultures, makes Abu Dhabi a highly attractive location for a large number of cosmopolitan international visitors. A key factor to understand is that Abu Dhabi is successful at business strategies, and you have to understand the behavior to make Abu Dhabi a business center for you. It may take a bit of time to understand, but we have a prize in Abu Dhabi. We get our clients to come to Abu Dhabi, we talk to them, and now we have decided to open a branch office here. We have been looking after Abu Dhabi clients for local interest, overseas interest, and now we have a commissioned place.

“Over the past decade, Abu Dhabi has become one of the world’s fastest growing economies.”

What draws international businesses to Abu Dhabi’s free zones?

With the intensified global trend toward trade liberalization, the Abu Dhabi government, which is keen to take the full advantage of various opportunities and challenges created by integration into the global economy, provides tremendous support for businesses established within the free zones. Abu Dhabi free zones attract international investors by providing a multitude of incentives, such as 100% foreign ownership of companies, eliminating the need for a local partner, a low-cost operational environment, full repatriation of capital and profits, and exemption from import, export, corporate, and personal taxes. One of the other major advantages that international businesses can benefit from is the utilities. Abu Dhabi has subsidized utilities—electricity costs as well as port facilities are subsidized. That is what makes Abu Dhabi an attractive place, especially when it comes to semi-skilled labor. The ability of Abu Dhabi to bring in skills from neighboring countries, and even attract the most skilled workers, is surpassed by none. This was made possible by changes in the labor laws.

Can you talk about how the tax system affects expatriates?

Most expatriates move here to work in Abu Dhabi. The tax benefits are well known and the standard of living—even with the heat—is very high, making it a great place to relocate to. Being an expatriate, no extra tax will be charged, which is what makes the Emirate so attractive. White-collar jobs make Abu Dhabi interesting for expatriates. Also, people generally pay taxes in the country they work in and there are treaties in this regard. If you are a resident, you would not be paying tax to your country when you are not domicile. However, in Abu Dhabi, if you are a resident here, you will not pay tax, which is a great advantage.

The silver and gold trade is intensely popular here. What are some of the customs issues people face?

Gold is popular in the UAE, being known as the Middle East region’s gold hub and the world’s largest re-exporter of gold. The gold souks here have a breathtaking choice of jewelry including silver, pearls, and diamonds. The gold is generally 18 carat and sometimes 22 or 24, while styles range from Indian to traditional Arab and modern Italian. The UAE, as a whole, is remarkably attractive in specific reference to the privileges it offers in free trade. There is a huge Indian market for gold, which is made into traditional ornaments. People from around the world especially travel here to buy gold ornaments to take back home. Abu Dhabi not only provides these facilities, but a variety of precious metals and stones. In Indian and Pakistani culture, they use these ornaments a lot, sometimes even for a dowry. The quality of gold is excellent here.

Where do you see the bulk of demand for your services in Abu Dhabi?

Merali’s aims at being widely recognized as a premier and independent accounting firm that serves leading national and global organizations and for this we ensure our work is conducted with professional skepticism. We strive for excellence in whatever we do. Merali’s has conducted several trainings for the UAE government and Abu Dhabi nationals in order to enhance their technical audit and accounting skills. Our firm specializes in service charge audits wherein community towers have been sold to a freehold, and the maintenance and communal part comes under review. The owners would like to feel comfortable with the idea that these expenses are accurate and correct. Therefore, it is good practice in Abu Dhabi that an independent company and not the auditors of the developer audit these expenses. We have been specializing in all the large developments, and audit all the service charges for the second-largest developer in Abu Dhabi. Having said that, we also looked after, historically, medium-sized and family businesses. We provide them with financial guidelines. We provide studies, corporate finance facilities, and insurance work. This is an area that, at the moment, is not well catered for when companies get into financial difficulties. We can help assist them to resolve their issues, debts, and insolvency issues, as well as look at their debts and help them figure out how they can clear them.