As trade volume exceeds $1.5billion between the UAE and Nigeria, the countries enter a new era of growth and prosperity.
This surge in trade can be attributed to several significant developments such as improved connectivity and easing of visa restrictions, economic reforms and regional integration. The expansion of direct flights between the UAE and Nigeria, the signing of strategic cooperation agreements are some essential factors accelerating bilateral business exchange.
Elaborating on the topic, we have with us today Lorenzo Jooris, CEO of Creative Zone, a Dubai based business advisory firm. Lorenzo demystified the process of setting up a business in the UAE, the current procedures and visa laws and what makes the UAE so attractive for Nigerian entrepreneurs, investors, and businessowners.
Q1. ) Thank you, Lorenzo, for doing this, ever since the pandemic started so much has changed. Can you tell us a little bit about the growing trade between the UAE and Nigeria? What does Dubai offer to the African investors and business owners looking to expand into the UAE?
A)Thank you for having me, always a pleasure. Yes, Dubai has always enjoyed a strong trading relationship with Nigeria thanks to the emirate’s proximity to the continent and its status as a preferred hub for African companies. The UAE sits at the crossroads of Africa, the Middle East, Asia, and Europe and continues to be one of the most sought after destinations for individuals looking to migrate to a safe and progressive country, widen their professional choices, diversify and expand their business or acquire an additional residency to a country that welcomes ex-pats from all across the Globe and offers limitless possibilities.
The country’s strategic location, favourable tax and fiscal structure and cosmopolitan outlook has attracted many African national, investors, and business owners to expand in Dubai.
The ease of setting up a business in Dubai is unparalleled. The country gives a three-year residency visa in the UAE. Moreover, company setup costs in the Free Zone and Mainland are affordable. Entrepreneurs can also benefit from other conveniences, such as more accessible construction permits, improved minority investor protection, ease of paying taxes and efficient export and import procedures.
Q2) How much does it cost to set up a company in the UAE?
The cost depends upon several factors such as the nature of the business activity, jurisdiction, number of visas, approval and certifications involved. But to give you a ballpark figure setting up a company in Dubai can start with as low as around 2000$ in Free Zones and around 5000$ for Mainland.
Q3) Can you tell us a little bit about the tax and fiscal structure of the UAE. How can foreign investors get a Tax Residency Certificate?
The tax structure in the UAE is very straightforward; on an individual level, there is no personal/Income tax. There are also no corporate taxes on the profit that your company makes. Since the UAE Dirham is pegged with the American dollar, the fiscal environment is also very stable. Apart from that, the UAE has a firm double tax treaty with many countries, including Nigeria. Meaning, if the company is based in the UAE and has made profits in another country, the taxes withheld by the country can be lowered due to the double tax avoidance treaty.
And as far as getting a Tax Residency Certificate is concerned, Yes, one can acquire that. To be qualified for tax exemption one needs to have a residency visa that will allow them to get an Emirates ID, proving a person resides in the country. Next, one has two option for setting up a business- Mainland and Free Zone, acquiring a license in any of these two jurisdictions will allow you to open bank accounts and conduct business overseas, and generate local invoices for international transactions.
Q4) How many visas can one get by setting up a company in Dubai?
Passports need to be submitted to start the visa process, then comes the medical and once the owner’s visa is processed they can sponsor their wives, parents, children even domestic help. The paperwork needs to be completed, which essentially means that the Birth certificate and Marriage certificate are attested by the Government here and the country where one was born/married, the same then has to be translated into Arabic. The process from start to end takes up about 36 days. However, the ex-pat doesn’t need to be in the country for the entire duration they only need to be physically present for 7-8 working days till their visa is stamped.
Q5) How can one open bank accounts in Dubai, as it can be often challenging.
Setting up a company is a very straightforward process; what is tricky is to open a bank account if you don’t know what exactly is to be done. We usually do this through our concierge, as they maintain relationships with various bankers in the country and advise which one will suit the company’s needs the best. This is done by acquiring the required documents before engaging with the banks and understanding the nature of the business, its overview, where is the funding coming from etc. So, the concierge team will have a confirmation before opening an account.
Q6) How beneficial is the setting up of big Holdings, Special Purpose Vehicles, trusts, etc.?
It is quite beneficial; the UAE has two regulated Free Zones- Dubai International Financial Center (DIFC) and Abu Dhabi Global Market (ADGM). These two Zones follow the English-welch common law, and if you are someone who is looking to structure a trust or SPV in these areas, then you can take advantage of the well-connected geographical location together with the tax benefits.
Q7) Finally, What is the difference between Mainland and Free Zone?
A Mainland license allows one to carry out business on the onshore; most Mainland companies have a 49% and 51% ownership arrangement, where a local representative owns the larger portion percentage. But for many professional services, the Government is allowing the expatriate to own 100% of the business. Free Zones are a kind of Special Economic Zone (SEZs) spread all across the UAE. There are more than 50 such zones, dedicated to specialised industries like Shipping, logistics, Media etc.