If you are an eCommerce company, should you consider relocating to Dubai? Well, with the UAE foreign ownership initiative and the many other benefits of doing business in Dubai, the answer is yes. Below are the major benefits of making Dubai the base of your eCommerce operations.
1. World-Class Logistics Facilities
Dubai has long been known for its world-class logistics facilities. Capping it all off, however, is its one-of-a-kind free zone explicitly dedicated to eCommerce.
Dubai CommerCity, as the free zone is called, is the first free zone in the Middle East, Africa, South Asia or MEASA region explicitly built for eCommerce activities. This 2.1-million square feet facility is an AED 2.7-billion joint venture between the Dubai Airport Freezone Authority and wasl Asset Management Group.
Dubai CommerCity provides all of the facilities an eCommerce company could want and need. It has office spaces of various sizes and types. Naturally, it has adjunct facilities like restaurants, cafes, conference rooms, exhibit spaces, and meeting halls for the people who occupy these offices.
More importantly, eCommerce platform technologies and consulting services are available on-site, as are end-to-end warehousing solutions. These warehousing services have flexible pay-as-you-go pricing schemes and seamlessly incorporate order management, customs clearance and last-mile delivery solutions.
What This Means for You
If you choose Dubai as your eCommerce company base of operations, you can get set up really quickly. You can go to Dubai CommerCity and have everything your eCommerce business needs all in one place, including the technologies, the platform and critical fulfilment solutions.
2. Strategic Location
Geographically speaking, Dubai is ideally located. Its unique location puts it within easy reach of up to three billion people in MEASA. This number increases to five billion if you include the people a Dubai company can reach worldwide within eight hours of flight time.
Since Dubai has first-rate transportation facilities and a superior international transport system, Dubai-based companies can fully take advantage of this proximity and convenient access to billions of people worldwide.
What This Means for You
If you choose Dubai as your base of operations, you can potentially reach up to five billion people within a mere eight hours of flight time. That’s five billion people you can potentially ship to in less than 24 hours.
3. UAE Foreign Ownership
The UAE is a long-time champion of foreign direct investments, as evinced by the UAE foreign ownership initiatives it has in place.
For instance, through its many free zones, the UAE encouraged foreign organisations to establish their businesses or set up a branch of operations in Dubai. In exchange, owners of free zone companies can own their companies 100%. In other words, they did not need to share company ownership with UAE citizens.
Soon, however, the UAE further sweetened the pot with the Foreign Direct Investment Law or Federal Decree-Law No. 19 of 2018. This opened the door to 100% foreign ownership not only in the free zones but also in the UAE mainland.
As expected, Federal Decree-Law No. 19 of 2018 was just the opening salvo. After that came the Federal Decree-Law No. 26 of 2020, which made 100% foreign ownership in mainland companies allowed by default unless the company engages in strategic-impact economic activities.
Specifically, Federal Decree-Law No. 26 of 2020 amended Federal Law No. 2 of 2015 on Commercial Companies (the Commercial Companies Act), which restricted foreign ownership of UAE mainland companies to a maximum of 49%.
The individual emirates of the UAE, as usual, were given autonomous discretion on how to implement the law and to determine which economic activities have strategic impact and thus were exempted from 100% foreign ownership.
Dubai embraced the law as expected of an international trading and logistics hub. It was quick to release a list of over a thousand economic activities where 100% foreign ownership in the Dubai mainland is allowed.
What This Means for You
You can establish your business in a free zone if you plan to sell outside the UAE. In this case, you can sell within your free zone, too, but nowhere else within the UAE. If you want to sell to anyone based anywhere in the UAE, you should set up in the mainland.
In either case, you won’t need to share ownership with a local partner as long as you are not engaged in what Dubai deems to be activities with strategic impact.
4. Incentives
Aside from 100% foreign ownership, there are other benefits to forming your eCommerce business in Dubai. Specifically, if you launch in the Dubai CommerCity, you will enjoy the following privileges:
- No corporate tax
- No income tax
- No import and export duties
- No currency restriction
- 100% repatriation of capital and profits allowed
What This Means for You
These incentives mean not only significant savings but also easy setup and maximum flexibility.
Ready to Set Up Your eCommerce Company in Dubai?
Setting up your company in Dubai starts with deciding on jurisdiction. If you choose the Dubai mainland, you will need a license from Dubai’s Department of Economic Development. If you select a free zone like the Dubai CommerCity, you will need a permit from the relevant free zone authority.
Next, identify your economic or business activities. They will determine the type of license you’ll need. For instance, if you are selling beauty supplements and cosmetics, you will need to obtain a commercial license.
After that, decide on your legal form (the limited liability company is a popular option), and choose a trade name (it should be unique and comply with the UAE’s naming conventions). Only then can you submit your application for a license at the relevant jurisdiction authority. After satisfying all the documentary requirements, you will be issued your business license.
Dubai: An Ideal eCommerce Base
An international eCommerce business has to consider many things, one of the most important of which is location. It has to be one with multiple transportation options, a variety of storage and distribution facilities, and a convenient global reach. Dubai has all these advantages, plus 100% foreign ownership and other economic incentives.
AUTHOR BIO
Naresh Manchanda is CEO at MBG Corporate Services, an international organization supporting clients across Asia, Europe and the Middle East and providing sustainable solutions and strategies that drive business transformation. Established in 2002 and headquartered in Singapore, MBG is a 600-strong member team that operates out of Europe, the Middle East and Asia, providing Legal, Risk, M&A, Tax, Strategy, Technology and Audit Services. Further, the company is one of the approved certifying partners for the National In-Country Value Program.
