More and more Russian investors are drawn to the environment of business setup in Dubai as geopolitical tensions keep soaring against the backdrop of the Ukraine skirmish. High net worth individuals and business owners flock to Dubai to set up businesses and purchase properties in the city to obtain residence and park their assets as the West toughened economic sanctions on Russia. Business setup consultants in Dubai can help the Russians assess their company formation and residency options in the emirate.
This article is meant to offer valuable insights for Russians who are contemplating whether they should make a move to Dubai now. Here is a list of reasons for the recent influx of Russian investment into Dubai.
A Safe Haven to Dodge Western Sanctions
Since President Vladimir Putin’s assault in Ukraine, Russians find it hard to establish a business or invest their money outside their home country due to the western sanctions on the Russian central bank and the removal of some lenders from the Swift messaging network. The UAE has always been keen on enforcing the UN sanctions but has chosen to maintain a relatively neutral stance in the Ukraine conflict. The neutral stance on sanctions and its status as a popular tourism and investment hub has made the process of business setup in Dubai attractive for the Russians.
Russia’s Historical Trade Ties with the UAE
Russians have always been a strong trade partner of the UAE even before the recent uptick in investment happened. Both countries share a trade partnership of more than five decades. The total trade between Russia and the UAE reached USD 4 billion in 2021, which was USD 3.3 billion in 2020. The UAE reportedly hosts more than 4,000 Russian companies, which, according to business setup consultants in Dubai, is set to grow in the wake of the sanctions-prompted surge in investments.
Presence of a Favourable Tax Regime
Russian investors give serious consideration to the process of business setup in Dubai as they can enjoy the benefits of a low-taxation regime. The country doesn’t impose any tax on the personal income of individuals. However, from June 1st 2023, a 9% corporate tax will apply on business profits exceeding AED 375,000. Even then, the UAE corporate tax rate is one of the lowest tax rates in the Middle East. The other form of tax in the UAE is the Value Added Tax (VAT), which the country levies at a meagre rate of 5%. In comparison, the Russians are subjected to a personal income tax of 13% in their home country.
Residence Visa Options Based on Investments
Russian investors can easily obtain a residence visa by investing or setting up a business in Dubai. The UAE has recently overhauled the country’s residence options to attract more foreign investments into the country. By initiating the process of business setup in Dubai, the Russians can secure residence visas for themselves and their family members.
More Russians prefer to obtain a residence visa by investing in properties in Dubai. According to the latest news reports, the number of Russians buying property in Dubai has doubled in 2022 (from Jan to June) compared to the same period in 2021. Russians can obtain a Golden Visa, Investor Visa or a Dubai Retirement visa by making investments in the UAE.
Opportunity to Live in a Community of Russian Expatriates
As per reports, there are already an estimated 40,000 Russians living in the UAE. Apart from that, the country is home to around 60,000 Russian-speaking expatriates from former Soviet states. This means the Russian investors need not feel like aliens while living, working or setting up a new business in Dubai. Moreover, consulting with business setup consultants in Dubai can make the company formation process easier.
Ability to Completely Own Companies
Unlike in the old days, foreigners considering the process of business setup in Dubai have more options to completely own their companies. The best option is to start a company in any of the 40 plus free zones in the UAE that offers 100% ownership along with other benefits such as tax incentives, complete repatriation of profits & capital, modern infrastructure, an easy company formation process, import/export incentives etc. Foreign entrepreneurs can also enjoy 100% ownership of companies on the mainland if they obtain a trade license for any of the more than 1000 activities listed by the Department of Economic Development (DED). Consult with business setup consultants in Dubai to choose the right option.
How Russians can Start a Company in Dubai?
Russians can set up a new business in Dubai by following the steps set out by the relevant licensing authorities. The entrepreneurs need to first make the strategic decision of whether to open a mainland company or a free zone business. Once that decision is made, they must execute the following steps of company formation in Dubai:
- Choose a business activity
- Select a company name
- Decide the legal form of the company based on the number of shareholders
- Rent an office space or premise (for free zones the leasing option comes with the license package)
- Obtain approvals for special activities from ministries and relevant government departments (This mainly applies to mainland companies)
- Submit all the documents
- Apply for residence visas after collecting the trade license
Consult with Business Setup Consultants in Dubai
Russians seeking political stability are increasingly attracted to the landscape of business setup in Dubai on account of the reasons listed in this blog. However, the investors may need the assistance of business setup consultants in Dubai to navigate the legal requirements. Company formation specialists such as Jitendra Business Consultants (JBC) can provide the Russian investors with robust solutions related to choosing between the free zone & mainland, selecting the right business activity, preparing and submitting the documents, applying for UAE residence visas etc. When it comes to opening a company in Dubai, JBC offers the best business setup packages for foreign investors.