United Arab Emirates: UK Triggers Brexit: Will EU's Loss Be Dubai's Gain?

Last Updated: 20 July 2017
Article by Crowe Horwath

Emerging markets are becoming increasingly attractive to 63 per cent of UK businesses, with 75 per cent eyeing Dubai as an overseas business location to expand into as the UK will no more be an attractive option after the Brexit, according to a latest study.

New research by Dubai Multi Commodities Centre (DMCC) said 42 per cent of UK businesses are more inclined to expand operations overseas since the Brexit vote and US election results.

"As the nation awaits the triggering of 'Article 50' on March 29, the uncertainty over Brexit is making UK businesses more open to overseas expansion, with 42 per cent of UK businesses confessing to having more appetite now than previously to expand their business presence overseas," according to the study released on Monday by a Dubai government entity on trade and enterprise.

Amongst the top reasons for eyeing overseas expansion include emerging markets becoming increasingly attractive (63 per cent), business need for global presence (47 per cent), availability and wealth of overseas talent (44 per cent), too much uncertainty in the markets and the UK no longer being an attractive option (36 per cent), it added.

Gautam Sashittal, chief executive officer, DMCC, said his centre can help UK businesses to establish their global footprint.

"While research reveals that the full impact of the UK's exit from the European Union is unlikely to be felt for another two years, British businesses are clearly identifying international opportunities to expand their operations and complement current business activities in new markets. DMCC can help these businesses establish their global footprint, trade with confidence and access new markets, in the same way that we have welcomed over 13,000 thriving companies since 2002," he said.

Out of the UK businesses open to expanding into overseas markets, a staggering 75 per cent say they are eyeing Dubai as a possible overseas location to expand into, the research said. And out of the UK businesses that are still undecided, it indicated that 40 per cent of the businesses say they would consider the Middle East as a territory to have presence in if they are open to overseas business expansion.

"The newly released research by DMCC showing that most UK businesses are eyeing Dubai for their overseas expansion post Brexit is, by a long shot, not surprising," Saad Maniar, senior partner at Crowe Horwath UAE, told Khaleej Times.

As the UK Prime Minister Theresa May prepares to trigger Article 50 at the end of March 2017, he said respondents in the study cited availability of tax free incentives and ease of paperwork formalities as some of the reasons that would make it more attractive for them to expand into overseas markets, factors which technically qualify Dubai as the best bet for foreign startup entities.

"Despite Brexit concerns weighing heavily on commerce, its business as usual for Dubai and the UK," Maniar said.

Referring to Dubai Customs statistics, he said Dubai-UK trade totalled Dh6.7 billion ($1.82 billion) in the first quarter of 2016, imports accounted for Dh4.6 billion in, exports reached at Dh393 million and re-exports hit Dh1.66 billion.

"Total trade for 2015 was Dh29.7 billion. We predict that the trade figure for this year would be higher," he said.

The UAE and UK have set a bilateral trade target of around £25 billion (Dh120 billion) by 2020 after successfully achieving £12 billion trade target in 2013 due to active role played by the UAE-UK Business Council.

"We are definitely seeing more interest in exporting and opening in Dubai. The UAE is the fourth-largest export market for the UK outside of Europe, so it is a natural next step for many companies looking to expand internationally," Emma Kirkman of the British Centres for Business in Dubai.

"Given the strong existing ties between the UAE and the UK, and the fact that many people are aware of Dubai as a tourism destination, it is often at the forefront of people's minds when looking at new markets," Kirkman said.

Uncertain future

Jeremy Cape, partner at international law firm Squire Patton Boggs, said the future of the UK when it leaves the European Union at the end of March 2019 is unclear.

"It's imperative that the UK government starts to provide some indication of the direction that the UK is likely to take. At the moment, it has not communicated that certain compromises will need to be made, or given any indication as to what those compromises might be. It would not be surprising if businesses were considering expanding their operations outside the UK when, for example, they do not know to what extent they will be able to hire non-British employees," he said.

And amongst the UK businesses that are still hesitant about overseas expansion, the DMCC research said 34 businesses say it is because their business is not applicable for an overseas market, however certain features could make it more attractive for them to consider overseas business expansion.

For 43 per cent of UK businesses, tax free incentives would make it more attractive to expand into overseas markets, and for 29 per cent, the ease at which they can arrange paperwork (trade licence, visas, office space) would help them consider an overseas expansion, according to the research.

"Although a favourable tax regime will never be a good reason in itself to invest in a particular jurisdiction, it would be naïve to conclude that a low-tax regime for both corporates and individuals has no effect on investment decisions. For that reason, it is no surprise to hear that more UK businesses are considering expanding operations in the UAE. Furthermore, the UAE's aggressive tax treaty programme is enabling it to position itself attractively as a holding company jurisdiction," Cape told Khaleej Times.

Some 80,000 plus international companies including 5,000 British firms have already been working in major free zones of the UAE and these numbers might go further up after the value-added tax (VAT) introduction. Moreover, the UAE has signed more than 103 agreements on the avoidance of double taxation, and more than 66 agreements to protect and promote investment with various countries. These deals provide a legal framework allowing tax authorities to cooperate without violating the sovereignty of other countries or the rights of tax payers.

"There are no direct taxes on corporate profits or personal income in the UAE, but the country will start implementing VAT in 2018," Maniar said.

Even with the looming introduction of VAT, the UAE continues to enjoy its place as the top-ranking country in the Middle East and North African region and is also ranked as one of the top 10 global improvers, according to the 'Doing Business 2017' global rankings released recently by the World Bank.

"The country has been implementing reforms to make doing business easier, and it continues to lead the region in terms of numbers of reforms implemented, with five reforms implemented over the past year," Maniar concluded.

Source: Khaleej Times > Business > Muzzafar Rizvi

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions