ABC, a household utensils and pressure cooker manufacturing company from India, was looking for guidance if they should incorporate a company and office in UAE. The company had a good team of International Business and was already doing export sales to different countries. They intend to open an office out of India with the purpose of having a strong presence globally.
UAE, being a smaller market and highly competitive, they were not sure if this was the right place to open an office or a store in UAE. To have more clarity, they asked for advice.
We undertook the following research:
- Interviewed the current utensils and kitchen appliances Traders in UAE to know about their experience working in the UAE
- Identified the latest trends in the utensils market in the UAE & MENA Region ∙ Gathered the last trade reports from the chamber of commerce about the export and import of Utensils in and out of the UAE
- Listed the countries to which the utensils are majorly exported
- Studied the relevant tax laws of the UAE
Taking into consideration the above details, I came up with the following findings:
- The orientation of setting up a company in UAE should be not to do business locally in UAE but it is more about doing business through UAE. UAE is a trading hub in the GCC and MENA region, and much procurement happens through UAE.
- With multi-currency bank accounts in UAE, it is easy and efficient to deal in dollars which is more suitable for trading in African and GCC countries.
- With the facility of a bounded Free zone in UAE, the goods can be stored and re exported without customs clearances
- There is a Free Trade Agreement between India and UAE, with which goods manufactured in India can be custom cleared in UAE without paying customs duty. Making it an opportunity to enter the local market.
- With no trade restriction, new products can be added as well by doing outsourced manufacturing in China and other regions where manufacturing costs are less
- As travelling to and from UAE is easy for Middle Eastern and African countries, business development activities can be carried out efficiently, and more trust can be created by physically meeting clients
- The bank in UAE are efficiently able to provide letters of credit for executing trade in the MENA region
- A lot of trade exhibitions are hosted in the UAE and MENA Region. The presence in UAE and overall presence in multiple countries can be valuable, and the company can be represented in a trustworthy way
- With no direct tax in UAE, it will be beneficial to do the trade from UAE to optimize tax planning.
Based on my above research and evaluation, I advised the client to have an office in UAE based on the following key considerations:
- Easy access to the Global hub
- Take benefit of efficient tax planning
- Ease of doing business with multi-currency revenue management
