If you are an entrepreneur from India or UK, then the UAE is likely to take an important part in your upcoming operations.
Five percent of overseas business owners might relocate to the UAE or transfer their assets, with business owners from India and the UK showing keen interest. This was mentioned in a new report by HSBC that asked business chiefs, inside and outside the UAE, about their future business plans.
About 19% of those people looking to settle assets in the UAE mentioned in the HSBC survey are from India, and 9% are from the UK. The fact that CEPA (Comprehensive Economic Partnership Agreement) between UAE and India came into effect in May 2022 has played a huge role for Indian business owners.
Effects of the UAE’s 9% Corporate Tax
Also, business leaders have handled the UAE’s 9% corporate tax rate without any major difficulties. If a business operates in multiple markets and earns €750 million in revenue, it is required to pay higher taxes in accordance with Pillar 2.
“HSBC says that since the UAE’s business environment is positive, entrepreneurs worry less about taxes than entrepreneurs in other countries do. Tax problems are mentioned by only 15% as a reason for concern when leaving a business.”
Out of all the UAE-based entrepreneurs, 95% are confident about the growth in their wealth, mainly because of positive geopolitical conditions.
After Covid 19, a larger number of the world’s super-rich and successful business founders have decided to settle permanently in the UAE and register businesses in Dubai and other Emirates of the UAE. Information from DIFC and ADGM reveals that family offices and hedge funds are increasingly establishing themselves in the UAE as well. It is exactly why the number of large-scale transactions in Dubai and Abu Dhabi’s property market is increasing.
Insufficient Preparation for a Succession?
Still, the transfer of wealth presents potential challenges. More specifically, there appears to be a great deficiency in planning regarding the transfer of wealth to the future generations.
“Business owners are more likely to indicate that they will only transfer wealth upon their death,” said the HSBC study, “and that they have no intention of discussing it with their family whatsoever. “
“Although 61% have not transferred wealth, 22% report that they will only transfer wealth after their death, a percentage significantly above the global average.”
As numerous family-owned businesses based in the GCC region have discovered to their dismay, this may become a source of concern later.
Having plans in place for business succession and being transparent about the transition of wealth will be critical to long-term sustainability.
