Due to the presence of important pillars of the corporate world, business, a comfortable but complicated term, stands firm. Every day, a large number of business organizations come into being, which serves as the first step in turning their thoughts and fantasies into reality. Finance is one of the indisputable pillars that propel an organization forward. In simple terms, we may refer to it as the fuel that propels an entity's engine of ideas into action. One of the burgeoning investment grounds is the United Arab Emirates, one of the rising nations among the GCC countries. The country has positioned itself as the podium of business establishment in the minds of global investors, entrepreneurs, and business professionals, with the Emirate of Abu Dhabi as its capital.
Understanding the importance of finance for corporate survival, the UAE has set its sights on becoming one of the world's financial centers. The rapid growth of business establishment in the area has aided the financial aspects in a variety of ways. Investors and entrepreneurs who work in the financial sector have a lot of options when it comes to starting a company in the UAE. If you have a financial business plan, the UAE is the place to put it into action.
The UAE's Finance Industry
The UAE Central Bank is the main financial regulatory authority, overseeing 23 local and 26 international banks. When it comes to branches, the initial count in 2018 was 761, but that number dropped to 733 in 2019, to improve the country's money flow. A reduction in branches, e-Banking services, and an increase in the number of ATMs (5,279 by the end of March 2019) is now the main reason for the reduction process. The UAE's finance and insurance industry accounts for ten percent of the country's GDP.
A solid framework has been developed to make financial assistance as simple as possible for business investors, owners, entrepreneurs, and the general public. Demand has been steadily increasing in recent years, making it a lucrative market for foreign investors. Now, let's take a look at the various options available within the finance sector.
Dubai Financial Market (DFM)
The DFM, which was founded in the year 2000 and is the first exchange in the UAE region, has merged its operations with Nasdaq Dubai to form a strong capital marketing hub. Real estate, banking, insurance, financial services, transportation, consumer staples, services, and telecommunications are among the nine industries covered by the DFM.
Types of Financial Companies in Dubai
When it comes to financial company formation in Dubai, the region allows investors to come forward and start any of the following:
1. Banks With a mix of technology, the banking industry in the UAE has undergone various transformations. Every step, from personal to corporate transactions, is now linked to digitalization, which is a new advantage that banks must shape themselves to accommodate. Both national and international banks' financial soundness has improved in the UAE.
2. Financial Investment Companies
The next choice that investors consider is investment firms in the United Arab Emirates. When it comes to investment company options, there are a few different types to choose from, including:
Each domain helps to strengthen a country's financial stability. You can choose the specific sector that interests you with the help of the above diversions. However, a financial investment company's core obligations include these duties.
Tasks of Financial Investment Companies
According to the UAE's Central Government's legal regulations, financial investment companies must meet the following criteria to be classified as identified institutions:
Opening investment accounts
Management of third-party portfolios (individuals and companies)
Prepare a report on economic feasibility studies.
Market the shares
Investment funds may be formed or managed.
Invest in corporate capital as well as syndicated lending.
To help take the finance industry to the next level, the government of the United Arab Emirates has created dedicated zones aimed at increasing the sector's growth potential. The Dubai International Finance Centre (DIFC), which opened in 2004, has grown to become a major financial hub for the Middle East and North Africa (MENA). Let's take a step forward and get a better understanding of it.
Dubai International Finance Centre (DIFC)
The DIFC, which is located on Sheikh Zayed Road, is an ideal investment destination with its jurisdiction over jobs, corporate security, and civic bodies. Entrepreneurs and professionals who want to start a business in the financial industry will use the grounds. There are 2,289 registered businesses in the ecosystem, with 24,000 employees.
DIFC's Business Sectors
Due to the lucrative benefits that the area offers, business owners and experts consider DIFC to be the ultimate investment ground:
No restrictions on foreign exchange
100% foreign ownership
Complete exemption on personal income
Full repatriation of capital invested and profits earned
Strict money laundering options
Independent Regulatory Framework
Hub and Spoke Business Model
Types of Business Entities in DIFC
If an investor wishes to operate on the DIFC grounds, he or she must choose one of the following business entities, according to the aforementioned rules and regulations:
Company Limited by Shares
Limited Liability Company
Branch of an Existing Foreign Company
Transferred Company from Another jurisdiction
Opportunities for Financial SMEs
The financial landscape does not only benefit multinational corporations; it also benefits small and medium businesses. The government has taken several steps to help small and medium-sized businesses diversify their business opportunities. There is a tremendous opportunity for financing SMEs with fin-tech start-ups, which is expected to grow by $125 million annually by 2022. If you have a business plan or work with financial institutions, now is the time to expand your business internationally and create a brand. In the year 2019, the United Arab Emirates has made another move, and that is FinTech, which is a combination of finance and technology.
The FinTech Move
Regardless of the industry or enterprise, technology has infiltrated every possible domain. The United Arab Emirates made a huge step forward in 2019 by combining technology and finance, giving birth to FinTech. With the help of technology, the DIFC has taken the necessary steps to leverage the finance sector and give it a competitive edge. The FinTech movement is built on three pillars:
Ground-Up Development
Global Connectivity
Development of Ecosystems
The FinTech hub has offered an outstanding infrastructure for bridging the gap, as well as a variety of business opportunities. Entrepreneurs and global investors are working to give their companies a competitive advantage. Fintech helps to repair for the finance sector, assisting it in integrating digitalization. This will represent a shift in the market's competitive landscape, including data digitization, creativity, and job creation. FinTech solutions will benefit the business world, particularly for newcomers to the market. At this point, forming a finance firm in the UAE region is a success because it offers many opportunities.
Abu Dhabi Fintech
The capital of the United Arab Emirates has made a strategic decision to include the most disruptive emerging and scaling FinTech talent in real-world challenges. Abu Dhabi Global Market is working with Unbound and KPMG to help corporate departments and FinTech companies collaborate more effectively. The following are the noted regions of difficulty:
Inclusion in the Financial System
Sup Tech and RegTech
Banking and financial services
Insurance
Digital Marketplaces
Asset and Wealth Management
Trust and Security
FinTech's integration with the corporate world will result in a slew of modifications. The following are a few of KPMG's top predictions:
The international market will be fueled by several emerging areas such as blockchain.
The banks will embark on a worldwide growth strategy.
The amount of money invested in the business world would skyrocket.
RegTech will receive significant funding.
Consistent participation and expansion of digital banking
Fintech companies and banks work closely together.
The finance industry has accelerated its growth and is now a bold platform with a comprehensive vision to become one of the most lucrative business sectors. Getting into the financial industry would open up a slew of opportunities for your company to expand, as well as a huge market to tap into.
Procedure to Start a Finance Business in Dubai
Now, before you take the first steps toward starting a finance company in Dubai, you should be aware that the UAE Company Law imposes certain requirements that must be followed. To begin the business formation process, any company must first receive a particular license from the Central Bank of the UAE, which is based in Abu Dhabi.
The presence of a local sponsor as required by the activity.
A financial body must have a minimum capital of 1 million AED to be established (approx. 300,000 USD)
A financial adviser must be hired by the management.
Audit procedures must be followed correctly.
The capital of financial investment firms would be at least 25 million Dirhams.
It should be observed that foreign firms with a financial background have full flexibility in operating their business operations in Dubai, given they have been operational in their home country for more than five years.
FUTURE STRATEGIC FINANCIAL PLAN
The United Arab Emirates' Ministry of Finance has taken a variety of initiatives to attract foreign investors and expand opportunities to launch a finance business in the UAE.
The UAE is a thriving finance destination that is preparing to turn into a global financial center. As an investor, you can comfortably pick the United Arab Emirates as your ultimate financial investment destination, which has proved to be a wise and lucrative decision. The financial sector of the economy will be at its peak by 2021.
BENEFITS
You will be able to take advantage of the following advantages if you plan to give your finance company a physical life.
TAX EXEMPTION: The thriving ground of the United Arab Emirates has removed income tax, which has proven to be a lucrative parameter for company owners. However, as a member of the Gulf Cooperation Council, the nation adopted VAT procedures on January 1, 2018, and it was required at a rate of 5%. You may not have to think about paying taxes if you start a company in the UAE.
Full Repatriation of Invested Capital and Profits: The second advantage is that if a condition occurs in which you would choose company liquidation, you will not be paying any extra fees for clearance. You have the option to refund the whole amount spent as well as any gains gained.
Different Locations: A geographic position is one of the reasons that contribute to a company's growth. The UAE offers a variety of market areas, from Mainland, Free Zones, and Offshore, each with its own set of advantages. Until you pick one at random, it will be more beneficial if you learn some experience and then choose one that will best represent your company.
A Gateway to the World: When it comes to business growth, the United Arab Emirates is one of the safest places to go. The country borders Oman to the east, Saudi Arabia to the south, Qatar to the west, and Iran to the north. It is situated at the southeast edge of the Arabian Peninsula. Setting up a financial firm in the UAE would allow you to gradually gain access to neighboring countries, which will be beneficial to your company.
Stable Network Connectivity: Network access is one of the most critical criteria for companies in the region, so the country has it.
A thriving business environment: The United Arab Emirates is home to people from over 200 different countries. If you're a newcomer, an existing organization, big, small, or medium-sized, Dubai's ground has a spot for you. Investing in Dubai is a wise decision because the area offers a diverse range of opportunities for all types of businesses.
Many of these advantages are crucial points that attract the interest of a global audience. There are a few key points that you, as an investor, should be mindful of before investing.
UAE BUSINESS INSIGHTS
The following are some of the milestones and market experiences linked to the UAE's financial ground:
According to the Global Financial Centres Index, Dubai, the UAE's capital, is ranked eighth in the world's top ten financial centers (GFCI).
In the first half of 2019, DIFC welcomed 250 new businesses and created 660 new jobs.
RAKBANK has teamed up with Waze, a mobile service.
Mashreq has launched a digital banking program for small businesses.
The financial center of the UAE, Abu Dhabi Global Market (ADGM), has launched an instant license renewal program.
The World Bank's country office in Abu Dhabi will be incorporated into the Abu Dhabi Global Market (ADGM)
According to the Ease of Doing Business Ranking, the UAE ranks 11th, suggesting that business owners can find stability and a friendly business environment in which to perform their operations.
As a result, you can see that the world's financial behemoths are holding an eye on the UAE's ground because it has a lot of potential in terms of financing growth. Establishing a financial base in the UAE is beneficial, but you must ensure that all steps of integration are done properly. If you have a financial idea but don't know where to proceed, it's a good idea to seek the advice of industry consultants who can appreciate your business model and direct you accordingly.
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