In reality, of course, very few business owners are weighing up the choice between Britain and the UAE. Instead, they are asking more and more – will the two markets work together?
For a British firm eyeing Middle East markets, establishing a UAE base can provide a local presence to reach new customers and business allies, all while not having to ‘abandon’ the home market in Britain. For other companies, a complete move might be a better move.
Or both, of course, with much to be clarified before the relocation will happen. This is considering the company structure, licence, visa requirements, banking and what will happen to the present UK business. MoveToUAE is one of the sources that investors reference in order to get an impression of how the puzzle pieces that make up this venture connect before having to choose.
Why the UAE Is on the Radar
Tax is clearly an aspect of this debate, but by no means the only one.
Corporate Tax rate The Corporation Tax rate in the United Arab Emirates (UAE) is 9% on taxable income over AED 375,000. In the UK, the main Corporation Tax rate is 25%, but smaller companies are entitled to the 19% small profits rate. So it can be a big difference, but it depends how your business is set up.
There are other features that might be equally significant.
The UAE has developed an ecosystem for international companies, from free zones and business centres to visa programmes and professional services, over the past couple of decades. It also has a large British and wider expat community which can make the country easier to settle into for founders moving from abroad.
It might also be said to be geography. But Dubai and Abu Dhabi have already become firmly established international portals for serving customers in the wider region. For a British company that wants to expand its activities in the Gulf, physical presence can often make it easier to nurture the relationships.
All of this still doesn’t make it financially sensible to relocate a company. A founder still needs to consider whether that is where the customers are, whether the employees will be located, and how contracts and operations remaining in the UK will be affected.
What Needs to Be Resolved First
Lets be honest the paperwork is probably not what we’re all looking forward to the most about this move, however it is usually where all your plans get sorted as it can make or break any move.
The investor would usually have to have the basic structure before applying for a licence or visa. The business activity being pursued is important as this can affect which licence is available and which jurisdiction you go to.
The basic requirements are usually:
| Requirement | Why It Matters |
| Passport and ID documents | Required for setting up a company, getting licenses and visa applications |
| Business activity and licence | Defines the scope of operations and location |
| Proof of funds | Required for specific investor/immigration applications |
| UAE bank account | Essential for performing business affairs |
| Office or flexi-desk | Required by many licence arrangements |
| UK company setup | You may require guidance on tax, contracts, employees, and your current operations |
And a very important note is that when talking about company formation, it is not necessarily the same as relocating.
A business licence may be relatively fast to obtain but obtaining a bank account and visas (if necessary) could take a longer time. As such, rushing to the last-minute probably isn’t going to be the best approach. Starting the process a few months in advance provides investors enough time to handle the more variable aspects.
Free Zone vs. Mainland?
This is a great first question for a new business in the UAE and the answer really depends on the type of company you want to establish.
Foreign investors have always had a soft spot for free zones. These areas allow a company full foreign ownership and are created with international companies in mind. A free zone might be an attractive option for a consultancy with international clients.
But there is a catch.
A free zone company may not always be able to operate to the same extent with mainland customers elsewhere in the country. Additional arrangements or approvals may be required to do business with mainland customers, depending on the activity.
That’s far less significant to some companies than others. The local business that’s only selling services to customers in Europe might not feel it at all. But a retailer or local business seeking to grow a client base across the UAE almost certainly will.
Local companies provide greater access to the domestic market and in most activities foreign investors are now free to own 100% of the company. However, there are exceptions in some strategically-regulated industries so one needs to check details before making any decisions.
So it makes sense to choose the one that suits the business model rather than the one that is more trendy.
The reasons why some firms will be better remaining in the UK
Yet there is a third side of the coin that gets left out of the relocation debate.
The UK is a huge commercial market and the firm you’ve worked hard to develop with customers, staff, suppliers and professional contacts may have taken years to build and be difficult and expensive to replace elsewhere.
Just shifting it all to another country with a lower headline tax rate doesn’t automatically work. There will be restructuring costs, changes to working arrangements and increased legal and accounting work. There could be practical reasons for retaining contracts, management and some of the business in Britain.
Therefore, some companies simply leave on that footing.
With a UAE subsidiary or regional branch opening in the Gulf might not mean losing a successful UK company, giving the company a presence on the ground and the opportunity to test the waters before making a bigger step.
UK Business Extending Into a New Market
That may be ultimately the more useful way to look at the trend.
British companies have been operating globally for decades, and there is value to this global out-sourcing for another country. Setting up shop in the UAE would allow you to get in front of GCC customers more quickly, while still operating UK works, customers and worksites that are based in the UK.
For some companies, that will eventually mean a complete move. For others, the UAE will stay as a regional office or second base.
There isn’t just one formula. The move has to sell commercially, not just give a good inkling on paper.
Thus, the most compelling reason to register a British company in the UAE is not necessarily the tax rate.