UAE’s next phase of business reforms opens up major opportunities for foreign investors
The government plans its second phase of investor-friendly reforms to rejuvenate the UAE’s business environment and encourage foreign investment, following on from the introduction of 100% foreign ownership of UAE-based enterprises.
Dubai will initiate a second phase of major incentives and initiatives in September 2018 with the aim of encouraging investment, reducing the cost of doing business in the emirate, nourishing economic growth, and improving the emirate’s gross domestic product. Dr. Raed Safadi, chief economic advisor at the Department of Economic Development in Dubai, recently emphasised the huge importance of investment on the government’s agenda, and also stated that the positive effects of the first phase of reforms will already be evident upon the initiation of the second phase.
Phase one of reforms involved the reduction in municipality fees, the waiving of penalties and fines, and the implementation of a license renewal instalment programme. In addition, the UAE Cabinet outlined its decision to allow 100% foreign ownership of UAE-based enterprises, along with the introduction of 10-year residency visas for investors. These progressive initiatives are sure to inject the region’s jewellery industry with a crucial boost of confidence, as experts predict a subsequent acceleration in the economy’s growth.
Such significant business developments have come hot on the heels of the reverse charge mechanism, which was announced by the UAE Cabinet and took immediate effect on May 1st. The measure has been hailed as an extremely beneficial development for the wholesale jewellery trade at B2B level. Since its introduction, buyers and sellers have been able to both book VAT as being collected at the same time, thus cancelling any liability to pay any VAT. The VAT will be noted as a book entry only, as no payment or collection is required. On top of that, the Cabinet approved a tourist VAT refund scheme, which will also take effect in the latter quarter of the year. The scheme specifies that non-residents will be entitled to VAT refunds on purchases from participating retailers, provided that the goods and services are exempt from VAT.