Abu Dhabi is the capital of the United Arab Emirates (UAE), which is the second largest Arab economy after Saudi Arabia. The UAE is also the 30th largest global economy, and has the world’s 18th highest GDP per capita (USD 44,200) rate.
A traditionally oil-rich nation, the UAE has diversified to future-proof its economy, and non-oil sectors now contribute to almost three-quarters (70%) of the nation’s gross domestic product (GDP).
The UAE population is made up largely of expatriates, with around 120,000 UK residents, and it housed a further one million UK visitors during 2014. Furthermore, some 5,000 British companies operate out of the UAE, including big names like BAE Systems, BP, Rolls Royce and Shell – so if you want your business to get in on the action, here’s all you need to know about exporting to Abu Dhabi.
The pros and cons of doing business in Abu Dhabi
In 2014, UK exported goods totalling £6.4 billion to the UAE, and the top five UK exports to the UAE (2013) were:
- power generating machinery and equipment
- road vehicles
- miscellaneous manufactures
- telecomms and sound recording and reproducing equipment
- professional and scientific instruments and apparatus
The strengths of the market include:
- Strategic geographical location – Dubai is regarded as a regional hub and commercial capital for the Middle East, north Africa and beyond
- UAE is the UK’s largest export market in the region
- Large expatriate population
- One of the most liberal trade regimes in the Gulf attracting capital from across the region
And the benefits for British companies doing business in Abu Dhabi include:
- Diverse economy continually growing and expanding
- Proximity to other Gulf markets – acts as an entry route to other Gulf Cooperation Council (GCC) countries
- Important market for re-export into other countries
- No taxation on personal income and capital gains
- Ranked 31st overall in World Bank’s ease of doing business report, but first in the Middle East and North Africa (MENA) region
- English is widely spoken and accepted as the language of business
On the downside, there are certain challenges faced by UK businesses exporting to Abu Dhabi, notably:
- Restrictions on company ownership by non-GCC nationals (a national sponsor must retain 51% ownership)
- Arabic will often be the first language and documentation will be in Arabic – although English is recognised as the language of business
- There can be confusion when federal laws, individual Emirate laws and free laws interact.
And don’t forget, if you’re going to do business in Abu Dhabi, you’ll need a reliable and cost effective conference call provider – here’s how to set up a conference call between the UK and Abu Dhabi.
Trading with Abu Dhabi
2014 saw the cost of exported goods from the UK the UAE hit £6.4 billion. A significant amount of these exports being re-exported, particularly to Iran and Saudi Arabia, as the UAE is an an important entry port for a £150 billion regional market
The top 10 exports from the UK to Abu Dhabi
- Power generating machinery and equipment
- Road vehicles
- Miscellaneous manufactures
- Telecomms, sound recording and reproducing equipment
- Professional and scientific instruments and apparatus
- General industrial material
- Electrical machinery and appliances
- Medicines and pharmaceuticals
- Non-metallic mineral manufactures
- Essential oils and perfume materials
Tax and customs in Abu Dhabi
The UAE is something of a tax haven, with no direct personal taxation levied on individual, no capital gains tax, and income tax is only applied in practice to foreign banks, gas and oil companies.
There is no VAT or sales tax in the UAE either, although its introduction is under discussion, but there are various municipal tax and indirect taxes levied through official fees.
Customs duties are generally levied on imported goods at a rate of 5%, but higher rates are applied on alcohol and tobacco. There are no duties or tariffs on exports.
Some categories of goods are exempt from any customs duty, including:
- Certain agricultural products
- Printed material
- Certain goods imported for industrial or manufacturing purposes.
Where goods are imported into a UAE free zone, customs duties are not payable.
Goods can only be imported into the UAE by a company that is registered in the UAE and the goods must be relevant to the licensed business activity of the business, and the following documents are required for the import and export of goods to and from the UAE:
- Invoices – initiated by supplier
- Certificate of Origin
- Bills of Lading /Airway Bill
Pornographic material, ivory/rhino horns, alcoholic beverages, firearms, and fireworks are strictly prohibited, as are goods manufactured in Israel, while all printed publications, films and tapes must be cleared by the Ministry of Information.