UAE business environment encourages innovation and growth – News

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DUBAI – Abu Dhabi and Dubai share common goals and economic strategies to create a thriving business environment.

Recently, the Abu Dhabi Department of Economic Development (ADDED), after consulting with several other government entities, including the Abu Dhabi Chamber of Commerce and Industry, announced a reduction in the business establishment fee in the emirate of Abu Dhabi to AED 1,000 – a reduction of more than 90%. The license renewal fee has also been reduced to AED1,000. According to ADDED’s media announcement, the new fee includes six activities within the business license and will cover all fees of Abu Dhabi government entities such as ADDED, the Ministry of Municipalities and Transport, membership fees of the Abu Dhabi Chamber of Commerce, CoC (Certificate of Qualified ) Issuance fees, and fees required by Abu Dhabi regulated entities depending on the type of business. Some fees have been eliminated entirely, while others have been significantly reduced.

This is a very welcome move that will further support SMEs in managing costs during the pandemic-induced decline in revenue. It also supports the Abu Dhabi government’s efforts to create a more prosperous business environment for the private sector, especially micro, small and medium enterprises.

All GCC governments are trying to diversify their economies away from oil and boost business and industry in all non-oil sectors as improving their Doing Business rankings will help attract global businesses to set up operations here place. Saudi Arabia recently developed a new business district in Riyadh and in February issued an ultimatum to foreign companies to set up their regional headquarters there by 2024 or risk missing out on lucrative government contracts .

In this environment, Abu Dhabi’s lower set-up costs and streamlined renewal fees will strengthen the UAE’s strong position in the World Bank’s global ranking of countries on the ease of doing business. As of 2020, the UAE ranks 16th out of 190 countries in the comparison of business regulations and competitive advantages. Abu Dhabi’s current move to fixed fees will increase transparency and reduce administration for businesses, which will improve the UAE’s competitiveness relative to other GCC countries in attracting regional and international players.

Both Abu Dhabi and Dubai share a common goal and economic strategy to create a thriving business environment that encourages growth and innovation. Notably, the ease of doing business is associated with increased entrepreneurship and leads to better job opportunities, higher government taxes, and higher personal income.

In the absence of a broad corporate and personal income tax, some would argue that lowering fees would further reduce government revenue and could put pressure on the country’s fiscal deficit and eventual credit rating. However, we believe that the increase in economic activity in the country, backed by higher business confidence, will ultimately pay off more than the loss in license fee revenue.

Furthermore, some may see Abu Dhabi’s lower license fees as a threat to Dubai’s dominance of business headquarters in the region. Although Dubai may lose some business to Abu Dhabi, in the bigger picture, Abu Dhabi’s lower fees will put the UAE in a better position compared to other GCC countries and will have Helps to get a bigger pool of resources Investors/Businesses choose UAE over other GCC countries which will ultimately benefit Dubai and Abu Dhabi. We also note that Abu Dhabi is more likely to host businesses related to oil and gas, mining, quarrying and manufacturing, while Dubai is more suitable for businesses related to logistics, retail and tourism. As such, the two Emirates are likely to complement each other rather than compete directly.

Anita Yadav is the Chief Executive Officer of Global Credit Advisory Ltd. The views expressed are her own and do not reflect the policy of the newspaper.