Singapore Companies Looking to Expand into the UAE

Singapore enjoys excellent ties with the United Arab Emirates (UAE), signing a Joint Declaration on Comprehensive Partnership that covers trade and investment, defence and security and sustainable development in February 2019.

The Joint Declaration “represents a shared desire on both sides to elevate ties and deepen bilateral cooperation in mutually beneficial areas”, said the Singapore Ministry of Foreign Affairs (MFA).

Even before the signing, the UAE was Singapore’s 16th-largest trading partner globally as well as its largest trading partner in the Middle East, with bilateral trade at $18.1 billion.

It was also Singapore’s largest investment destination in the Middle East. As of 2017, Singapore’s stock investments in the UAE stood at $3 billion, while UAE investments in Singapore were worth $3.6 billion.

The UAE is rated as the easiest place to do business in the Middle East by the World Bank’s annual ‘Doing Business’ report , so it is no surprise that it is the primary location for Singapore companies looking to expand into the MENA region.

The UAE, and Dubai in particular, has a diverse and educated population, a world class infrastructure for telecommunications and transport, as well as a developed legal system.

Expansion into the UAE

Businesses undertaking international expansion face any number of challenges – be they financial, legal, administrative, cultural or geopolitical – and choosing the right structure in the right location is the key decision.

A new company formation in the UAE is no exception. There are multiple structures you can establish in the UAE, including mainland Onshore Companies (a Limited Liability Company (LLC) which requires a local sponsor), Free Zone Companies and Offshore Companies.

Each of these options has its own characteristics and requirements so identifying which structure would be suitable for your business can be difficult and time consuming. For example, there are over 45 Free Trade Zones in the UAE, each specialising in different industries.

The licensing authority in mainland is the Department of Economic Development of the respective emirate. In the Free Zones it is the relevant Free Zone Authority and in the case of Offshore jurisdictions, it is the respective Offshore Authority.

There are also the UAE’s foreign ownership rules to be considered, as well as tax (VAT), and import and export tariffs for products and services. Fortunately, the Sovereign team is here to help!

Key Considerations – LLC, Branch, Freezones

It is essential for any Singapore company looking to expand into the UAE, either through a Dubai or Abu Dhabi entity, to ask the following questions?

  • Does your business require you to set up a Subsidiary, Branch or Representative office?
  • Does your business require you be in a UAE Free Zone? If so, which Free Zone is appropriate for your business?
  • Does your business require you to set up a UAE Onshore Company to do business throughout all the Emirates and GCC countries?
  • Does your business require you to work with government bodies?
  • What licences does your business need to operate – professional, commercial, industrial or tourism?
  • Does your business require a physical office or other space?
  • What are the VISA options for employees?

Singapore Government Support available

The Singapore government can support companies with their global expansion plans, including the Middle East. Enterprise Singapore is a statutory board under the Ministry of Trade and Industry in Singapore, which was formed in 2018 to support Singapore small and medium enterprise (SME) development, upgrade capabilities, innovate transform, and internationalise.

The Market Readiness Assistance Grant (MRAG) assists Singapore-based SMEs to take business overseas by offering grants for up to 70% of qualifying expenses, capped at S$20,000 per company per fiscal year. This is limited to one activity – for example, market entry or participation in a trade fair – per application.

The Enterprise Development Grant (EDG) assists Singapore companies to grow and transform by supporting projects that upgrade a business, innovate or venture overseas, under three pillars: Core Capabilities, Innovation and Productivity, and Market Access.

It funds up to 70% of qualifying project costs – third party consultancy fees, software and equipment, and internal manpower costs.

Enterprise Singapore’s international co-innovation programmes also assists a company’s growth and internationalisation, by supporting projects that catalyse cross-border collaboration on technology development and co-innovation.

By working with an international counterpart, a Singapore company can co-innovate solutions, test-bed them and scale up into the region together. As part of its expanding global network, Enterprise Singapore has set up partnerships with the EUREKA Network, France, Germany and Shanghai.

Sovereign – your consultant between Singapore and the Middle East

The Sovereign Group has dedicated teams in Singapore, Dubai, Abu Dhabi, Saudi Arabia and Bahrain that are ready to assist companies to overcome the challenges of expanding their businesses overseas.

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