Dubai's new Virtual Company License and Nomad Visa show that the city is open for business
- New initiatives to create a more business-friendly environment are catching the attention of innovative foreign firms
- In addition to the quality of life and global salary arbitrage, the UAE is a great place for young professionals to accelerate their careers
Last year, the Government of Dubai launched the region's first Virtual Company License, enabling freelancers and business owners around the world to conduct business online without obtaining residency in the emirate. The license was rolled out as part of Dubai Virtual Commercial City program as has since attracted three major sectors to Dubai; the creative, tech, and service industries.
One year later, as the pandemic has shaken up our understanding of how businesses and economies should operate, many have begun taking a closer look at the Dubai's Virtual Company License.
Along with latest Dubai's Nomad visa, the unique features of the license increasingly complement the evolving nature of work in the 21st century.
With this in mind, Tahseen Consulting COO Wes Schwalje was invited to share his thoughts on the growing significance of Dubai's new visa and business licensing initiatives, with a particular focus on what the programs mean for UK-UAE relations.
Why might this VBL initiative be attractive to British companies in particular?
The virtual company license program is likely to be very interesting for British SMEs and startups in tech, creative economy, and services sectors which have the UK as an operating base due to its business friendly business environment and access to human capital but which transact globally.
The program will enable smaller businesses to more effectively utilize IP-based and business model optimization strategies to create tax efficiencies.
Could it allow UK companies to boost post-Brexit trade?
While initially attracting the attention of SMEs, startups, and freelancers with a narrative of progressivity, Dubai often is very successful in converting this initial interest into investment.
Programs like the Dubai Virtual Commercial City program signal Dubai is open for business.
It is a strategy that is similar to Startup in Estonia or Startup Amsterdam which is effective in mobilizing investment, trade, and world‒class human capital. Dubai’s Virtual Company License is very likely to boost UK trade with the UAE and other GGC countries as smaller British businesses begin to understand the opportunities in the MENA.
Could there be any drawbacks of British companies entering this city?
In a post-Brexit world, UK companies might establish foreign domiciled companies for European Union business to create tax efficiencies. In this way, Brexit may have the unintended consequence of domestic tax base erosion. Base erosion and profit shifting by multinationals has long been a focus of global government and Organization for Economic Cooperation and Development, but the future of work, rise of digital economies, and national competitiveness considerations complicate these negotiations.
Do you think that as Dubai becomes a better place to live and work (liberal and red tape reforms) that we might see an influx of Brits who have lost their jobs in the UK flock to the UAE?
The recent changes to personal status laws clarifies some of the uncertainties surrounding cohabitation, rule of law, and public behavior often sensationalized in the global press that keeps some people away.
Destigmatization around the edge cases and unwritten understandings concerning these social and economic rights is likely to build more confidence in the UAE as a destination to stay, work, and play.
At the same time, cost cutting in response to Covid is still very much impacting the job market as reflected in October data from the Purchasing Manager’s Index, and Dubai remains the 23rd most expensive city in the world to live according to Mercer. Declining costs of living associated with housing, in particular, combined with liberalization of cohabitation could be a strong driver of increased interest in relocating to the UAE in the short term. However, over the longer term, there is still a lot of cost cutting needed to address indirect taxes and reduce household inflation.
Why might Brits chose to work in the UAE rather than elsewhere if made redundant?
In addition to the quality of life and global salary arbitrage, the UAE is a great place for young professionals to accelerate their careers. Given the youthful demographics, employment in the UAE often involves taking on far more responsibility earlier in your career than comparable positions in other countries. One year of working in the UAE is equivalent to 3 to 5 years elsewhere due to the level of responsibility given very early to employees who prove themselves capable.
The pace of business is break neck which means that your work often is translated into results much faster than elsewhere.
This short time to impact is unique to the UAE and is really appealing to young workers who want to see immediate results from their efforts. The UAE also has a strong business culture of controlled experimentation which means that all ideas, no matter how farfetched, are on the table and have a high chance of seeing the light of day.