Singapore Vs Dubai- Which is the best location to incorporate your company?

 To understand which is the preferred location for incorporating a business, a comparison is required. A quick comparison would provide us with a clear picture of where to incorporate.

 Key Comparisons between Singapore and Dubai

1. Ease of Doing Business- As per the World Bank, Ease of Doing Business Survey, Singapore is ranked number 2 for doing business. In comparison to this, Dubai ranks number 17 in the world for doing business.

2. Enforcing Legal Contracts- Singapore has a robust legal system that allows the seamless enforceability of contracts. The legal system in Singapore is derived from English common law. In contrast, Dubai follows the system of Sharia law. As per the World Bank Survey, Dubai has an enforceability percentage of 75.9% when compared to Singapore which is 84.5%. This percentage shows that it is relatively easier to enforce a contract in Singapore when compared to Dubai.

3. Foreign Ownership- Foreign ownership is another crucial factor for incorporating a company. In Singapore, there are no restrictions on foreign ownership in a company. A foreigner can own 100% shares in a company incorporated in Singapore. 

Dubai is a land of several free trade zones (FTZ). Some famous free trade zones include the Dubai Airport Free Zone (DAFZ) and Dubai International Financial Centre (DIFC). Along with FTZ in Dubai, there are several locations in mainland Dubai. While there are no restrictions on foreign ownership in FTZ, there are restrictions in mainland Dubai. A foreign shareholder can own only 49% of shares in a company incorporated in mainland Dubai. Entities incorporated in mainland Dubai must be controlled by a UAE national or UAE company. A UAE national or UAE company must have a 51% stake in a foreign company in mainland Dubai. In terms of foreign ownership, both Singapore and Dubai can be matched. However, foreign shareholders can have complete ownership only if they incorporate a company in Dubai FTZ.

4. Resident/Nominee Director- For incorporating a company in Singapore a resident/nominee director is required. In Dubai, there is no requirement for a nominee director to incorporate a company. 

5. Governance and Bureaucracy- ACRA (Accounting and Corporate Regulatory Authority) is the main authority for registering companies in Singapore. The company registration process in Singapore is completely digitized and a company can be incorporated in 2 days. The Department of Economic Development (DED) is the main authority for registering entities in Dubai. A company can be incorporated in Dubai within a period of 2 days.

6. Attractive Tax Benefits- Singapore offers competitive corporate tax rates of 17% for all companies. Tax rebates and exemption schemes are available for existing businesses to reduce costs and to support new start up companies in Singapore. 

Dubai is considered a tax haven with no corporate tax payable by a company. However, in January 2022, the government of Dubai announced the introduction of a federal corporate tax of 9% to be levied on all businesses from 01 June 2023. Corporate tax will be levied on companies that have paid up profits of AED 3,75,000 per annum. No corporate tax shall be levied on companies that have a paid-up profit lesser than the above amount per annum. 

In terms of corporate taxes, both countries can be considered beneficial. In Singapore, corporate tax is 17% which can be reduced through tax exemption schemes for start-ups. In comparison, to meet international standards, the government of Dubai has announced a minimum corporate tax of 9% effective from 01 June 2023.

7. Goods and Services Tax(GST)/ VAT (Value Added Tax)- In Singapore, GST at the rate of 7% is levied on businesses that have a taxable turnover of S$ 1 Million per annum. In Dubai, a VAT rate of 5% is charged on all goods and services. If the business turnover is more than AED 3,75,000 per annum, then VAT registration is mandatory. 

8. Opening a Corporate Bank Account- Opening a bank account for your business is required for carrying out transactions. In Singapore and Dubai, a bank account can be set up using online modes.

Takeaways

The comparison indicators above show that both Dubai and Singapore have their benefits for incorporation. If you are incorporating a company in a free trade zone, then choosing Dubai would be beneficial due to fewer restrictions. However, all other factors show that Singapore being a financial hub is a preferred location for incorporating a business.