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Epica Learn Series

Singapore vs. Dubai: Where to Incorporate an Offshore Company?

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Singapore Vs Dubai - Where to incorporate a Company? Where to register your Business?

Undoubtedly, Singapore is the go-to country of foreign business owners when incorporating their offshore companies. On the other side of the world, one country that is being seen as Singapore’s worthy opponent for foreign investments is Dubai. Let’s figure out the similarities and differences between these two jurisdictions in terms of company incorporation, and understand which one may be preferred.

The Similarities Between Singapore and Dubai

  • Prosperous Economy – Singapore and Dubai have prosperous economies.
  • Ease of Doing Business – Singapore and Dubai land in top places in the category of ease of doing business. The World Bank highlights the following factors when recognizing a country for the category:
    • Incorporating a Company
    • International Trading
    • Acquiring Electricity
    • Paying Taxes
    • Resolving Bankruptcy
    • Securing Financial Status
    • Imposing Contracts
    • Incorporating a Property
    • Acquiring Construction Licenses
    • Catering to Minority Shareholders
  • Easy Company Incorporation Processes – Singapore can incorporate a company in only 15 minutes, while Dubai can complete the process in 3.5 days for male business owners and 4.5 days for female business owners.
  • Capital Requirements – Singapore and Dubai have low minimum capital paid-up requirements: it is S$1 in Singapore and none in Dubai.
  • Highly Skilled Manpower – Singapore and Dubai prioritize high-quality education, which result in their high employment rates and highly skilled manpower.
  • Business-Friendly Climate – Singapore and Dubai have business-friendly climates, which make it easy to start and grow a business in the two countries.
  • Lifestyle – Singapore is home to many foreign businesses and tourist spots. Meanwhile, Dubai is famed for its modern architecture, great shopping experiences, and luxuries.

The Differences Between Singapore and Dubai

Singapore vs Dubai incorporation - Differences Between
  • Location – Singapore is in Southeast Asia, while Dubai is at the center of Middle East.
  • Economic Focus – Singapore has a diverse and comprehensive economy, which focuses on oil refining, shipping, international trade, airport hubs, banking, and IT. Singapore also focuses on dealing with other Asian nations, including India and China that have booming economies. Meanwhile, Dubai has tried to reduce its economy’s reliance on oil, but it is still heavily dependent on oil industry. Dubai is also dependent on Middle East nations and has excellent business relationships with African nations.
  • Corporate Tax – Singapore imposes a simplified tax structure, in which companies are taxed at 17%, start-ups can be taxed for as low as 4% to 5% in a certain year, and goods and services are taxed at 7% (GST). Meanwhile, companies in Dubai are not taxed on their profits, but the country imposes numerous charges, taxes, and levies. Oil companies pay 55% tax, banks pay 20% tax, and goods (whether imported in Dubai or passed through the Dubai port) are all charged with 10% tax. Dubai also imposes levies on hotel rooms, businesses, and cars, as well as high rates on business license renewals (an average of S$1,500).
  • Personal Income Tax – Singapore imposes one of the lowest taxes in the world. Singapore foreign workers have to pay a certain amount of tax depending on their tax residency status. Meanwhile, Dubai does not impose taxes on its residents and foreign workers.
  • Business Ownership – Singapore allows 100% foreign ownership of businesses in all sectors. Meanwhile, Dubai only allows a maximum of 49% foreign ownership of businesses, and the remaining 51% must be owned by a local resident or citizen. When Ras Al Khaima Free Trade Zone (RAK FTZ) was built, 100% foreign ownership was allowed, but foreign-owned companies incorporated here are not allowed to trade with other Dubai companies. In 2019, Dubai opened some business sectors in the local region for 100% ownership.
  • Local/Nominee Director vs. Manager Requirement – Singapore requires either a resident director for locally owned companies or a nominee director for foreign-owned companies whose foreign owners will be staying overseas. Meanwhile, Dubai requires the appointment of a manager for its companies.
  • Legal Systems – Singapore used to be a colony of the UK; hence, all state laws are based on the UK legal system. It is also worth mentioning that Singapore has a very straightforward approach in implementing laws. Meanwhile, Dubai has a combination of international and Sharia laws, which may confuse some foreign workers and result in unresolved disputes.
  • Business and Government Transactions – Singapore has efficient business and government transactions. Company incorporation, acquiring business permits, banking, and many others can all be processed with the help of professional firms and the government website. Meanwhile, most business and government processes in Dubai still require personal transactions and may take several days to complete.
  • Permanent Residency – Singapore has been offering permanent residency and citizenship to its foreign workers for a long time. Every year, over 10,000 foreign workers get permanent residency and citizenship in the country. Meanwhile, Dubai offers a residency program to its foreign workers, in which they can only purchase a property, start a business, and get a visa that is renewable for three years. Nevertheless, this program does not allow foreign workers to permanently settle in Dubai beyond their retirement or after selling their properties. In 2019, Dubai started offering the permanent residency program, but it is only limited to 2,500 expats who are professionals in the fields of medicine, engineering, science, and arts. The program is still new and has yet to be observed on how this will turn out.
  • Language – The official language in Singapore is English, while the official language in Dubai is Arabic.

What’s the Decision?

Incorporating an offshore company in Dubai makes sense if you are trading to and from the Middle Eastern or African region. Otherwise, all other factors claim that Singapore stands out as one of the most prominent finance and commerce hubs not just in Asia, but across the world.

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