UAE: More entrepreneurs from India, UK to shift operations - assets too

Dubai: Are you an entrepreneur based in India or the UK? Then, the chances are that the UAE will find a major role to play in their future operations.

While 5% of business owners from overseas would consider shifting their base to the UAE – or move their assets – those from India and the UK show ‘particular interest’. That’s according to a new report from HSBC, which tracked the sentiments of business chiefs, based in the UAE and outside, on their plans.

Of those looking to move assets to the UAE, 19% in the HSBC survey are from India and 9% from the UK. (When it comes to Indian business owners, the taking effect of CEPA (Comprehensive Economic Partnership Agreement) in May 2022 between UAE and India has been a major factor.)

Impact of UAE’s 9% corporate tax?

Also, business owners have also been quick to take the UAE’s 9% corporate tax rate in their stride. (Businesses with operations in multiple markets and with revenues of 750 million euros are taxed at a higher rate in line with Pillar 2 obligations.)

“With a positive business landscape, entrepreneurs in the UAE are less concerned about tax compared to the global average,” says the HSBC findings. “Only 15% cite tax implications as a concern for business continuation after exit.”

Of the entrepreneurs based in the UAE, a super-majority of 95% expect growth in their business wealth, with favourable geopolitical factors cited as a major reason for the optimism.

Post-Covid, more of the world’s super-rich and business founders have been making the UAE their permanent address. Family offices and hedge funds too have followed in their wake, with DIFC and ADGM both confirming a higher intake. All of which obviously is reflected in the number of high-value transactions lighting up the Dubai and Abu Dhabi property market.

Not sufficient succession planning?

But there are potential concerns too in the transfer of wealth that’s been happening. In specific terms, there seems to be an acute lack of preparation on how to pass on the wealth to future generations.

“Entrepreneurs are more likely to say they will only transfer wealth upon their passing,” finds the HSBC survey. “And that they don’t intend to discuss it with (their) family at all.

“While 61% have not transferred wealth, 22% say they will only transfer wealth after their death – a figure significantly higher than global average.”

Now, that could be a recipe for repercussions down the line, as multiple GCC-based family owned businesses have found to their detriment.

“Being prepared for business succession and clearly communicating wealth transitions will be key to long-term survival,” said Gemma Wild, Head of Global Collaboration – MENA at HSBC’s Global Private Banking operations.