“Habibi! Come to Dubai!” I am sure most of you would have encountered one such reel in your feed. It’s honestly a smart way to attract tourists by showcasing the opulence and the luxurious lifestyle the city has to offer. Be it the best of the best designer clothes, or lavish hotels, luxury cars, and high-end airlines—this place has it all. But this extravagant lifestyle is not the only thing that is making the ultra-rich gravitate towards it.
In recent times, Dubai has emerged as a global wealth nexus. UAE has a gross domestic product (GDP) of US$507.06 billion, according to the World Bank. This makes the UAE the second-largest economy in the Middle East, after Saudi Arabia. It is also one of the wealthiest countries in the region on a per capita basis (average family income is $4500 per month in Dubai).
As per the World’s Wealthiest Cities Report 2023, Dubai occupies the 20th position. The city is home to over 68 thousand millionaires, over 200 centimillionaires (with a net worth over $100 million), and 15 billionaires. Year after year, a growing number of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) from around the world are choosing to relocate and settle in Dubai. Unsurprisingly, Indians represent the largest demographic of expats in UAE, standing at around 30%. In fact, Dubai is sometimes referred to as the ‘fifth city of India’. So, why is it a favorite spot for HNIs to relocate to?
Well, the answer is the government’s several strategic initiatives to not just attract wealthy individuals but also make them stay and set up their businesses there. Some of the key reasons for HNIs to relocate are zero income tax for individuals, low business taxes, a business-friendly environment, and a strategic location at the crossroads of the East and the West.
Back in 2019, Abu Dhabi launched a program called the “Golden Card” to attract High Net Worth Individuals (HNWIs) to the region. The program grants a long-term residency visa to individuals such as investors, entrepreneurs, and specialized talents. The visa is valid for 10 years and can be renewed for family members as well. The program aims to attract and retain top talent in the region and boost the economy. One of the eligibility criteria to qualify as an investor is to deposit at least 10 million dirhams into an Emirati investment fund. Another option is to partner with an existing company with a share of at least 10 million dirhams or initiate a new company formation with at least 10 million dirhams in the capital. Similarly, there are various criteria that an individual or company must qualify for, and one is advised to read so from the official website.
When it comes to setting up businesses, the capital city- Abu Dhabi or the wealth hub of the Middle East- Dubai are the most sought-after destination for companies if they wish to expand their businesses in the Middle East.
Companies have the option of setting up their businesses either in the free zone or on the mainland.
Free zones in the UAE are special economic zones that offer regional benefits such as favorable business conditions, including tax exemptions, customs duty benefits, full ownership for foreign investors, simplified company setup procedures, and business-friendly regulations. These zones are designed to attract foreign investment and promote economic growth in specific industries or sectors as different free zones focus on specific industries (such as technology, media, finance, logistics), providing tailored support and regulations for those sectors. Also, Free zones often allow companies to transact in any currency without restrictions, and Companies can repatriate 100% of their profits and capital without restrictions.
Mainland in the UAE refers to the economic zone monitored by the Department of Economic Development. Companies operating in the mainland have easier access to the local UAE market, as there are no geographical limitations or restrictions on conducting business within the country. Unlike free zones that require businesses to operate within the designated area, mainland businesses can set up offices anywhere in the UAE. Mainland companies have more flexibility in conducting business within the UAE and internationally, without some of the restrictions that might apply in free zones. While some free zones have minimum capital requirements for setting up a business, the mainland does not have such stipulations.
Setting up a business in the mainland might take anywhere from a few weeks to a couple of months as this process involves various steps such as company registration, obtaining approvals, acquiring licenses, and more. Whereas establishing a business in a free zone can often be quicker, sometimes taking a few days to a couple of weeks due to streamlined procedures and dedicated services provided within the free zones.
One of the most compelling reasons that draw HNIs to the UAE is its absence of personal income tax. Individuals residing in the UAE are not subject to personal income tax on their earnings, allowing them to retain a significant portion of their wealth. This incentive has made the country immensely appealing to HNIs seeking to optimize their financial portfolios while enjoying a luxurious lifestyle.
Moreover, the UAE’s corporate tax regime contributes significantly to its allure as a tax haven. Companies operating within designated free zones benefit from a 0% corporate tax rate, making it an attractive destination for businesses aiming to minimize their tax liabilities. This advantage has led to the establishment of numerous multinational corporations and startups choosing the UAE as their base of operations, fostering a thriving business ecosystem.
Additionally, the absence of capital gains tax, inheritance tax, and wealth tax further cements the UAE’s status as a tax-efficient jurisdiction. This favorable tax landscape not only attracts individuals and companies seeking to preserve their wealth but also encourages entrepreneurship and investment across diverse sectors.
In the world of high finance, Abu Dhabi has quietly but confidently secured its place as a beacon for billionaires and Special Purpose Vehicles (SPVs), emerging as a magnet for wealth management. The richest man in crypto Changpeng “CZ” Zhao, India’s Adani family, hedge fund billionaire Ray Dalio, and Russian steel magnate Vladimir Lisin are among the dozens of high net worth individuals who’ve set up special purpose vehicles in Abu Dhabi’s international financial center this year.
Special Purpose Vehicle is a separate legal entity with its own assets, liabilities, and legal status. It is usually created for a specific purpose, often to isolate financial risk. For example, when a company undertakes a new, risky project, it can form an SPV to protect its finances and assets.
These entities, designed for specific investment purposes or asset securitization, find Abu Dhabi’s business-friendly environment and supportive regulatory framework highly conducive.
Today, more than 5,000 SPVs exist in the Abu Dhabi Global Market (ADGM) compared with just 46 in 2016, according to data compiled by M/HQ, a wealth advisory firm. ADGM is a financial free zone in Abu Dhabi, established to create a world-class financial services hub. It operates as an international financial center, offering a wide array of benefits to businesses looking to establish a presence in the region.
Despite the Israel-Hamas conflict, Dubai remains a good option for billionaires to invest in due to its higher returns on investment.
Moreover, the strategic location of the UAE is the cherry on top because of its proximity to rapidly growing markets in Asia and Africa, coupled with a robust infrastructure network, which positions the city as an ideal hub for wealth management and financial activities. Its proximity to major shipping routes has transformed it into a vital transshipment center, facilitating trade between continents. Its strategic position attracts foreign investment, as companies establish a presence to access markets in the Middle East, Africa, and Asia. This influx of investment fuels economic growth and diversification.
Oil refining has historically been a significant sector in the UAE’s economy, especially in the emirate of Abu Dhabi. The country possesses considerable oil reserves and has developed a robust oil and gas industry. However, the UAE has strategically diversified its economy over the years to reduce reliance on oil revenues.
Lately, Investments in various sectors, including technology, renewable energy, healthcare, and infrastructure, have not only bolstered economic growth but also provided unique investment opportunities for the world’s wealthy.
The government’s strategic initiatives have been instrumental in transforming Dubai into a financial powerhouse. The city offers remarkable wealth management solutions and an enticing quality of life, including infrastructure, education, healthcare, and entertainment options. Needless to say, tourism is a flourishing industry in the UAE. Along with the government’s efforts to liberalize society and enhance the ease of doing business, it has become an attractive destination for millionaires and high-net-worth individuals.
Dubai has taken the extravagant lifestyle to a whole new level because, in this utopia for the ultra-rich, money isn’t just a currency; it’s a way of life—the key to networking with the wealthiest influential individuals and making your craziest lavish fantasies come true.
Written by – Shambhavi Gupta
Edited by – Lucksh Mota