Singapore vs Dubai – Where to Incorporate?

Singapore vs. Dubai – Where to Incorporate? This is a very common question among businessmen. Singapore and Dubai both have thriving economies. 

They have various geographic and economic focuses for their economies as a result of their dissimilar geographic positions. 

Singapore places more of an emphasis on Asian countries like China, Malaysia, and India. In the meantime, Dubai has built strong business ties with African and Middle Eastern nations.

Compared to Dubai, Singapore’s economy is more diversified, with international trade, banking and finance, IT, and shipping among its key industries. Dubai’s economy is mostly driven by the production of oil. 

But in recent years, it has been successful in lessening its reliance on oil and promoting the expansion of the tech, trade, and tourism sectors.

The general business culture in Singapore and Dubai differs from one another. Singapore has a more regulated and formal business culture that places a high value on timeliness, professionalism, and respect for authority. 

In Dubai, networking and establishing personal connections are given significant importance in the business environment.

SINGAPORE VS DUBAI – KNOW THE DIFFERENCES TO INCORPORATE

Legal Regulations

Modern Singaporean law is founded on the British “common law” legal system, reflecting the country’s history of British occupation. In addition, Singapore updates its laws frequently to keep up with the needs of its economy and society, particularly in the area of corporate rules and other commercial laws. 

For instance, Singapore company registration can take up to 3 days for foreigners and up to 1 day for locals. One of the finest in the world at protecting intellectual property, Singapore has become a top destination for digital and innovation startups. The nation is also renowned for its strict contract enforcement; according to a World Bank report, Singapore’s enforceability rate is close to 85%.

International and Sharia laws are combined to form Dubai’s legal framework. This has an impact on a number of its business laws. In several instances, Sharia’s rules discriminate against women. 

For instance, in order for some Muslim women to work or start a business, they must first obtain the approval of a male guardian, typically their father or husband. Hence, for female business owners, the incorporation process might take longer. In Dubai’s private sector, just 10% of companies are run by women.

The combination of Sharia and international law regulations may also be confusing to foreign workers, which can lead to complex and perplexing disagreements. Dubai has a 75% enforceability rate for contracts. Hence, it is harder to enforce a contract in Dubai than in Singapore.

Economic base

The main industries in Dubai’s economy are retail, tourism, and oil. Its primary emphasis is on the local oil industry.

The Dubai administration has worked hard recently to expand the economy into new sectors like commerce, tourism, and retail.

Due to its substantial reliance on oil, it is vulnerable to unstable circumstances that arise in the international oil market.

Comparatively, the Singaporean economy has a considerably wider basis. The core sectors of the Singaporean economy include trade, manufacturing, shipping, banking, and finance..

Requirements for Incorporation and Incorporation Process

The conditions for forming a business vary slightly between Singapore and Dubai.

Singapore mandates the presence of either a resident director for locally owned businesses or a nominee director for businesses with foreign owners who would be managing their operations from abroad. Nominated directors are not necessary to start a business in Dubai.

Yet, Dubai mandates that each business select a manager to oversee operations. Before the registration is accepted, the management must be on board.

A minimum paid-in capital of S$1 is required by Singapore. Dubai does not have any minimum capital requirements. Nevertheless, in reality, you would want paid-up capital of at least AED 300,000 (about S$110,000) to keep your credibility with the government and investors.

The ownership of the businesses is another significant difference. In all industries, Singapore permits 100 percent foreign ownership. In some industries, such those involving oil, mainland Dubai only permits a maximum of 49 percent foreign ownership of enterprises; the remaining 51 percent must be held by a local citizen or resident. 

Nonetheless, Dubai has now created free zones that permit 100 percent foreign ownership for all firm operations; however, these businesses are still subject to certain restrictions, such as a ban on doing business with entities registered in mainland Dubai, etc.

A relatively quick incorporation process that can be finished totally online is available in both Singapore and Dubai. The incorporation process in Dubai is more difficult, though, as the applicant must first obtain the necessary license (commercial, industrial, professional, etc.) before he can proceed. This could be confusing. In comparison to Singapore, Dubai requires a much lengthier set of paperwork for incorporation.

Refer to Dubai company registration and Singapore company formation for more information.  

The price of incorporation varies widely. Whereas the registration process in Singapore only costs 0.4% of the average income per capita, it costs 17.2% of that in Dubai (presuming that all your documentation is in place and that filling in a form is the only major step remaining).

Also, the applicant could require a translator while registering the business in Dubai because some paperwork and documents must be submitted in Arabic, which serves as the city’s official language. English is the official language in Singapore. Hence English submissions are required for all forms and papers.

Taxation

Tax Residency and Tax Rates

Singapore corporation tax residency is determined by the location of the company’s control and management rather than the location of registration. If a person is a Singaporean citizen, a permanent resident of Singapore, or a foreigner who spent 183 days or more in Singapore during the tax year, they are termed a Singapore tax resident.

Dubai does not have a local legal concept of tax residency until November 2022. Now that void has been filled. People will be regarded as tax residents if Dubai is where they typically live, where their primary place of business is, where their primary place of residence is, or if they have physically resided there for 183 days or more in a 12-month period. If a corporate entity has been established, constituted, or recognized in Dubai, with the exception of a Dubai branch registered by a foreign entity, it will be regarded as a Dubai tax resident.

Singapore has a simplified tax system in place, with businesses paying a flat rate of 17% tax, start-ups paying as little as 4% to 5% tax in some years, and goods and services paying a flat rate of 7% tax (GST). Dubai does not tax businesses on their profits, but it does levy a number of fees, taxes, and levies. Oil corporations are subject to a 55% tax, banks to a 20% tax, and goods—imported into Dubai or transported through its port—to a 10% tax. Dubai additionally charges fees for hotel rooms, enterprises, and automobiles in addition to exorbitant renewal fees for company licenses (an average of S$1,500).

One of the lowest tax rates in the world is in Singapore. Depending on their tax residency status, international employees in Singapore may be required to pay a particular amount of tax. The inhabitants and international employees of Dubai are not subject to taxes.

DTA network

A corporation conducting business with or from Singapore or Dubai won’t be subjected to double taxation because of the two countries’ vast networks of double tax treaties. Singapore has signed 102 double taxation agreements (DTAs) with other nations throughout the world, while Dubai has inked 92 DTAs. With Australia, Bahrain, Cambodia, Ecuador, or Hungary, Dubai does not have a DTA. 

Government Incentives

Both Singapore and Dubai have put in place a number of schemes to assist corporate growth. Mainland Dubai’s primary industries of focus are the tourism and high-tech digital sectors. The free trade zones in Dubai also offer certain financial incentives.

The industries in Singapore with the highest incentives include high-tech, finance, and business.

For instance, the NextGen FDI project has seen the launch of one of Dubai’s newest incentive schemes. These incentives for digital businesses include quicker business registration, smoother visa application processes, and more enticing conditions for commercial and residential leases.

In comparison to Dubai, Singapore now has 75 business incentive packages available. These initiatives provide financial awards, lowered tax rates, cost-free marketing support, and many other advantages.

Foreign ownership in companies

Singapore enables 100% foreign ownership in the companies registered here. No local partner needs to serve in the capacity of a shareholder. 

In Dubai, a foreigner can hold a maximum of 49% interest in enterprises founded outside the Free Trade Zone. A UAE citizen must control the remaining 51% of the shareholding. 

This can be problematic if a firm is thriving because the businessmen don’t truly know the person who owns the majority of the company.

Availability of a Skilled Workforce in Singapore vs Dubai

The attraction and retention of a talented workforce is a priority for both Dubai and Singapore. These cities are home to numerous highly educated and experienced professionals from all over the world, as well as a diverse and cosmopolitan populace.

Both give high-quality education a lot of consideration. High employment rates and a workforce with high skill levels are the result. The UAE was placed first in the Arab world and 21st overall in the IMD World Talent Ranking (WTR 2022), moving up two spots from the previous year. Singapore was ranked 12th.

The labor force in Singapore is more flexible and has higher expertise in the financial and technological industries. Due to English being the primary business language in Singapore, employees are fluent in it. 

Corporate Compliance in Dubai vs. Singapore

Both Dubai and Singapore place a high priority on corporate compliance and have created a variety of rules and legislation to make sure that companies conduct themselves in a fair, open, and ethical manner.

Singapore has created a model for effective business-government communication. With the help of a professional corporate services provider such as Relin Consultants, company incorporation and the associated compliance procedures can be completed online.

In contrast, the majority of corporate and governmental procedures in Dubai still call for personal visits. This causes delays and may raise your operating costs. On the Corruption Perception Index 2021, Dubai is ranked 20 positions lower than Singapore due to the huge increase in the risk of corruption.

Residency & Citizenship

The Golden Visa is Dubai’s most well-known immigration policy. This is a visa for a long-term stay with a validity of five to ten years. Talented persons from abroad who match the eligibility standards can apply for this visa. This visa allows holders and their families to settle down, start enterprises, and take advantage of extended residency privileges.

A Green Visa for investors is an additional choice. This visa is intended for investors setting up shop in Dubai or taking part in commercial endeavors there. Five years are allotted for the validity of the visa, which may be renewed. Also, the Green Visa holder may sponsor their first-degree relatives (up to three people). Compared to the qualification criteria are simpler as compared to those for a Golden visa.

If the firm is incorporated in Singapore, applicants can apply for an Employment pass on behalf of the new business. The pass will only be approved if the eligibility conditions and current government regulations are met. The applicant’s family will be able to move when the pass is authorized using the dependent pass visa.

FTZs in Singapore vs. Dubai

Many free trade zones can be found in both Singapore and Dubai, and they have had a big impact on the growth of both cities’ economies. FTZs provide a variety of advantages to businesses in both cities, such as tax savings, quicker customs procedures, access to infrastructure, and support services.

More than 30 free trade zones are available in Dubai for business owners and investors. Tax exemptions and 100% ownership for foreign investors are permitted in all Dubai FTZs. In a Dubai FTZ, two different kinds of businesses may be established:

• Free Zone Company – This kind of business has up to five stockholders. Such a firm can be incorporated by either natural or legal individuals.
• Free zone establishment – This kind has a single shareholder with restricted liability. Such a firm can be incorporated by either natural or legal individuals.

DMCC:  Dubai Multi Commodities Centre is the greatest free zone. For the eighth consecutive year, the DMCC recently took home the prize for Global Free Zone of the Year. This FTZ focuses on coffee, cryptocurrencies, and diamonds.

In addition, the DMCC is planning to transform Jumeirah Lakes Tower (JLT) into the first smart, sustainable area of its sort in the region, driven by a 5G network. One such development is the mixed-use Uptown Dubai District.

Nine free trade zones exist in Singapore. Singapore’s FTZs are diverse from one another in terms of opportunities available, requirements, and costs.

Reach out to us at Relin Consultants for more information.