The UAE economy is thriving and opportunities to do business in the country are many. The UAE’s currency, the dirham, which is pegged to the US dollar, is secure and freely convertible; there are no restrictions on profit transfer or capital repatriation; import duties are low (less than 4 per cent for virtually all goods and zero for items imported for use in free zones); labour costs are competitive; federal corporate tax and personal taxes are nil and numerous double taxation agreements and bilateral investment treaties are in place. In addition, the financial risk is minimal. These factors, combined with a strategic, accessible location for major regional markets, an excellent reliable infrastructure and an extremely pleasant, stable and safe working environment are key elements in attracting foreign investment.
The UAE is a contracting party to the General Agreement on Tariffs and Trade (GATT) since 1994 and a member of the World Trade Organization (WTO) since 1996. It is also a member of the Greater Arab Free-Trade Area (GAFTA) in which all Gulf Cooperation Council (GCC) states participate.
The UAE concluded Free Trade Agreements with Singapore and the AFTA bloc in 2008 and 2009 respectively, and is now cooperating with the GCC's negotiating team to conclude Free Trade Agreements with the EU, Japan, China, India, Pakistan, Turkey, Australia, Korea and the Mercosur bloc comprising Brazil, Argentina, Uruguay and Paraguay.
Log on to the UAE Ministry of Foreign Trade website for additional information.
The UAE has consistently scored very well in a wide range of economic and business-related indices. Most significantly, regulatory reforms have increased the UAE's overall global ranking in the World Bank's Doing Business Index from thirty-third in 2012, to twenty-sixth in 2013 and twenty-third in 2014. This index assessed 189 economies in 11 areas vital for facilitating business. In particular, the UAE scored highly in the trading across borders category (first in the MENA region and fourth in the world). Other high scores were achieved in the paying taxes category (first in the world); dealing with construction permits (fifth); obtaining electricity (fourth); and registering property (fourth). The UAE has also stressed that it is using the findings of the index to improve in areas where it did not score so highly.
The favourable nature of the UAE's tax regime was also borne out by the Paying Taxes 2014 study compiled by the World Bank, International Financial Corporation and PricewaterhouseCoopers, which reiterated that companies in the UAE enjoy the world's least demanding tax framework out of the 189 countries assessed in the report.
Economic freedom plays a major role in the UAE's success. The Index of Economic Freedom 2014 pointed out that the UAE has been a regional leader in economic freedom since it was first assessed in 1996, ranking the UAE's economy as the second freest of 15 countries in the Middle East and twenty-eighth worldwide among 185 countries, an overall score that is higher than the world and regional averages. The UAE's score was up 0.3 points on 2013, reflecting improvements in labour freedom, business freedom, and monetary freedom.
Significantly, the UAE took the regional lead in the WEF Global Competitiveness Index 2014–2015, moving five places up to twelfth position out of 144 countries. The report attributes this upgrading in ranking to the country's strong drive towards reforms and the underpinning of initiatives to enhance competitiveness by the country's successful bid to host World Expo 2020. According to the report, the UAE's institutional framework, infrastructure, macroeconomic stability and ICT use have all improved. Overall, the country's competitiveness reflects the high quality of its infrastructure, where it ranks an excellent third, as well as its highly efficient goods markets (third), strong macroeconomic environment (fifth) and some positive aspects of the country's institutions – such as strong public trust in politicians (third) and high government efficiency (fifth) – round out the list of competitive advantages.
Strong macroeconomic stability (seventh), a high level of business sophistication (sixteenth) and innovation (twenty-eighth), as well as little or no corruption, a low crime rate and an enabling tax regime enhance the country's competitive advantage.
There is no doubt that competitiveness in the UAE is greatly assisted by a very low level of corruption, as is indicated by the 2013 Corruption Perceptions Index produced by Transparency International. According to this index the UAE is the least corrupt country in the Middle East and North Africa (MENA) region, and the twenty-sixth least corrupt country in the world, out of 177 countries listed, one up on its rankings in 2012.
Perception and confidence also play a significant role in the UAE's high scores in the Swiss-based IMD World Competitiveness Yearbook 2014 (WCY), which measured the competitiveness of 60 economies on the basis of 329 criteria. The UAE came in eighth place in the overall ranking, just one place behind Canada. However, it scored a very high confidence rating and was ranked fourth globally and first in the Arab world in the context of its 'image abroad', i.e. competitiveness 'perceived' versus competitiveness 'measured'.
Underlining the progress that the UAE has made in achieving its strategic goal of becoming a sustainable knowledge-based economy with innovation at its core, the country was ranked first in the Arab world, and thirty-sixth globally (out of 143 countries) in the Global Innovation Index (GII) 2014 published by Cornell University, INSEAD and the World Intellectual Property Organisation. Acknowledging the role of innovation as a driver of economic growth and prosperity, the index focuses on a wide range of parameters, including the regulatory and business environment, ICT, infrastructure, ecological sustainability, knowledge, technology and creative outputs.
Considering its achievements in other benchmarking indices, it is not surprising that the UAE was ranked twenty-eighth worldwide and maintained its status as the most prosperous country in the Arab world in the 2013 Legatum Institute's Prosperity Index. The index, describing itself as a unique global enquiry into wealth and well-being, assessed 142 countries in eight distinct categories: economy, education, entrepreneurship and opportunity, governance, health, personal freedom, safety and security, and social capital. In thirteenth place worldwide, the UAE ranked particularly highly on the economy subindex, and at thirty-sixth, relatively high on entrepreneurship and opportunity.