Dubai vs Singapore: Offshore Financial Centre Comparison
Dubai and Singapore are two popular offshore financial centres. Both offer business-friendly environments with minimal “red tape” for entrepreneurs who want to incorporate and run their businesses from these countries.
When choosing a country for offshore incorporation, it’s important to consider the process of registering a company, ease of doing business, corporate compliance and the availability of a trained workforce.
Let’s take a closer look at how Dubai and Singapore compare in these respective categories.
Ease of Doing Business in Dubai and Singapore
Dubai, which is part of the United Arab Emirates (UAE), ranks 11 out of 190 economies and has received a score of 81.28 out of 100 for ease of doing business, according to the World Bank.
Singapore ranks 2nd out of 190 economies and has received a score of 85.24 out of 100 for ease of doing business.
The World Bank takes several things into consideration when assigning an “ease of doing business” score, such as:
- Registering a business
- Trading across borders
- Getting electricity
- Paying taxes
- Resolving insolvency
- Securing credit
- Enforcing contracts
- Registering property
- Obtaining construction permits
- Protecting minority investors
Both Dubai (the UAE) and Singapore receive high rankings in all of these categories.
Dubai outranks Singapore in a few categories, including: dealing with construction permits, getting electricity, registering property and paying taxes.
Setting Up a Company in Dubai and Singapore
It's relatively easy for entrepreneurs to incorporate a business in either Singapore or Dubai.
In the UAE, there are just two steps in the procedure process for men and three steps for women. It takes 3.5 days for men to incorporate a business, while it takes women 4.5 days. The cost of setting up a business is the same for both genders: 22.8% of income per capita.
The UAE does not have a paid-in minimum capital requirement for establishing a limited liability company.
The procedure for setting up a business in UAE (including Dubai) is as follows:
WOMEN ONLY: Obtain Husband’s Approval to Leave the Marital Home
Under the Personal Status law, articles 71 and 72, a wife must seek her husband’s approval to leave the marital home. Wives risk losing their maintenance if they refuse to move to the marital home, leave the marital home, prevent the husband from entering the marital home, or refuse to travel with the husband without a legitimate excuse.
Under these laws, wives are also required to be obedient to their husbands, maintain the home and breastfeed the children unless there is an impediment.
Women may be considered disobedient if they decide to engage in activities without first getting consent from their husbands.
Reserve a Company Name, Apply for Registration at the DED, and Notarize MoA
In order to register an LLC and obtain a general trade license, the entrepreneur must complete an online application using the Instant License service. The application is made available by the Dubai Department of Economic Development.
Once the online application is complete, the entrepreneur will receive an establishment card reference number from the Ministry of Human Resources and Emiratisation. Additionally, the entrepreneur will automatically be registered for membership at the Dubai Chamber of Commerce and Industry.
The Instant License application will require the following steps:
- Choosing a legal form.
- Choosing business activities.
partners and identifying:
- Distribution of profits and losses among partners
- Partners’ shares in the Capital
a trade name by either:
- Reserving a new name
- Choosing an automatically generated name consisting of the trade name reservation number
- Enter the value of the capital in the company’s commercial register data.
- Optional: Issue an electronic memorandum of association.
- A payment voucher will be issued.
- Payment of all associated fees.
The Instant License application requires the following fees:
Department of Economic Development
- AED 15,000 for the general trading license issuing fee
- AED 2,000 for the foreign name containing numbers fee
- AED 600 for the commercial license fee
- AED 600 for the trade name reservation fee
- AED 350 for the trade name advertisement fee
- AED 100 for the preliminary approval fee
- AED 50 for the administrative service fee
- AED 30 for the Innovation Dirham fee
- AED 30 for the government cultural fee
- AED 10,000 for the market fee
- AED 1,000 for the public waste-related service fee
- AED 80 for the service improvement fees
Dubai Chamber of Commerce
- AED 1,200
Ministry of Economy
- AED 3,000
Local Trade License
- AED 100
Commercial License – Tejari
- AED 200
In total, entrepreneurs will have to pay AED 34,340 to register their business through the Instant License application platform.
The Instant License service allows entrepreneurs to sign an electronic memorandum of association (MoA) right along with the application. Entrepreneurs may skip this step, but they must provide a notarized MoA when renewing their licenses the following year.
Entrepreneurs are not required to have a company location or lease during their first year of operation. However, entrepreneurs must submit documentation proving that they have a lease contract and a location when renewing their licenses the following year.
Register Native Workers
The final step in the process is to register native workers with the Ministry of Human Resources and Emiratisation as well as the General Authority for Pension and Social Security.
As per the Ministerial decree No 1215/2005, native workers must be registered with these two agencies. The following documents will be required for this step:
- Copy of the employer’s passport
- Copy of the trading license
- 3 copies of the employment contract
- Proof that the worker is a citizen of the UAE
Setting Up a Company in Singapore
Singapore has a similar process for incorporating a business.
The cost to incorporate, according to the World Bank, is just 0.4% of income per capita. Setting up a business takes just two steps regardless of your gender. It can take as little as 1.5 days to get a business up and running.
Online Registration with ACRA
In Singapore, the Accounting and Corporate Regulatory Authority (ACRA) regulates businesses, public accountants, and corporate service providers.
Most of the steps involved in registering a business can be done online through Singapore’s Bizfile+ platform.
The steps involved in registering a business include:
- Company name application, which is sent online at bizfile.gov.sg (fee of SGD 15 is applied).
- If the name is available, the application may be approved within minutes. Otherwise, it may take 14 days to 2 months to have the application reviewed and/or approved by a separate agency.
- Once a name is approved, it will be reserved for 60 days.
- The application for incorporation process takes approximately 15 minutes to complete online, and will require a fee of GSD 300.
- The ACRA will issue a notice of incorporation through email.
Businesses will receive a free copy of their Business Profile through the mail after successfully filing the appropriate incorporation forms and paying the applicable fees.
The platform allows entrepreneurs to run a name check, register a business, obtain a tax number and apply for goods and services tax (GST). The entire incorporation process can be done online and in less than a day.
Through the Bizfile+ platform, businesses may also register with the Inland Revenue Authority of Singapore (IRAS) for GST if its annual turnover exceeds SGD 1 million.
Obtain Employee Compensation Insurance
Under Section 23(1) of the Work Injury Compensation Act (WICA), Chapter 354 of Singapore, all businesses must maintain an approved insurance policy against all liabilities that the company may incur in respect to any employee employed by the business.
Corporate Compliance in Dubai and Singapore
The legal framework in the UAE is a dual-acting system comprised mainly of Islamic shariah and some aspects of conventional law.
Companies in Dubai must:
- Appoint a manager through the memorandum of association, or through a separate management contract. Unless stated otherwise in the MoA, the manager will enjoy full powers of the administration, and his acts will be binding to the company.
- The MoA, which is a contract between the company’s shareholders, includes the registered office address, company activities, profit distribution within the company, shareholder and director details, and share capital.
- LLCs registered in Dubai must renew their business license and registration with local authorities.
- All companies must lodge an annual return that includes the address of the principal place of business; the names and addresses of all directors; and the details of shareholders and their shares.
- All companies must submit financial statements annually, and they must be prepared on the basis of IFRS/IAS. Financial statements should be filed with the Ministry of Commerce if the business is located outside of a free trade zone.
- Deregistering a company will take at least 6 months.
Corporate Compliance in Singapore
Maintaining corporate compliance in Singapore will require the following:
- The appointment of a resident director.
- Securing a physical address as a registered address.
- Registering to pay GST if the business earns more than SGD 1 million.
- The appointment of a company secretary within 6 months of registering the business.
- The appointment of an auditor within 3 months of incorporation unless the company has fewer than 50 employees, total assets are less than SGD 10 million or annual revenue is less than SGD 10 million.
filing of certain documents:
- Financial statement audit
- Annual tax return
- Financial statements
- ACRA filing of the company's annual return
- Chargeable income
Businesses are also required to maintain a hardcopy or digital register of controllers.
Availability of a Trained Workforce in Dubai and Singapore
According to an annual survey by the Dubai Statistics Centre, Dubai has 2.7 million workers. Employment for 2017 hit 2,778,000, with 53.6% of the workforce being female.
The UAE government has made education a top priority as part of its effort to promote economic growth outside of the hydrocarbons sector. Through its investments, the government has improved educational attainment rates and established a high-quality education system.
Singapore also makes education a priority, which ensures a highly skilled and trained workforce. Every Singaporean over the age of 25 receives SGD 500 for skills training of their choosing through the SkillsFuture program.
Singapore's unemployment rate is among the lowest in the world at about 2%, and the per-person gross domestic product is over 300% of the global average.
In the PISA, children in Singapore regularly score among the top students in the world. An educated youth leads to an educated, highly-skilled workforce in the future. Both Singapore and Dubai offer business-friendly environments that make it relatively easy to launch and run a business. It’s important to weigh the pros and cons of each destination before making a final decision on where to incorporate.