Political Risk Assessment of the Business Environment of the United Arab Emirates

3818 Words 16 Pages
United Arab Emirates
Business Environment Shell

Analysis by
Trever Morley

1. Introduction and Disclaimer

In our group’s effort to match our enthusiasm for this class with our love for engineering marvels and innovative ideas, the country of choice for us was the United Arab Emirates. Thanks mostly to the recent oil boom and spikes in demand for petroleum based products, the UAE and most other Oil and Petroleum Exporting Countries are now finding themselves in a position of power and are noticing a lot more revenue flowing into their country. I think what mostly attracted our team to the UAE is the way that they have reinvested their profits into the country to bolster their tourism using state-of-the-art designs and
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This gives UAE the appearance of a risk-free environment, when in actuality it merely has less risk than its risk-inherent regional partners. Finally, there are two different business environments that exist within the UAE: Business within a Free Trade Zone, and business outside of a Free Trade Zone. Companies that are allowed to do business within one of the UAE’s Free Trade Zones receive many benefits that other companies are not lucky enough to enjoy. The main perks of the Free Trade Zones are that foreign companies are allowed to own 100% of the company without needing a joint venture with a UAE national. Also there are 100% tax exemptions on import and export taxes, allowed 100% repatriation of capital and profits, no personal income taxes, and no corporate taxes for 15 years with an option to renew for 15 more years. The fact that these two business environments exist make it extremely difficult to analyze the political risks of doing business in the UAE. One area of risk for the UAE has to do with joint venture rules. If a foreign entity tries to obtain ownership of a company or do business within the UAE, they must seek out a joint venture or a sponsorship with a UAE national entity that will then own no less than 51% of the company and hence will earn no less than 51% of the profits. Another area of risk is that there are many

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