Major oil deposits were found in the capital of Emirates, Abu Dhabi by the end of 1950s. It was not a little discovery. Keep in mind that it was a huge deposit of oil. Their proven reserve is even more than that of all over Russia. But it was quite different in the case of Dubai. The authorities found that the reserves of oil were a lot smaller than the ones of their compatriots.<\/p>\n

It may shock you but oil accounts for just 1% of every 100 dollars generated in the economy of Dubai. You may have heard about its importance in diversifying the economy. It is something Dubai did to deal with addiction and dependence on oil.<\/p>\n

But what did Dubai do to achieve such a higher living standard and development as compared to its neighbors which are rich in oil? To attract professionals and multinationals from different parts of the world, they first started low tax policy.<\/p>\n

Tax on profits is almost none and they don\u2019t have income tax. Even purchases are not taxed. A tax on purchases will be launched soon according to a joint agreement of Persian Gulf Cooperation Council. But the rate will be just 5%, which is far less from over 18% in developed nations.<\/p>\n

Of course, there is no tax on gasoline in Dubai. But Dubai hasn\u2019t just followed a low tax strategy. Dubai has resorted to \u201cSpecial Economic Zones\u201d, an instrument more important as compared to taxes. They are quite different from the SEZs in other countries. These special zones have tax benefits with their own regulations to promote business activity.<\/p>\n

Companies can easily skip the strict legal systems influenced by Sharia Law, thanks to special rules. Dubai International Financial Center is one of the good examples of this model. It is like a state in another state. It has its separate judicial system chaired by an English-speaking British judge and also uses US Dollar instead of local currency.<\/p>\n

Even a bank can benefit from its tax advantages while doing business here. This is how Dubai attracted over 25 leading banks in the world. Apart from Special Economic Zones and low tax rates, Dubai has also got great immigration freedom. Hence, over 96% of its residents have their origin in foreign countries.<\/p>\n

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