This article was written by Futura Digital co-founder Alexandra Kurdyumova and associate Evgenia Shikholeva.

The UAE has emerged as a top choice for businesses in recent years due to its competitive tax regime, robust support infrastructure and other benefits, offering conducive conditions for games development companies.

We, as lawyers, partner with many game development companies that already set up a business in the UAE or plan to do so. Each company is driven by its own reason to come here.

At the last Dubai Game Expo Summit powered by Pocket Gamer Connects, we met a lot of professionals willing to move their businesses to the Gulf Cooperation Council region (GCC), and UAE specifically.

What makes it so special here?

These are the top three reasons why game development companies are choosing the UAE.

1. The UAE offers support measures for IT businesses and hosts numerous tech hubs

Firstly, there are free zones specifically established to attract technological companies, including Dubai Internet City, DMCC, Abu Dhabi Global Market, and twofour54.

Secondly, the UAE is home to various hubs and funds and accelerators are available, such as AD Gaming on Yas Creative Hub, DMCC’s Technology Ecosystems, Dubai Technology Entrepreneur Centre, The Mohammed Bin Rashid Innovation Fund, or Abu Dhabi Investment Office. These entities may offer facilities, acceleration or financial support to tech companies.

Examples:

• AD Gaming aims at supporting (including financial support, etc.) the games industry's growth in Abu Dhabi, offering special subsidies to games businesses.
• The Dubai Technology Entrepreneur Centre (DTEC) provides funding and mentorship opportunities for startups in the technology sector. DTEC is open to technology startups in the IT software services area.
• DMCC’s Technology Ecosystems works with AI, blockchain, e-commerce, tech development. There are funding opportunities thanks to access to capital and support from global investors. Businesses can also collaborate and innovate with other ecosystem members.
• The Mohammed Bin Rashid Innovation Fund - an initiative by the Ministry of Finance of the UAE, offers financial and other support for innovation initiatives in two ways - Accelerator and Guarantee Scheme.

Supporting measures vary widely, as each business's journey is unique and possible measures depend on their stage of development.

2. The UAE offers favorable tax conditions.

In the UAE, a universal Corporate Income Tax is applied - 0% for income below 375,000 AED and 9% for income above that threshold. Tax is levied on income adjusted for deductible expenses.

Several classic tax benefits are available to UAE-resident corporations, including the IP-Box type tax benefit for Qualifying Free Zone Companies, a 0% tax rate for Free Zone companies engaging in certain activities, and participation exemption.

What is IP-Box?

IP-Box is a special tax regime that allows a 0% rate on IP profits if conditions are met. This tax benefit in the UAE aligns with OECD BEPS Action 5 recommendations.

To claim most Free Zone tax benefits, companies must demonstrate sufficient tax presence in the UAE, with the number of actual employees influencing the chances of proving such presence.

We have devised a simple tool that will help to get the gist of the IP-box principle. Please try it out with specific numbers through the link here.

We’ve also created a comprehensive explanation of how CIT and IP Box work, including IP Box formula and all the details. It is available to download here.

Moreover, in the UAE, there is no Personal Income Tax. This means that tax residents (individuals) do not pay tax on their salaries and other income.

Finally, the UAE offers an attractive 5% rate for value added tax with clear rules for taxation. The state is a member of a special VAT treaty between states of the Gulf Cooperation Council which simplifies taxation rules if you’re running your business across Qatar, KSA, Bahrain, Oman and Kuwait.

In summary, the UAE is one of the most favorable jurisdictions globally in terms of taxes, making it advantageous to operate from the UAE when targeting overseas markets.

3. The UAE offers numerous additional advantages, including:

• Impartiality in the origin of founders and investors, along with a transparent foreign direct investment procedure.
• Intellectual property regulations in line with global standards.
• Clear legal landscape, with public authorities regularly consulting industry opinions.
• No language barrier, as business and government representatives are fluent in English, and most laws are available in English.
• Legalisation of even the most specific game development activities, such as esports ecosystems or Offshore Gaming Operators.

But be cautious, as there are specific content regulations in the UAE. Pay attention to sexual content, violence, and other objectionable material. For instance, the game “Dead Island” was banned in the UAE due to its extreme depictions of violence and scantily-clad characters.

This topic is extensive and complex, requiring more than just a few sentences to explain adequately. The experts at Futura Digital conducted thorough research and compiled it into a guide titled 'You've Set Up a Company in the UAE - What's Next?'. This comprehensive guide walks you through the steps a business may encounter after incorporation in the UAE, covering everything from taxes to intellectual property.

To receive your complimentary copy, simply email us at ak@futura.ae or follow us on Instagram. We distribute the guide to every new follower.