Oman to cut income tax on SMEs, offer investors long-term residency

Oman will reduce income tax for small and medium businesses for 2020 and 2021 and will offer long-term residency permits for foreign investors, state TV said on Tuesday.

The plans announced on state media are part of Oman’s Vision 2040 aimed at diversifying the economy away from oil, which makes up the bulk of state revenues.

Oman is one of the Gulf’s weakest economies and was hit hard by the coronavirus pandemic and low oil prices. The International Monetary Fund said last month its economy likely shrank 6.4% in 2020 and estimated it would make a modest recovery to 1.8% growth this year.

The measures also include income tax being reduced for companies in sectors aimed at economic diversification that will begin operating this year.

Oman will also cut rent at the Duqm Special Economic Zone and industrial areas until the end of 2022.

It said granting longer residencies for foreign investors would be done “in accordance with specific controls and conditions that will be announced later after their study is completed by the Council of Ministers, in addition to incentives related to the market.”

The cabinet also approved a long-term urban growth strategy that “is considered a key enabler for achieving Oman Vision 2040,” state TV said citing Oman’s ruler, Sultan Haitham bin Tariq al-Said.

Source : Gulfnews

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How Tax Groups Can Conduct VAT Deregistration in UAE

Two or more related taxable persons conducting businesses are allowed to form a tax group and perform Vat registration in the UAE. Two or more related parties register for VAT as a tax group as the supplies between the members of a VAT Group are considered as out of the scope of VAT. However, there are situations where a tax group is required to conduct VAT deregistration in the UAE.

For instance, if the tax group no longer qualifies for the requirements for VAT registration, they should deregister. Tax groups registered with the Federal Tax Authority (FTA) can consult with accredited tax agents in Dubai to perform VAT deregistration. In this article, we enlist the process and various reasons for VAT deregistration that tax groups should be aware of.

Various Scenarios for Deregistering a Tax Group in the UAE?

The primary reasons for deregistering a tax group and individual VAT deregistration are the same. A tax group can be deregistered if the group companies are no longer making any taxable supplies. Tax groups can deregister if the group companies make taxable supplies but the value in the preceding 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500). Deregistration is also applicable if the group companies make taxable supplies, but the value in the previous 12 months was less than the Mandatory Registration Threshold (AED 375,000).

Apart from the common reasons, the following are the various scenarios in which the tax groups become eligible for deregistration.

1. The entity registered as tax groups no longer meet the requirements to be considered as a tax group

A tax group is eligible for VAT registration if each member entity has a place of establishment in the UAE; the relevant members of the group are related parties, and one or more persons conducting the business should control the other members. If the tax group no longer meets these requirements, then it should mandatorily apply for VAT deregistration in the UAE.

2. The registered entity no longer has any association with the group

In a tax group, the persons should be related parties where one of them can control others either by Law or through the acquisition of shares or voting rights. If the tax group entities no longer have any such association through economic, financial or regulatory practices, the tax group should be deregistered.

3. FTA Initiates a tax group deregistration on its own capacity

FTA can deregister a tax group if the authority has reason enough to believe that the tax group is involved in tax evasion, fraud or any non-compliance that would impact the integrity of UAE’s tax system.

The Process of Deregistering a Tax Group

The process of deregistration of a tax group must be initiated through FTA’s portal in which the VAT registration was made previously. The option for deregistration appears on the dashboard against the Tax Group registration space. The reason for deregistering the tax group and the date from which deregistration is required must be specified.

Along with the application for tax group deregistration, all the relevant documents and information must be submitted. The applicants then need to wait for FTA’s approval for the deregistration application. The FTA will send the result of the application after the authority completes the review. Accredited tax agents in Dubai will perform the entire process of deregistration on behalf of the member entities.

Penalty for Failing to Apply for VAT Deregistration

A tax group should submit the application for VAT deregistration within 20 days of becoming eligible for deregistration. The failure of the VAT registrant to submit a deregistration application would attract an administrative penalty of AED 10,000. Hire the best tax agents in Dubai to avoid such hefty penalties.

How can VAT Consultants in Dubai Help Businesses?

The UAE allows two or more related taxable entities to form a tax group and register for VAT as a single group. There are circumstances where the entities of a tax group will be required to deregister. An entity that fails to deregister within 20 days of becoming eligible for deregistration is liable to pay penalties to the FTA. Tax group entities can avoid such penalties by hiring the best VAT consultants in Dubai, UAE.

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Businesses told to comply with anti-money laundering steps

FOUR CATEGORIES OF BUSINESSES MUST COMPLETE FORMALITIES BY MARCH 31

The UAE’s Ministry of Economy has extended the grace period until March 31 for certain business categories to be in full compliance with anti-money laundering and prevention of terrorism financing.

Businesses that fail to do so will face fines range from Dh50,000 to up to Dhl million and can be raised to Dh5 mil-lion based on the provisions of the law and according to the assessment of the Supreme Committee for Combating Money Laundering, and Financing of Terrorism and Illegal Organizations.

 This applies to activities in four categories — brokers and real estate agents, dealers of precious metals and gemstones, auditors, and corporate service providers.

The ministry issued a list of 26 violations. Three actions will invite fines of Dhl million each.

These are for dealing with fake banks in all ways; opening or maintaining bank ac-counts with fake names or numbers without the names of their canters; and failure to take measures related to clients listed on international or domestic sanctions lists, prior to establishing or continuing a business relationship.

Steps to be taken

These businesses must first register with the Financial Intelligence Unit (goAML) and on the Committee for Commodities Subject to Import and Ex-port Control system (Automatic Reporting System for Sanctions Lists).

 Following the registrations, they should adopt other measures related to the two systems in accordance with the provisions of the Decree-law, its implementing regulations and the relevant decisions.

“We call on all concerned companies to establish internal policies, procedures and controls to avoid money laundering risks in accordance with the measure set forth by the executive regulations of the law, which can be found on the official website of the Ministry of Economy,” Said Safeya Al Safi director of the Anti-Money Laundering Department, Ministry of Economy.

The Ministry called on the companies practicing the four categories of activities to enhance their awareness and knowledge on the risks of money laundering and keep pace with the government’s efforts in this regard.

Registration extended

The Ministry clarified that the grace period for registering on the two systems has been extended until March 31, 2021, and that the companies that fail to do so before this date will be subject to penalties, including suspension of the license and closure of the facility.

 In addition, it underlined the significance of completing the post-registration procedures and measures to avoid the fines set by the Cabinet Resolution No. 16 of 2021.

AI Sail said: “The Department is committed to answering the inquiries of all stakeholders and helping the targeted establishments comply with the requirements of the law, via the Ministry’s call center number 800-1222.

Al Safi explained that the issuance of the violations and fines list supports the UAE’s efforts in combating money laundering crimes and financing of terrorism. It enhances the business sec-tor’s and non-financial professions’ compliance levels as de-fined by the provisions of the law and its implementing regulations, thereby contributing to raising the national economy’s ability to achieve healthy and sustainable growth. Furthermore, the measure reflects the UAE’s keenness, under the guidance of its wise leadership, to continuously develop Its economic legislation to enhance its competitiveness as a safe and stable global business destination. Al Safi also affirmed the Ministry of Economy’s commitment to strengthening partnerships with private sector companies and establishments that belong to the designated non-financial business and professions sector.

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Understanding the United Arab Emirates’ tax position

Occupying a strategic location between Asia, Europe and Africa, the United Arab Emirates (UAE) ranks first among the countries most attractive to foreign direct investment in the Middle East (ME) and Africa region. If you are a new reader of the Deloitte Middle East Doing Business guides series, you will find this document a useful companion and supportive guide throughout your journey in the UAE business terrain. 

If you have followed our reports for a while now, you will appreciate the updates, highlighting the most important changes, presented in the familiar format.

This Taxation and investment guide is a first stop for investors wishing to gain a working perspective on the operating conditions and investment climate. The areas covered in this guide are listed below:  

• About the United Arab Emirates
• Legal and regulatory framework
  • Entering the market
  • Mainland and Free Zone establishments
  • High-level entity set-up comparison in mainland vs. Free Zones
  • Offshore establishments and formation procedures and registration
• Taxation in the United Arab Emirates
  • Taxation of oil and gas companies
  • Taxation of branches of foreign banks
  • Withholding taxes
  • Capital gains and tax incentives
  • Transfer Pricing and country-by-country reporting
  • Stamp duty
  • Real estate transfer fees and municipal charges
  • Economic substance rules
  • Value Added Tax
  • Excise Tax
  • Customs duty
  • Personal Taxation
• Immigration and labor landscape
  • Work authorization
  • Exit requirements/de-registrations
  • Processing challenges for work permits
  • Inter-emirate assignments and employer compliance
  • Emiratization
  • Business visitors
  • Virtual work program and labor laws
• United Arab Emirates double tax treaty network

Source :  Deloitte

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A peculiar situation was noticed when a Person (an individual) was highlighted a portion of the Director’s fee he received in 2018 for the board meetings that he attended in 2017, was not accounted for VAT.

The question was whether such services should be subject to VAT or is the amount received an ‘Out of scope’ transaction since the services were rendered in 2017 (i.e. before the introduction of VAT).

It is important to note that the fee that was paid to the Director was not fixed when he provided the services in 2017, but the amount was finalized in the AGM held in 2018 and paid thereafter.  This means that the Director provided his services in 2017 but the amount of fee to be billed to the Company was only determined in 2018 and therefore, he could neither issue an invoice nor receive any advance.

This is a peculiar situation because such instances require an analysis of the ‘transitional’ provisions under Article 80 (3) of the UAE VAT law that covers situations where the contract to provide a service is entered into before 1st Jan 2018, but the service is completed post 1st January 2018.

It is also important to look at the Public Clarification on ‘place of supply for independent directors’ that clarified that when the director’s fee is not determined at the time of provision of services but later in the AGM, the time of supply shall be the time when such amount is fixed in the AGM.  It was clarified that the service of providing directorship services shall be deemed to be completed when the fee amount was determined in the AGM.

The above is subject to the condition that the Director had neither issued any invoice nor had received any advance. If either of these events occur, the time of supply shall trigger upon happening of these events.

Thus, in this given case itsa possibility that the Director who rendered his services in 2017 could be liable to VAT on his board fee, both determined and paid in 2018. This is on the basis that the time of supply clarified by FTA read with Article 80(3) of the UAE VAT law could potentially make this transaction subject to VAT.

Source:GCCFintax

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WHAT IS VAT DE-REGISTRATION?

Tax De-registration is the provision for a registered taxable person to cancel his/her VAT registration with the Federal Tax Authority (FTA). It means de-activation of the registration and the VAT number of the taxable person. Tax de-registration can be applied for by a person registered under VAT or done by the FTA on finding that a person meets the conditions for de-registration.

ELIGIBILITY FOR VAT DE-REGISTRATION

VAT deregistration in UAE is as important as registration for a VAT. There could be various reasons for canceling the registration for VAT in UAE.

De-registration reasons should comply with the conditions defined by the Law related to VAT. If the reasons are not valid and the conditions are not fulfilled, the FTA might reject the application for de-registration.

As per the current UAE VAT regulations that are set by the country’s tax authority, Federal Tax Authority in UAE, a business has to follow the conditions listed below in order to be eligible for VAT de-registration.

1-MANDATORY VAT DE-REGISTRATION:

A Registrant shall apply to the Authority for Mandatory Tax Deregistration in any of the following cases (as per Article 21 of the Decree-Law read with Article 14 of its Executive Regulation)

•  If the business or a person stops making taxable supplies and does not expect to make any taxable supplies over the next 12-month  period then they must apply for VAT  Deregistration.

•  If the value of the Taxable Supplies made over a period of 12 consecutive months is less than AED 187,500/- If the business or a person is still making taxable supplies but the value in the preceding 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500) and said Registrant  does not expect that the total value of taxable supplies and imports subject to reverse charge provisions or the expenses which are subject to tax that will be incurred, will not exceed AED 187,500/- during the coming 30-day period then they must apply for VAT Deregistration.

TIME FRAME FOR VAT DE-REGISTRATION

The registrant should apply for deregistration within 20 business days of the occurrence of the conditions mentioned above. 

PENALTIES AGAINST NON DE-REGISTRATION 

As per the guidelines issued by the Federal Tax Authority (FTA)  on registration, amendments & Deregistration, if the date of submission of the de-registration form is more than 20 business days from the date the Taxable Person is required to de-register then, a late de-registration penalty of AED 10,000/-  will be levied by the Federal Tax Authority.

VAT registrant in the UAE shall mandatorily verify as to whether they will fall in the categories specified in UAE VAT Law to avoid any non-compliance penalties.

2- VAT VOLUNTARILY DEREGISTRATION

A registered entity for VAT in UAE can deregister voluntarily if it meets any of the following:

•  If the business or a person is still making taxable supplies but the value in the previous 12 months was less than the Mandatory Registration Threshold (AED 375,000) AND
• 12 months have passed since the date of registration if you were registered voluntarily then you may apply for VAT Deregistration.

Note that a person who has voluntarily registered under VAT cannot apply for de-registration in the 12 months following the date of registration. 

TIME FRAME FOR VAT DE-REGISTRATION

There’s no specific deadline that has to be met to apply for deregistration for VAT (voluntarily) with the Federal Tax Authority.

DE-REGISTRATION FOR VAT GROUPS

The eligibility for the VAT deregistration of VAT groups is the same as the criteria for the individual taxable entities. However, certain other criteria also apply to the VAT groups for applying for deregistration:

1. The VAT deregistration will be approved if the group no longer meets the conditions to be considered as a VAT group
2. The group could be granted deregistration if the constituent member companies are no longer financially associated with the group
3. Deregistration will be approved if the FTA anticipates the tax status of the group may lead to tax evasion

The companies that are closing down should upload their liquidation letter from authorities

PROCESS OF VAT DEREGISTRATION IN THE UAE 

A registered entity should follow the below-mentioned procedures to cancel VAT registration in UAE: –

• Check they meet the criteria for the cancellation
• Log into their VAT Account on FTA Portal
• Fill in the vat deregistration form UAE online with the details along with the reason for the cancellation
• Submit the form electronically
• Receive SMS confirmation on the registered number for submission.

Subsequent to the submission of Application, the FTA will: –

• FTA will review the application and if they confirm the VAT De-registration the status of VAT De-Registration will be changed to ‘Pre-Approved’.
• After that the businesses have to submit final VAT Return Filing, after the last VAT Return filing the businesses must clear all the outstanding liabilities in order to complete the VAT Deregistration process.
• An email and an SMS notification of the status of the application and requesting you to complete the payment of the outstanding liabilities will be sent by FTA.
• If the VAT deregistration application is approved, only then the Federal Tax Authority will cancel the VAT registration of the registrant and will deregister with effect from the last day of the Tax Period during which the Registrant has met the conditions for deregistration or from such other date as may be determined by the Federal Tax Authority.

A Registrant shall not be deregistered unless he has paid all Tax and Administrative Penalties outstanding and filed all due Tax Returns under the Decree-Law and the Federal Law No. (7) of 2017 on Tax Procedures

Source : xpertsleague.com

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After the decision of the GCC Commission for Financial and Economic Cooperation on 25 October 2020, amendments to the GCC Unified Customs Tariff have come into effect on 1 January 2021. Dubai Customs adopted these amendments through Dubai Customs Notice 2/2021.

Tariff amendments

The amendments include modifications to the “Description” column of 2 Tariff Codes, 4 newly-created Tariff Codes’ Headings, and 65 changes to existing Tariff Codes’ Sub-headings.

The commodities affected by the amendments are:

• Tobacco-related products
• Electronic products (including smart TVs and receivers…)
• Cocoa powder and other instant preparation drinks with added sugar or sweetener
• Water, milk, and cocoa beverages with added sugar or sweetener
• Miscellaneous Chemical products

Implications for businesses

Importers and exporters must review the tariff classification of their products to ensure that they are in line with the new version of the Tariff Codes. They should also consider updating their commodity codes’ databases to reflect these amendments.

News Courtesy :  KPMG

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His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai chaired a meeting of The Executive Council of Dubai, during which he launched the Invest in Dubai platform.

The largest one-stop-shop platform of its kind, ‘Invest in Dubai’ enables investors to obtain trade licenses and launch their business easily in a matter of minutes.

Key features of the platform:

• First integrated digital platform for setting up a business in Dubai.

• Requires a few minutes only to obtain commercial licenses in Dubai.

• Largest integrated and trusted platform serving over 2,000 businesses in the emirate, including free zones.

• With standardized procedures and processes, platform allows services and transactions to be completed without visiting service centers

• Platform features value-added services such as opening a bank account, issuing an establishment card, and other services to facilitate the establishment of companies.

• Interactive tools offered through ‘Dubai Business Map’ feature provide investors information on the best commercial opportunities by geographical location.

• Interactive tool provides recommendations on ideal free zone based on investor requirement and comprehensive information on the value propositions of each free zone.

Dubai, a leading business destination

Sheikh Mohammed issued directives to the team to work to consolidate Dubai’s status as a leading global business destination, stressing that no effort should be spared in achieving this vision.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of The Executive Council, said Dubai offers businesses and investors an attractive environment “with all the elements needed to achieve success and gain the agility needed to transform challenges into opportunities”.

“Despite the prevailing global situation, Dubai has demonstrated the strength of its digital infrastructure and leveraged advanced technologies to develop economic solutions for helping investors and entrepreneurs accomplish their goals.”

he confidence that international investors have placed in Dubai stems from its “agile economy, solid legislative environment, and robust, investor-friendly infrastructure”, said Sheikh Hamdan. “Dubai is a city that is constantly renewing itself, offering a fertile growth environment for investors from across the world. It has created an integrated investment ecosystem powered by advanced technology and designed to support constant development, economic growth and efficiency.”

Centralized portal

An integrated portal for doing business in the emirate, ‘Invest in Dubai’ offers users various services, including commercial licensing in which government permits and approvals can be obtained from a centralized platform, eliminating the need to physically visit any service center.

Also offered on the platform are packages and value-added services that support businesses in launching commercial projects.

Apart from providing a hassle-free process for establishing a business in Dubai, the platform enables investors to gain insights into investment opportunities (or projections for key sectors); and information on investment opportunities in commercial zones (or free zones), competitiveness assessments, locations of businesses in the city, key economic sectors; and cost of incubating businesses; in addition to sector reports and statistics on foreign direct investment (FDI).

Comprehensive experience

‘Invest in Dubai’ provides a comprehensive platform to support investors and entrepreneurs in setting up a business in Dubai. Its services, which cover the entire business cycle, assist businesses in searching for opportunities, registering trade names; getting initial approvals to issue a license; ensuring all government requirements are met; and obtaining trade licenses.

Furthermore, the platform offers a range of packages and value-added services to facilitate the launch of commercial projects.

These include opening a ticket for the new establishment as required by the Federal Authority for Identity and Citizenship, allocating labor quotas, opening a ticket at the Ministry of Human Resources and Emiratization, notarizing the establishment contract by the Department of Economic Development, notarizing a rental contract by the Real Estate Registration Department, and obtaining a membership in the Dubai Chamber of Commerce and Industry.

It allows investors to access information regarding the requirements, conditions and fees for issuing trade licenses in Dubai for more than 2,000 commercial activities. They can also immediately obtain licenses for their companies, as well as other commercial ones.

A seamless, integrated, and customer-centered digital process allows users to save time and effort, sparing them the need to physically visit service centers and reduce the paperwork required to establish companies.

The platform also allows them to manage their business using a personalized dashboard that provides an overview of partners, licenses, KPIs, and other useful insights.

Investor visa

Dubai encourages investors from around the world to set up their headquarters in the emirate, offering a safe home both for their companies and their families through its dedicated investor visa program.

Teamwork

The ‘Invest in Dubai’ platform was developed by Smart Dubai and the Dubai Department of Economic Development (DED), under the supervision of the General Secretariat of The Executive Council of Dubai. A team of more than 70 members, representing more than 20 local and federal government entities, worked in direct coordination with the private sector, a strategic partner in the emirate’s economic development, to develop the platform.

News Courtesy : khaleejtimes

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His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Prime Minister and Vice President of the UAE and Ruler of Dubai announced the launch of Invest Dubai – a digital platform for entrepreneurs looking to set up shop in Dubai.

The new platform was approved during the Executive Council’s meeting held on Tuesday under the chairmanship of Sheikh Mohammed. The platform covers over 2,000 commercial activities and various license types, Sheikh Mohammed said in his tweet.

Making Dubai the best, easiest place to do business

The new initiative is another step making Dubai the destination of choice for entrepreneurs from around the world. UAE had issued a law in November 2020 which scrapped the need for a UAE national to be the sponsor when starting a business on the mainland.

Starting from December 2020 entrepreneurs of all nationalities could start businesses with 100% foreign ownership. In the Ease of Doing Business score by The World Bank in 2020, Dubai scored a high 94.8, based on 10 factors and ranks in the top 20 easiest countries to start a business.

The Invest Dubai platform combines all the information, requirements and procedure of starting a Dubai-based business in one place. From getting information on the kind of license you need to detail on the funding programmed available, the platform offers a wealth of information for entrepreneurs.

Instant license

The Dubai DED Instant License allows entrepreneurs to get a license in 5 minutes with no pre-approvals. The Instant License allows entrepreneurs to start a business with no tenancy contract and no requirement for a bank account for 12 months. The license is available to many categories of activities and four types of establishments – Limited Liability Company, One Person L.L.C, Sole Proprietorship and Civil Company.

The licensee gets an establishment card from the General Directorate of Residency and Foreigners Affairs along with three work permits for employees from the Ministry of Human Resources and Emiratization once the trade license is issued

While this license itself is not a new feature, the Invest Dubai platform allows you to check availability of the license based on activities, number of partners and type of company. It also shows you the fee payable if you were to go for the license.

Business Setup Recommendation

For example, we checked the feature of Business Setup Recommendation on the platform for a restaurant with two expat partners with an option to try the civil company formation. The website instantly showed us the approximate costs for an Instant License while also showing a normal license option.

Different company types can be checked on the website based on your search, and while some options are disabled, it shows you the company types you can check yourself if you know your activity and number of partners.

If you know what kind of firm you’re looking to establish, you can start your business through the platform. Clicking on ‘Start your Business’ takes users to the option of mainland or free zone business. Once you choose that, you can log in to the platform to start the process. Prospective investors can also use the UAE Pass to log in.

Once registered, the platform helps users manage the business through a personalized dashboard which includes an overview of partners, licenses, key performance indicators and other features.

Where should I start my business?

For mainland or free zones, it is nice for a prospective entrepreneur to know where exactly to base his or her business. The business map on the platform has a heat map of active businesses in the emirate. It also shows active businesses, top activities, business age range, areas and major activities in those areas, top sub-areas, etc. Hovering over the map shows you the area name and the number of active businesses in the area. You can further filter these results.

If you’re unsure of which free zone to choose for your FZE, the platform has a feature to find the best one for your operation. The website shows 19 free zones available in total which you can then filter based on business sector or industry, license type, facilities required, and amenities. Residency and citizenship

The platform allows investors to go through and learn all the details of getting a visa or residency through investment. UAE also recently announced citizenship for investors, doctors, professionals, talented people, and innovators. The same group of residents can also apply to get a Golden Visa. 

Apart from these, each type of license, based on activity and type of company, gives investors residency options for themselves and their families. All these details can be easily found and used from the Invest Dubai platform.

Start-ups

For start-ups in the ideation stage, the platform is extremely useful since it gives various incubator options, funding programmed details, and other features to understand exactly how, when, and where to start. The mentioned arenas for SME start-ups include the Hamdan Innovation Incubator (Hi2) in Dubai SME, Dubai SME approved incubators such as Re-urban Studio, Astrolabes, The Co-Dubai, etc., and the Dubai Entrepreneurship Academy.

News and success stories

Apart from this, the platform keeps interested readers updated with the latest news and press releases relevant to starting a business in Dubai. The website also features business success stories that can prove inspirational for the next crop of entrepreneurs.

News Courtesy : Gulf News

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