Tag Archives: Business Base

Dubai – Support of entrepreneurial enterprises

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Dubai has announced plans to launch a new visa system – similar to that already operational in Singapore – that would expedite entrepreneurs’ visa applications and offer business formation advice as part of the Dubai’s efforts to encourage high value start-ups to the Emirate. A new bourse, specially for Small- and Medium-sized enterprises, has also been proposed for implementation in coming years.

As reported initially by Dubai-based paper the National, the EntrePass scheme has been established to encourage “start-ups with high commercial value to set up in Dubai and share knowledge and intellectual property rights with the emirate”.

In return, the paper reported, entrepreneurs will have their visa application expedited and be provided guidance from experts at the Mohammed Bin Rashid Establishment (MBRE) for Small- and Medium-sized Enterprise Development to aid them in establishing Dubai operations, as well as ongoing support. In addition, in certain cases, entrepreneurs may be eligible to financing through the UAE’s first Sharia-compliant venture capital fund, the paper reported.

According to the National’s report, the EntrePass scheme will be implemented on a small scale in the final quarter of 2010 with ten entrepreneurs offered a placement. The scheme would then be expanded thereafter, the Department for Economic Development said. It is anticipated that the scheme will run until 2012 or 2013.

In comments on the scheme to the National, Alexandar Wilians, the Director of Strategy and Policy Division at MBRE, said, “We want Dubai to be the centre for innovative small- and medium-sized enterprises (SMEs). The future of Dubai will rest on nurturing selective foreign entrepreneurs with good ideas to use Dubai as a test bed for development and to build business around it.

We are looking at any company with new business models and existing technology that can be adapted to the UAE and that could benefit Dubai through the sharing of intellectual property and knowledge transfer.

Entrepreneurial activity is a major driving force in Dubai; SMEs account for 98% of companies registered as operating from the Emirate. The MBRE is looking to support the sector’s growth, including through plans to establish a specialized stock exchange for Dubai SMEs – the Dubai SME 100 – which would allow smaller companies with lower capitalizations to gain access to extra funds through public offerings, removing capitalization-based barriers to entry. According to the National, the Dubai SME 100 ranking system would be established in March 2011, allowing for the creation of the new secondary bourse in 2012-13.

In the meantime, support for SME development is to be provided through the Emirate’s first Sharia-compliant venture capital fund, which is to provide Dubai SMEs with additional equity through repayable loans.

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Start-up incentives introduced in Singapore

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During his keynote address to Singapore’s Fourth Start-up Enterprise Conference, the Permanent Secretary for Finance, Peter Ong, illustrated how the competitive tax regime in Singapore encourages the growth of new start-up companies.

“Singapore offers a very competitive tax regime designed to encourage new start-up companies,” he said. “Under the full tax exemption scheme, a newly incorporated company that meets the qualifying conditions effectively pays only 5.6% on the first SGD 300,000 (USD 213,000) of the income they earn in their first three years.” “After this period,” he continued, “start-ups can continue to pay less than 9% tax on the same amount, thereby allowing new entrepreneurs to retain a larger portion of their earnings to be ploughed back to grow their businesses.”

He pointed out that, this year, the government has also unveiled an unprecedented tax benefit in the form of the Productivity and Innovation Credit, to encourage start-ups and small- and medium-sized enterprises (SMEs) to invest in productivity and innovation. As an illustration, for the first SGD 300,000 that a start-up invests in staff training, it can deduct SGD 750,000 from its taxable income.

The same start-up will enjoy another SGD 750,000 deduction should it invest in automation. “The Productivity and Innovation Credit also allows businesses to convert the enhanced tax deduction into a cash payout,” he added, “a move that would come in handy in helping start-ups and SMEs ease their cash flow.”

Ong then illustrated the programme which supplies young start-ups with grants of up to SGD 50,000 to start their innovative business, while the Start-Up Enterprise Scheme provides a co-financing option of up to SGD 1m in funding start-ups with innovative and viable content.

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Tax advantage in Russia’s Silicon Valley

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Russia’s Skolkovo To Have Own Tax Regime The head of the Russian ‘Silicon Valley’ project at Skolkovo, Victor Vekselberg, has given an interview to Vedomosti, in which he describes the project and its planned tax privileges in more detail. Skolkovo will have its own special legal regime, he said, which will be managed and funded by a non-profit making foundation rather than a city council. Companies in residence, will be exempt from income taxes on property, and have lower rates of social security contributions,” said Vekselberg, adding that he had sometimes had to raise his voice when discussing tax privileges with the Ministry of Finance. Enterprises should be eligible for duty-free importation of equipment – or subsidies to compensate for duties. According to the draft terms still to be agreed, preferential tax treatment would be given for unspecified periods of up to 10 years, or until annual revenues reached RUB3bn during which time there could be zero taxes on income, property, land, and transport, and no VAT.

Vekselberg said that he would be the first president of the foundation, assisted by co-sponsors on the foundation board of trustees, which would include representatives from the Russian Academy of Sciences, Rusnano, Vnesheconombank, the Russian Venture Company, a Fund for Assistance to Small Innovative Enterprises in the scientific and technical sphere, the owner of the land (а state-sponsored housing association), as well as an association formed by universities. Vekselberg did not exclude the possibility of adding foreign sponsors to the list in due course.


The community is expected to grow to 25,000-30,000 people and premises for postgraduate and doctoral research will be constructed, which should also encompass laboratories, housing, offices, kindergartens, schools and hospitals. The construction alone, excluding research funding, should involve expenditure of USD2bn.

Vekselberg described the construction as low-rise, environmentally friendly and energy efficient. Funding for the first 30 months may reach RUB50-60bn (USD1.7bn-USD2.0bn). It would be state funded and financial contributions from co-sponsors would be minimal. Local services would also be state funded.
The foundation will provide grants for some projects. Companies whose projects are supported will be able to rent premises virtually at cost and will be given tax, customs and other privileges. This way, Vekselberg said, companies will be able to concentrate fully on research without being distracted by bureaucracy and formalities.

A streamlined procedure for the transfer of land would be introduced, which would shortcut planning permission formalities. Import formalities would also be streamlined. Some projects would not have to meet performance criteria, promised Vekselberg; for the first time in Russia, projects may be allowed to fail. In the West, Vekselberg concluded, two successful start-ups out of 10 would be regarded as a satisfactory outcome.

The project is not without its critics, however. Vedomosti quoted, for example, Sergei Mitrokhin, leader of liberal party Yabloko, as saying: “It will be a kind of state corporation, a sinecure; and with the absence of local government (which is in fact unconstitutional), activity will be completely out of control.” 

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