UAE companies have started looking for alternate jurisdictions amid business risks

Businesses from the UAE, amid geopolitical tensions and disruptions in the financial infrastructure, began to consider alternative jurisdictions to ensure settlement stability and asset protection. This was reported on March 19 by RBC.

The reason for the review of the strategy was the events of early March, when the largest banks in the region, including First Abu Dhabi Bank and Abu Dhabi Commercial Bank, faced disruptions in digital services. As the Khaleej Times reported, the problems arose against the background of an incident in one of the Amazon Web Services data centers. Later, major financial institutions, including Citigroup and Standard Chartered, temporarily closed their offices in Dubai and transferred employees to remote work.

Despite the current difficulties, the UAE retains its status as one of the key financial centers. International players such as JPMorgan and HSBC continue to work here, and the region's legal system remains predictable. The country's authorities also declare their intention to maintain the stability of the economy.

Businesses most often consider three jurisdictions as backup areas. One of them is Hong Kong, which allows you to quickly register companies and settle accounts with China, including in yuan. At the same time, companies can claim zero tax if a number of conditions are met, but they are required to undergo an annual audit and confirm their economic presence.

The second option is called Mauritius, which is used as a platform for holdings and international operations. The jurisdiction offers flexible tax regimes and a well-developed banking infrastructure, but requires strict compliance rules and does not provide complete anonymity.

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"Mauritius is usually better perceived than a number of classical jurisdictions, some counterparties or the compliance of large corporations may still classify it as a "high-risk" territory and request more documents.
However, the jurisdiction is not suitable for those beneficiaries who need maximum anonymity. This is due to increased compliance requirements: confidentiality is possible at the level of publicity, but not at the level of banks, providers and regulators," the publication says.

Kazakhstan is becoming another destination, which attracts companies with the opportunity to work within the EAEU, a developed digital infrastructure and convenient logistics between Europe and Asia. However, investors take into account currency risks and the specifics of judicial practice.

The choice of a replacement jurisdiction depends on the business structure, settlement currencies, geography of partners, and requirements for the tax and legal environment. In the current environment, companies are striving not to replace the UAE, but to complement their presence in the global market, reducing operational and financial risks.

Alexey Busev, Vice President of the Russian-Arab Business Council of the Russian Chamber of Commerce and Industry, told Izvestia on March 6 that the situation in the UAE, despite the escalation in the Middle East, continues to remain stable for doing business. He noted that despite the turbulence in the Middle East region, the country remains a stable jurisdiction for long-term expansion. In his opinion, Russian business, unlike companies in many other countries, is able to "think long-term" and work even in difficult conditions.

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