Gov­ern­ment Pol­icy


F am­ily busi­nesses in the GCC pay some of the low­est tax rates in the world. Ac­cord­ing to the World Bank's 2012 Do­ing Business re­port, the six GCC coun­tries are among the world's 11 low­est tax ju­ris­dic­tions. GCC busi­nesses, there­fore, tend to have more cash in the cof­fers than some of their western coun­ter­parts. Reg­u­la­tion also helps fam­ily-owned firms. Most of the GCC coun­tries have laws say­ing that an in­ter­na­tional company want­ing to op­er­ate in a GCC coun­try has to work with a lo­cal part­ner. This means pay­ing a spon­sor­ship fee to a lo­cal firm and giv­ing it the majority stake in the business, while the for­eign firm takes charge of the day-to-day man­age­ment of the company. The main aim is to de­velop the lo­cal econ­omy by cre­at­ing eco­nomic op­por­tu­ni­ties and jobs for lo­cal na­tion­als, but the sys­tem also en­cour­ages trans­fer of knowl­edge from for­eign com­pa­nies to lo­cal firms. GCC coun­tries have cre­ated a num­ber of free zones, such as the Jebel Ali Free Zone in Dubai. As well as al­low­ing for­eign­ers to main­tain full own­er­ship of their com­pa­nies, th­ese free zones make it eas­ier for lo­cals to do business by cut­ting red tape (for ex­am­ple, it's eas­ier to process a work per­mit ap­pli­ca­tion).

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