Tourism Industry - Research Paper Example

It was gauged to be 60.4% free. Starting a business requires 63 days compared to a world average of 48 days. Acquiring licenses is relatively easier than shutting down a buiness.However, the national regulatory environment exercises considerable control over the freedom to start, operate and close a business venture. Financial freedom is a measure of banking security as well as the extent of government intervention. State ownership of financial entities like banks and insurance companies has adverse effects on the free functioning of the market.

On the financial front there is substantial State interference in the UAE.There are restrictions on foreign ownership(with a cap of 49% on foreign stake)of companies listed on the stock exchange, while some companies prohibit foreign ownership altogether. There are 21 domestic banks and 26 foreign banks currently and no new bank licenses have been issued since the mid eighties. The insurance sector has been closed to foreign companies since the late eighties, currently there are 47 insurance companies nearly half of them are foreign.

The capital market is relatively developed with two stock exchanges. There is skepticism about foreign ownership and financial policies are restrictive.Investment freedom-30% Investment freedom is essentially an evaluation of the free flow of capital, especially foreign capital.Foreign investment in UAE is subject to constrains. It is mandatory for a UAE national to hold 51% ownership in every company, except the ones located in the free zones. Foreign investors do not receive national treatment.

There are limitations on land ownership also, with the Non Gulf Co-operation Council nationals being barred from owning lands.Furthermore; only 22 out of 53 stocks on the UAE stock market are open to foreign investment. However there are no controls on current transfers, foreign exchange access or repatriation of profits. Because of excessive controls, the investment climate in UAE is deemed adverse to foreign investments. Freedom from Corruption-62% Includes an assessment of the prevalence and degree of administrative and judicial corruption at the government level.

Corruption is prevalent though not in a significant degree. The UAE was ranked 38th out of 158 countries in the Transparency International Corruptions Perception in 2005.Taxation Environment-99.9%It is a measure of the burden of individual and corporate taxes as well the proportion of tax revenue of the government to the total GDP.The UAE taxation regime is reasonably conducive for business growth. There is no income tax and no federal level corporate tax; however the tax structure for foreign banks and oil companies is different.

Foreign oil companies are liable to pay a 55% corporate tax whereas a 20% corporate tax is levied on foreign banks. The Government imposes a rental tax and a 7%-12% federal level value added tax is being contemplated. Tax revenue of the