The United Arab Emirates of today is a well-developed country with rich oil reserves and an advanced economy. It attracts not only tourists and laborers from other countries but a great number of foreign investors too. More and more business people from different parts of the world choose the UAE to establish companies or branch offices there.
Advantages of doing business in the UAE
Doing business in the jurisdiction brings numerous advantages. We list the main ones below.
Minimum tax burden
If you register a company in one of the Free Zones in the UAE, you would have to pay nothing in taxes at all. However, you cannot do any business in the mainland UAE if you want to remain tax-exempt. The corporate tax for a mainland company is 9%. The VAT is 5%.
Advanced business infrastructure
The infrastructure is very well developed in the UAE. There are lots of residential accommodations and office buildings in the country. Foreign entrepreneurs have no trouble at all finding suitable office space and production facilities in the UAE and the same goes for living space.
Large number of Free Economic Zones
You can register a mainland company, a Free Zone company, or an offshore company in the UAE. There are several dozen Free Zones in the country and registering a company in one of them makes the founder eligible for a residence permit in the UAE. Registering an offshore company does not.
Please note that most Free Zones are found in Dubai. Each of them has its own legislation and each normally focuses on a certain business sphere. However, you can register a company in any Free Economic Zone in the UAE.
Availability of a large number of solvent consumers
The UAE is a country with high living standards and there you will always find solvent consumers of your goods and services. Even though competition is tough, high volumes of sales are almost guaranteed.
Dubai is the Emirate where you would have the least trouble finding qualified personnel for your company. We have to note that salaries are lower in the UAE than they are in Europe or America.
Specifics of doing business in the UAE
The culture of the UAE and its hot climate have a direct bearing on the specifics of doing business in the country. You should learn about all the nuances and possible obstacles before launching a company in the UAE.
There are certain factors that you have to bear in mind without fail:
- You have to have some seed capital to start a company in the UAE. You have to pay a company registration fee, buy a license (whatever business you do), rent office space, and purchase the necessary equipment.
- Even though serious measures are taken to combat the hot and humid climate in the UAE, the number of tourists drops in the summer significantly. You have to bear this fact in mind if you plan to engage into business that is somehow related to the tourist industry.
- The people of the UAE are Muslims. Even though they are tolerant to other religions, you have to find out about their customs and traditions because these are going to be interwoven in your negotiations with the local people.
- Sale of alcohol is prohibited in Dubai. You can buy alcohol only in restaurants, hotels, and nightclubs. Acquiring a license that allows selling alcohol is extremely difficult in the UAE.
Possible obstacles in your way
Practice shows that foreign entrepreneurs establishing business companies in the UAE often encounter the following difficulties:
- They lack the knowledge of the local rules and regulations. Corporate etiquette, licensing processes, visa requirements, and regional differences – all these things matter.
- They are overly optimistic about their ability to manage their time. Some stages in the company registration process go fast but you may come to a stall at some point. For instance, setting up a corporate bank account in the UAE can take a month or even more. If you are aware of that in advance, you can manage your time more efficiently.
- They fail to take additional costs into account. When calculating the costs of setting up a company in the UAE, you may overlook some additional expenses involved in the process. Licenses for some types of business activities, for example, are rather expensive.
- They lack the knowledge of the visa requirements. In particular, the employer is responsible for obtaining resident visas for his/ her employees in the UAE.
- They vainly hope to be able to acquire a bank loan. To apply for a business loan, you have to submit a business report for the last three years of your Emirates-based company operations. And this has to be a success story.
- They lack knowledge of some regional specifics. Each Emirate has its own specifics: the UAE is not exactly a homogenous country.
Most promising business areas in Dubai
Much of your business success will depend on the business area that you choose. Below we list the industries where the profit margins are high in Dubai.
IT sector
Competition is very tough in the IT sector in the UAE. However, success is possible if the following conditions are met:
- You are a highly-qualified software developer;
- You are fluent in English;
- You have innovative ideas.
Dubai Internet City is a suitable Free Zone for an IT company. You will need 8 to 10 thousand US dollars to launch a company (license, office rent, and other costs).
Tourist sector
Dubai is a popular tourist destination. Visitors enjoy the comfort that it offers, the views of the skyscrapers, and the abundant shopping opportunities.
You need US$ 100,000 to launch a full-fledged tourist company. However, acquiring an inbound tour operator’s license is cheaper and it is not difficult to do that at all.
E-commerce
It’s inexpensive to engage in e-commerce in the UAE. If you register a company in a Free Zone, your costs will amount to US$ 8,000 to US$ 10,000. You don’t need a large office either.
Trade
A foreign entrepreneur can open a small shop or a huge mall in the UAE. The location of your outlet/ store is important: you should place it in a Free Zone sitting close to air and sea ports. The required amount of initial investments will depend on the size of your shop.
Construction
The construction process never ends in the UAE and especially in Dubai. If you launch your own construction company in the country, you will have almost unlimited opportunities for making profits. You may even get a chance to go down in the history of the country as the creator of a large-scale architectural project. You will need between US$ 50,000 and US$ 100,000 to start a construction company in the UAE.
Needless to say, there are many more business opportunities in the UAE and the conditions that the country offers to foreign entrepreneurs are simply superb.
