Many of my friends, family, feel that this is a confusing topic. It is a fact that this article is being read by you just due to the fact that you have a query or two regarding this topic.
So the idea is to give you a synopsis of the key aspects of doing business in Dubai and then lead into the “How” question. I’m a big believer in that the “what” and the “why” needs to be understood clearly before the “how” aspect of a complex question is answered.
By the time you’re done reading this I hope to have addressed your question of “how to set up a business in Dubai”. Even if you perceive that you know everything there is to start an organization in Dubai, I’d be delighted if you took away a thing or two from this discussion which you weren’t aware of before.
This observation commences with the reason behind the desirability quotient of people to start doing business in Dubai. There isn’t one single reason for this but rather a mixture of many.
Freehold Zones
Foreigners are permitted to make investments in property in freehold zones, due to the fact that these areas are designated by the Dubai government (generally you are not allowed property ownership in Dubai).
In freehold zones, corporate income tax isn’t levied by the government of the Dubai emirate. Even the payroll taxes are not applicable in these particular regions.
The financial miracle of Dubai has been built on free trade and relaxed tariff laws, and the designation of freehold zones have encouraged transnational corporations to set up a presence in Dubai.
The rules and regulations for the small businesses aren’t any different from the other businesses.
In my estimation, the foremost advantage the freehold zone concept offers you is the exemption from having a local business partner who owns no less than 51% of your business (keep reading below).
Labor Arbitrage
As of early 2008, there aren’t any minimum wage laws in Dubai. Due to the fact that daily wage blue collar workers arrive in droves to Dubai from the Indian Subcontinent (India, Pakistan, Bangladesh, Sri Lanka) so as to look for high-paying jobs and a better life-style for their family members and acquaintances. These workers do not get paid much. Most times, their arrival in Dubai is facilitated by employers seeking to hire.
Excellent Geographical Location
Dubai’s wealth was made through trade, not oil. Less than 7% of Dubai’s annual GDP is oil driven. Rather, its central geographical location near water has made it a premier destination for trade.
Many merchants from both Asia and Europe meet at one of many Dubai ports to conduct business. Dubai’s relaxed trade and tariff laws make trading in Dubai even more attractive for foreign merchants. All the individuals involved in this emerge victorious.
Dubai is a really attractive place to establish a business for many entrepreneurs and even multinational companies only because of all these advantages. Being a multi-national, you want your company to be near your vendors and customers. It becomes difficult for you to not set up a a commercial concern in Dubai while all the individuals are doing so. You may just lose your position in the industry you play in.
Majority of the individuals would want to be close to people and businesses which you frequently deal with. You want to be at the forefront so that you are always ready to wholeheartedly welcome any opportunity that knocks the door.
And perhaps the most underestimated reason is that local businesses and individuals prefer to work with companies that are established locally. In such cultures, building personal relationships is very important, and that involves the sense of sight and touch. You should be there for that to happen!
Business Licenses
Any person requires an operating license for the business activity done by their company so as to own a business concern in Dubai. The 3 general types of business licenses you could apply for are as follows:
* Professional License – for companies engaging in professional services
* Commercial License – for companies engaging in import/export trading
* Industrial License – for corporations looking to establish manufacturing operations
These business licenses can be acquired from Dubai’s economic department, a body established for the only purpose of governing economic activity. Despite each license application having its own fine details, the general application process is similar for each.
For example, the department may necessitate you to obtain a guarantee from a local bank in Dubai, if your company is involved in trading or certain services. For any kind of business to be established in Dubai, the Chamber of Commerce should recognize it and provide registration. Similarly, there are several other significant things to understand to be able to successfully set up a business in Dubai.
The 7 types of business entities you can form in Dubai:
* Public Company (Traded in the Stock Exchange)
* Private Company (Not required to disclose publicly)
* Joint Venture Company (JV)
* Limited liability Company (LLC)
* General Partnership
* Partnership-en-commendams
* Share Partnership Company
My personal choice has always been an LLC. I have multiple LLC registered at the time I am writing this discussion. I find them to be the most flexible. Along with that I even get the liability protection from separation of business from personal assets.
I’d recommend you go with an LLC as well. You will not be alone if you choose to establish a limited liability company in Dubai. LLCs consist of the majority of the numerous successful companies in Dubai. It is the number one choice of business entity.
If you’re used to the western business laws, there are a few key things you should know about an LLC in Dubai. A minimum of 2 individual shareholders are required for your LLC. You can have as many as 50 (somewhat similar to an S Corporation in the USA).
There is also a minimum capitalization requirement to institute an LLC. As of 2008 this number is about 300,000 Dirham or just around $80,000 USD. You could have this in either cash or capital assets.
The Dubai Information Site is a website on Dubai City put together from a practical and first-hand perspective. The site covers information about Business in Dubai , sightseeing, jobs, sports, flights, hotels, weather, visa information, tourism, holidays, history and more. Dubai-Information-Site.com is your guide to fresh, practical and first-hand information about Dubai City.
