Dubai has been attracting a lot of budding entrepreneurs because of the business friendly environment and most importantly, because of the lower tax rates. Regardless of your nationality, Dubai has always been welcoming to all the people around the globe. In fact, approximately 80% of the workforce in Dubai consists of foreign nationals. International exposure and an investor-friendly government are just two of the factors that motivate entrepreneurs to start a business in Dubai. Startups in Dubai also get perks on investments and tax advantages when compared to other countries.
Although Dubai has an acclimatizing business environment, one cannot straightly jump in hopes of prosperity and profits. There are few things; one needs to account for before putting all the savings at stake. Here are the 7 utmost important things, one needs to take care about, before commencing a business in UAE.
- Type of business activities: Dubai’s Department of Economic Development (DED) has listed around 2000 number of business activities, which your venture has to revolve around. It does not allow any economic activity outside this list. Hence it is mandatory to decide the type of your business beforehand and determine which out of 2000 categories, it falls under.
- Partnership with UAE national: To commence a venture in Dubai, according to the company laws of UAE, a UAE originated business, who is also called ‘Local sponsor’, has to be partnered with and given 51% of the shareholding. Apart from this, a professional fee is to be negotiated for their services. Although this would result in weaker control on business by the promoters, this could prove fruitful, as local sponsors can give you local insights about audience, location, distributors and consumer behavior. This can create an edge for us in terms of affordability as well as market research.
- Free Zones: Government has declared certain areas of Dubai as ‘Free Zones’ which eliminates the mandate of having a local partner with 51% control. Commencing a business in a Free Zone, means 100% business control, speedy incorporation of business and Duty-Free customs boundary. However, one should not give away to human tendencies and straightly jump wherever we see the word ‘Free’. Since, Free Zones are located in remote locations outside city markets; our audience would be really far away if we decide to start our business in this Zone. In addition, the rents and prices for offices and sites at these zones are invariably high. This could really distort your budget.
- Licensing & approvals: The DED grants the initial approval of your trade name and type of business activities, on submission of all the required documents. Once the company is registered by DED, the business license will be processed and could be collected duly. Business licenses are provided mainly depending on the nature of the business activity and the jurisdiction of the business. The most prominent licenses for business setup in Dubai are: commercial license, industrial license, and professional license.
- Visa: A visa application for foreign nationals is compulsory to start a business in UAE. A visa application consists of four stages: entry permit, status adjustment, a medical fitness test, then Emirates ID registration and visa stamping Visas are allowed for any kind of business activities that is allowed by DED. The local sponsor of your company who is investing 51% in your company has to apply for your visa on your behalf to confirm their investment in your business with DED. A letter is also considered necessary from your sponsor to underline his or her, or your personal information, the reason for the visa application, and the likes before processing.
- Bank account: For all your business transactions, you’ll need a UAE origin bank to open your account. You need to be very careful while choosing a bank. A thorough research should be undertaken rather than choosing a bank with a prestigious name. Different Banks levy different charges. For a business startup, these can amount to a sizeable sum of money, for a bank-dependent operation. Always confirm the requirements and charges beforehand.
- Company name & shareholding structures: Your company trade name should be registered and approved by the DED. Your company name should be appropriate to the business activities you are undertaking. There are a lot of restrictions regarding names of the business. You might want a cool business name for your start-up but DED won’t allow the word, ‘Mafia’ to be named for a venture.
After deciding the name, you need to decide the share-holding structure. There are various forms of shareholding like an LLC, or a sole proprietorship, Joint Venture, Shared Partnership etc.
For an outsider, these all may seem overwhelming. You need someone local to help you out choosing a local sponsor, helping you with Visas, DED approvals as well as bank accounts, so that you’re not robbed off your budget and your dream of establishing a successful business. AskMe as an advanced local marketplace might just be the knight in the shining armor for you, who will take care of all these formalities while you focus on your product development.