For years, foreign entrepreneurs have been flocking to the United Arab Emirates to expand their ventures or chase their dreams of running their own business, which many have been successful in accomplishing.
If you have also been thinking of opening a business in the UAE for years, you may want to push through with your plans now because of the following reasons:
● Economic and political stability
Even during the pandemic, providers of business formation services in the UAE say that the country enjoyed political stability. Because of this, the nation remained peaceful and economically stable. The government was also able to reopen its economy this year, making them one of the few that started its path to recovery earlier than others.
● A high ease of doing business ranking
The UAE has a conducive regulatory environment that facilitates smooth, successful business operations. The government has straightforward company formation processes and rules that exist with little bureaucratic red tape.
● Tax efficiency
The current VAT rate in the UAE is only five percent, with certain services and products enjoying exceptions. Also, there are no direct corporate taxes, except for some oil and gas companies and foreign bank branches. Additionally, customs duties are set at four percent with many exceptions.
● Whitelisted jurisdiction
The UAE was previously on the EU’s blacklist of non-cooperative jurisdictions for tax reasons. However, in 2019, the nation was whitelisted because of changes in its tax law. Additionally, this upgrade was brought about by the changes in policies regarding running and setting up international businesses in the country.
● Strategic location
Another good reason to expand or open a business in the UAE this year is its proximity to countries with fast-growing economies. Its location makes it a strategic hub that facilitates more efficient trading with and faster travels to China, India, Taiwan, Vietnam, Germany, and other Asian and European countries.
Setting Up Your First Business in the UAE
With these benefits in mind, opening a business in the UAE this year can be a smart decision.
If you are ready to push through with your plans, here are five facts you have to know about setting up your first venture in the UAE this year:
1. Foreign nationals are now allowed to own 100 percent of their business.
A decree issued last year introduced changes to the UAE Federal Law No. 2 of 2015. The most significant of these amendments is allowing foreigners 100 percent ownership of the business within the country.
The decree cancels the requirement for entrepreneurs and organizations to have a major Emirati shareholder or agent in order to open a business in the country. This means that foreigners of any nationality can have full ownership of their commercial company.
The decree also introduced new provisions and regulations regarding ownership of limited liability and joint-stock companies, all aimed at attracting foreign investments.
These changes reduce the pressure and work foreigners have to go through to set up a new business in the UAE. You won’t need to look for an Emirati national or group to sponsor your company.
This does not mean, though, that you cannot enter into an agreement with an Emirati individual or group to open a company. You can still do so if you want your business to operate under a partnership or joint-stock legal form.
2. There are two primary jurisdictions for business locations.
Before the latest changes on the proprietorship of companies, foreign investors are only allowed to own a business fully in a free zone jurisdiction.
This year, non-Emirati entrepreneurs who want to own 100 percent of their business can also set it up in mainland areas.
This change gives you an additional option regarding where you can put up your business.
When you open your company in mainland UAE, you can conduct business anywhere in the country, even in free zone areas.
On the other hand, if you choose to set up your company in a free zone, you are not allowed to engage in manufacturing and selling business outside the jurisdiction, which is any area in the UAE.
Another key difference between these two primary jurisdictions is that if you open a business in mainland UAE, you need a minimum of 200 sq. ft. of physical office space, while in a free zone, you are not required to have physical premises.
3. There are hundreds of business activities to choose from.
If you are planning to expand, you will do well to check if your business idea is allowed in the UAE.
You have to check this beforehand to avoid encountering any problems that can happen during the initial setup stage.
Additionally, confirming your business activity will help you select the right legal form and acquire the appropriate license.
Some types of business licenses available in the UAE that encompass different activities are:
- Agricultural
- Commercial
- Consultancy
- Educational
- Industrial
- Manufacturing
- Professional
- Occupational
- Tourism
The UAE allows companies to have more than one business activity.
4. Choosing the right legal form is crucial.
The legal form of your business will be the basis for knowing which laws and regulations will apply to your company.
Aside from 100 percent ownership of your company, you can choose from among these options:
- Foreign company branch
- Free zone company branch
- GCC company branch
- Sole Establishment
- Civil Company
- General partnership
- Limited partnership
- Limited liability company (LLC)
- Public joint stock company (PJSC)
- Private joint stock company (PrJSC)
When choosing your legal form, consider your business activity, company size, license type, scope, and potential financial and legal exposure.
5. A residence visa will be issued to foreign entrepreneurs.
Once your application is successful, you have to obtain a residence visa for yourself, your business partners, and your employees.
You can also apply for a residence visa for your dependents.
The visa application process covers the following stages:
- Entry permit application
- Status adjustment
- Medical exam
- Emirates ID registration
- Visa stamping on the passport
Taking note of these facts can help you make the right decisions and navigate the business setup process in UAE this year. However, being an effective leader and manager also means knowing when to get help.
If you are seriously considering starting a company in UAE, then the post-Coronavirus era is the best time that you should look at. This is because, UAE and Dubai have established their position as one of the new and most important financial capitals in the world.
If you need help with going through all the stages and making crucial decisions, work with a UAE business setup consultant. They have the experience, knowledge, and resources to guide you at every step of the process.
AUTHOR BIO:
Naresh Manchanda is a Partner at MBG Corporate Services, an international organization supporting clients across Asia, Europe, and the Middle East and providing sustainable solutions and strategies that drive business transformation. Established in 2002 and headquartered in Singapore, MBG is a 450-strong member team that operates out of Europe, the Middle East and Asia, providing Legal, Risk, M&A, Tax, Strategy, Technology and Audit Services.
REFERENCES:
https://www.pinsentmasons.com/out-law/news/eu-removes-uae-from-tax-blacklist
https://www.freemontgroup.com/media/articles/2020/3424/
https://kiltons.com/blog/difference-between-mainland-freezone-company-uae
https://www.edarabia.com/how-start-company-dubai/
https://u.ae/en/information-and-services/business/steps-to-start-a-business-on-the-mainland
You must be logged in to post a comment.