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Running Your Own Business In The UAE – Five Things You Need To Know

The United Arab Emirates has become one of the most popular expat destinations in Asia due to its cultural diversity, high standard of living, low crime rate and modern infrastructure. Factors like economic stability, strategic business framework, no-tax policy and free markets have also helped to attract foreign investors from across the globe.

While setting up your own venture here may seem like a profitable idea, it is essential for you to acquaint yourself with a few facts first.We asked Francesca Bouwman from Watermill Consultants about the most common misconceptions people have when thinking of setting up their own business in the UAE.

“We often have to deal with misconceptions which foreigners have about the UAE. Firstly, many people think that there are many restrictions as the UAE is an Arabic country by origin. However, life in the UAE is quite liberal. One is able to wear a bikini to the beach, and drink alcohol in a pub. It is a very family friendly environment with lots of indoor and outdoor activities and vibrant nightlife.

The UAE is largely a tax-free country, which makes it an attractive place for business. Having said so, there are some differences in terms of culture and attitudes which must be taken in to consideration when starting a business in the UAE. Some might think language would pose a problem – especially when dealing with UAE nationals. This is not true. Even though Arabic is the official language, English is widely used in the business sectors. The working week in the UAE is from Sunday – Thursday. One should not be in a hurry when doing business in the UAE. There is more bureaucracy than we are used to and therefore a lot of required paperwork and documents which is quite time consuming. As rules and regulations often change, it is therefore useful to contact companies such as ours who could provide you with support and assistance when starting a business in the UAE otherwise you are likely to experience many difficulties, delays and frustration. This will save you costs and time. Even though people are expected to be on time for meetings, bear in mind that your business partner could arrive late. You might experience that during meetings someone will interrupt and leave you waiting a bit more. This is not meant to be seen as disrespectful, this is just the way things are done in the UAE. Even though the UAE is quite liberal, it is advisable not to wear shorts or skirts/dresses to meetings or when visiting governmental organizations. It is also important to build on personal relationships in the UAE. Small talk is essential and valuable in order to establish trust.

In conclusion, it is fairly easy to do business in the UAE if you just bear in mind a few differences. There is a large mutual respect between locals and foreigners which makes doing business in the UAE definitely worthwhile!”

So how do you go about avoiding these common pitfalls and setting up a business in the UAE? Here are a few pointers to get you started.

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1. Getting a local sponsor or selecting a free zone

It is compulsory for foreign investors to have a UAE National sponsor their business venture as a 51% partner. This gives them the liberty to set up their business in any location across the country. Having a local is also highly beneficial during the inception phase in terms of paperwork and permits. Many Arab nationals agree to sponsor foreigners for a yearly fee or a percentage of the profits. On the downside, you are unlikely to have complete control of your own company as you only own 49% of its shares.

Alternately, you could start up your business in one of the emirates, without a local partner, as long as your setup is based in one of the country’s Free Zones, some of which include:

– Abu Dhabi Airport Free Zone
– Umm Al Quwain Free Trade Zone
– Ajman Free Zone
– Dubai Academic City
– Dubai Airport Free Zone
– Dubai Gold & Diamond Park
– Dubai Internet City
– Dubai Knowledge City
– Dubai Techno Park
– Fujairah Creative City

There are more than 35 Free Zones in total spread across the 7 emirates and many are still under construction. Some of the advantages they offer are 100% ownership (without a sponsor), duty free customs and a speedy start up. Unfortunately, not all the free zones are conducive to every type of business. Moreover, property prices in these areas tend to be on the higher side.

A detailed list of free zones is readily available on the net and in business directories. For more information, take a look at www.en.wikipedia.org/wiki/List_of_Free_Trade_Zones_in_the_United_Arab_Emirates

2. Setting aside the required capital

Once you register a company in the UAE you will need to show the Ministry Of Commerce a substantial investment amount, which could range anywhere between US$ 10,000 (£ 6,500) and US$ 50,000 (£ 33,500), depending upon the emirate your business is based in.

The money is regarded as a guarantee against your liabilities. However, you do have the liberty to withdraw this amount after a short period of time.

3. Choosing the right location

This step is an essential one, regardless of which country you are setting up your business in. If your customer base needs to have easy access to your premises, you may be better off renting or buying property in the city center, even if it is at a higher cost. However, if you aren’t expecting a daily traffic of clients, and if you’re not looking to increase your customer base with passing trade, an office space at a slightly more remote area may be a more feasible (not to mention economical) option. There is a wide range of commercial properties available for all types of business models across the country.

4. Confirming visa requirements

All foreigners must have the required work and residence visas in order to run their businesses in the UAE. If you are new to the country, it is important to work with a sponsor so that your paperwork is processed quickly. A letter from your sponsor will be required for your initial visa application.

If you are planning to hire other foreigners, your company will need to sponsor their work and residence permits too (as long as your sponsor authorizes you to do so). Fortunately, the government issues visas for people working with most types of businesses. However, the number of foreigners you can sponsor will vary depending upon the size and type of your setup.

5. Hiring a professional for the startup phase

While this comes at an additional expense, it is a good idea to hire a professional advisory firm that can register your business and set up your company. The services of these consultants become almost crucial when it comes to aspects like dealing with government bureaucracy and free zone authorities. They also often provide assistance in other important matters such as acquiring licenses, financing, banking, itemizing potential costs, predicting hurdles and offering solutions.

Those are our tips for getting started in the UAE. Have you set up a business abroad? How was your experience? Let us know in the comments.

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