5 Top Challenges of Doing Business in the UAE
The seven emirates that form the UAE have their own rules and regulations, which clearly mean that doing business can sometimes, be a daunting task.
The UAE is actually a federation of seven emirates- Dubai, Abu Dhabi, Sharjah, Fujairah, Ras Al-Khamiah, Umm Al-Quwain and Ajman. All the seven emirates come with their own rules and regulations, which shows that doing business in the UAE can be quite challenging. And this is where law firms in Abu Dhabi or in Dubai play a significant role in making the process easy and simple. The UAE is full of potential for businesses looking to set up or scale up, but of course, it is very important for you to do a proper research before getting started. So let us have a look at the top challenges of doing business in UAE that you are most likely to encounter:
- Forming the Company
Companies or business firms looking to operate in or from the UAE are required to get their company registered as a legal entity. Each company running its business needs a company license, which is further linked to the registered activity of the entity. However in general, there are two main options when setting up your operational entity:
- Free Trade Zone- Setting up your business in free tarde zone provides you with 100% business ownership. There are at least 2 free zones in each emirate, with Dubai alone offering more than 20 and each zone has its own laws and regulations.
- Onshore Jurisdiction- It refers to any area not confined in a free zone and they are subjected to federal laws and regulations with authority bodies under the Ministry of Economy in each Emirate. A Limited Liability Company needs 51% local UAE shareholder. But being based onshore enables you to do business anywhere in the UAE.
- Finding the Right Office Space
Setting up a legal entity business in the UAE comes with a combination of license, legal entity and facility. UAE is a real-estate driven economy and it is a law that a company license must be linked to its physical office space.
However, the conditions of minimum office requirement differ from one jurisdiction to another, and size of the office space will be linked to the visa allowance for the company.
- Speaking the Language
Though Arabic is the official language of the UAE, but still English is preferably used in business meetings and transactions in the UAE. However, when it comes to contracts and other documents, they should be sent to employees in Arabic.
- Understanding the Taxation Environment
The UAE is known for its tax-free economy, but for the first time in January 2018, it introduced VAT. The VAT rate is low at only 5% and hasn’t impacted the cost in doing business in the UAE significantly. Penalties include Dh 20,000 for late registration, and other fines for late payment and carrying out business without a VAT registration.
- Work Permit and Visa
All expats working in the UAE need a work permit or a residential permit to live and work in the UAE. This clearly shows that it is very important to ensure that you comply with all the rules and regulations set by the General Directorate of Residence and Foreign Affairs and also the Ministry of Human Resources and Emiratization.
Therefore, if you are facing any of the above challenges while setting up your business in the UAE, law firms in Abu Dhabi or in Dubai can help you get over all the legal obstacles and challenges. Everything has a solution in Abu Dhabi or in the UAE, so are you ready?