Business Formation In Dubai

Introduction:

United Arab Emirates has emerged as the economic and geographic lynchpin of the Middle East in recent years. UAE is being recognized as a great opportunity hub for businessmen and investors. Investors and businessmen see the country as a great potential of business formation in Dubai with great profits for starting their businesses.

Multinational companies see Dubai, the tourist and economic hub of UAE as a prime location for starting the businesses. This is why business formation in Dubai is the main area of focus for new businesses to grow their brands and establish them well in the mushrooming market of Middle East.

Dubai is the second largest emirate in the UAE and regarded as the vital commercial centre of the country with the most important port.  It has a well diversified economy which includes all sectors from manufacturing to logistics, IT, retail, transportation, healthcare, tourism, education etc. Absence of trade barriers, foreign exchange controls, income/capital taxes make it one of the ideal places for business formation in Dubai.

So, if you are an investor and want to start your business in Dubai, here are few ways to choose from:

Local Business Start Up:

Business formation in Dubai is pretty easy due to prevalent supportive environment for investors and businessmen in the country. But there are definitely few terms which a new start-up is required to meet first to initiate the business in the city. If you truly desire to exploit potential of Dubai, you need a locally registered LLC (Limited Liability Company) Business. For this local business, you need a UAE National as a local sponsor who enables you to start your business in any part of the city where you think it will be most profitable and can exploit market perfectly. But remember, a UAE national known as your local ‘Sponsor’ will be taken as 51% of the partner in your business whereas foreign equity is limited to 49% in the company.

Remember that to start a business in Dubai with local sponsor; as you need a local’s sponsorship for business formation in Dubai. Arab Business Consultant provide you with local sponsor as well.

So, starting business formation in Dubai has following pros and cons:

Pros:

• You can pick any location within city which is definitely not an option for free zones.
• You can pick a location which matches with your budget.
• A national can help you with sorting out all the obstacles which you come across while dealing with authorities.
• You can always negotiate a yearly fee with your sponsor.

Cons:

• You must take a UAE national as 51% a partner which is definitely a big point to think about.

 Free zone business start-up:

As I told you earlier, business formation in Dubai gives you many options to choose from for starting your business in this economic hub. So, if you do not want a partner for 51% of your business, you can always start your business in one of the free zones. Free zones are some specific locations where you can start your business and own it 100%.

Free zone business start-ups also have some advantages and disadvantages.

Pros:

• You can own 100% of your business and do not have to pay any fee to a sponsor.
• You can speed up the process and start business in a couple of weeks as you are faced with very little rules, regulations and formalities.
• You get access to Duty-Free customs boundary and all taxes are wavered.

Cons:

Below are some cons for business formation in Dubai in one of the free zones:

• Rental or purchase in Free trade district can vary and get very high with respect to your budget and you may not afford it.
• Although there are more than 30 free zones operating in Dubai and 45 in UAE offering many custom duty benefits and tax concessions to foreign investors, but your business location gets limited to certain areas which may not be suitable for some specific businesses which should operate in city markets for their profits and growth e.g. retail stores and restaurants.
• Businesses which deal with governments must get registered with local sponsor.
• Every free zone has its own approval formalities and regulations.
• Each free zone only allows some specific type of business activities to conduct.

So, these are two basic ways for business formation in Dubai.

If you are an investor but do not want to set-up a thoroughly new business in Dubai or UAE, you can buy a well established business. By completing few formalities and legal procedure, you can strike a deal and buy a well established business which ensures good ROI. You can also sell your well established business to other investors.

 

Selection of a suitable location which optimizes costs, convenience and suitability

For a successful business formation in Dubai, you are required to plan your business with precision and give most consideration to selection of a suitable location. If your clients and customers cannot reach you then despite mushrooming economy in the country, it won’t be possible for you to build a profit based enterprise.

• Choose the area which is most suitable for your business as well as convenient
• For selecting free zone as the location for your business, make sure if it supports your business model, product type and trade requirements.
• Keep in mind all likely costs which you may have to bear with the location you choose.
• Do not register your company for business formation in Dubai unless you have a look at the available offices in the free zones. Certain offices may only allow one visa and that is for investors and no visas for employees.

Conclusion:

Well, above are some ways for business formation in Dubai which has given you a clear idea that how you can start your business in free zones to avoid all taxes and custom duties or strike a partnership with a national UAE sponsor to start your business in any part of the city.