In the Middle East, the United Arab Emirates is an absolute goldmine when it comes to any type of business activity. The biggest advantage is that business formation in UAE is quite a hassle-free affair. You pay up front and get a business license on the same day.
Despite lock down, business formation in UAE (we will explore the types later in the article) is on an all time high – thanks to a booming economy and safety assurances to investors. With the Dubai Expo on the horizon, a trade license in UAE would be a very wise move. But before get into the details, let’s dive into the UAE and what makes it so lucrative for businesses.
United Arab Emirates – At a Glance:
A Gulf powerhouse, the United Arab Emirates features some of the most powerful brands in the world – including Emirates Airlines, Emaar and many more. So, what it is alluring about this desert country, you ask? The answer is simple – a talented and diverse workforce.
U.A.E is home to over 9.2 million expats – which represents almost 80% of the total population. These foreign workers have contributed to more than a billion dollars in revenue working for different sectors. The country is also rich in natural resources and landscapes – with sprawling waterfronts and vast deserts are defining features of U.A.E
Since it features such a heterogeneous mixture of people, the opportunities for doing business are plenty. Even an offshore company in Dubai promises returns (if you have acumen for business, of course. Now, let’s focus on the ingredients required for business formation in UAE.
Know The Market
But before you even delve into knowing the market, you first need to understand about yourself. What is your business’ U.S.P? Who is your audience? Is there a gap in the market? What is your long-term strategy?
A business setup in UAE does not only require capital, but extensive knowledge of the market landscape. If you are not a resident of U.A.E, no need to worry; as there is plenty of information available on the internet as well as number of organizations that provide business consultancy.
L.L.C or Free Zone?
There is one slight aberration with regards to an LLC formation here in U.A.E. You need an Emirati partner who’d own 51% of the ownership of your business. What this means is if, let’s say you open a restaurant, you will need a national to own 51% of the company. It is up to you whether you want that individual to be an active or sleeping partner.
On the other hand, free zones or special areas designated by the government that allow expats and foreigners to assume complete ownership of their business. Let’s talk about the advantages and disadvantages of both.
L.L.C – Pros & Cons:
Pros:
- Partnering with a national gives you certain leverages.
- Protects you from liability
- Can increase no. of members
Cons:
- Heavy costs of setting up a business in U.A.E
- Difficult to raise additional capital
- Harder tax regulations to deal with
Free Zone – Pros & Cons:
Pros:
- Full tax exemption
- State of the art support infrastructure
- Complete ownership
Cons:
- Lack of expansion options
- Not a lot of business opportunities as compared to an L.L.C
- Different zones – different regulations
Best Areas to Invest In
If you are looking from an economic perspective, then look no further than Ajman and Al Ain – as these are the most inexpensive cities in the United Arab Emirates. While if you have bigger ambitions, then we’d suggest you go for one of the 37 free zones operating in the country – especially the Dubai Silicon Oasis and the Ajman Free Zone.
Regardless of your business set up in UAE, make sure you operate from a place which is in close proximity to your audience – for instance, if you are a small to medium sized restaurant, then maybe you should look into getting a shop near commercial offices.
If risk minimization is your goal, then you should look to invest into a service sector business here. A German national got his trade license in Dubai and set up a personal fitness/gym business in Dubai – and in a span of just two years, he is looking into scaling options to Ajman and Abu Dhabi.
All in all, U.A.E presents a myriad of opportunities to investors who want to set up a business in Dubai or any other city. What’s cool is the fact that you can also set up an offshore company in partnership with a national, and gain access to a business-friendly legal framework all the while paving way for international business expansion.
