Dubai’s reputation as a business hub is universally acknowledged. Business opportunities are always available for entrepreneurs from around the globe in any field and trade. Every year, multiple new large and small companies start their business venture in Dubai amid the profits they can expect to gain in this business-friendly place. There is no doubt that many of these companies and professionals continue their venture. But this surely doesn’t happen for everyone.
Like all other destinations, Dubai also has few rules for new and established businesses and it is mandatory for them to follow them fully. On occasions, it becomes difficult for them to cope with the situation and it results in failure of their startup in Dubai. But most of the time, the reason for their failure is not understanding important factors that they will face before and after setting up their business in this emirate. Merely fully understanding these things can easily consolidate any new company in this important business jurisdiction.
Following are important things to consider for any startup in Dubai.
Choose appropriate location:
Business opportunities are available in mainland area as well as several free zones in Dubai. Both these areas are distinguishable due to their unique features. Before setting up your company, you need to know advantages provided by both these areas and their limitations for various businesses. If your business is related to providing goods or services inside Dubai and UAE, then the best option is the mainland area. In this situation, you must be aware about the requirements of businesses in mainland Dubai. Business in this area will require services of local sponsors who will own 51% shares of company.
On the other hand, foreigners can own 100% shares of their businesses in free zones but with certain conditions. Free zones are profitable for traders having import and export businesses along with few exclusive businesses that are supported by these free zones. Few of these specific free zones are: Dubai Media City (DMC), Dubai Design District (D3), Dubai Healthcare City, Dubai Science Park, Dubai Industrial Park, Dubai Internet City and several others.
UAE was once a tax haven but the situation has completely changed now. There is 5% VAT applied on most of the businesses. But there are still few sectors that have been exempted from VAT. But if you are setting up your new business in Dubai mainland, then there are more chances that it will be affected by VAT. In this case, you must contact VAT consultants in Dubai that can assist you in knowing effect of VAT on your business and the amount you are required to pay on annual basis. This information is important in initial stages of your startup as it will help you manage finances of your company well.
If your desired destination for startup is a free zone in Dubai, then there are 23 free zones that are exempted from VAT in UAE. Few of these free zones are in Dubai. If your designed free zone is one among these, then there is nothing for you to worry. Otherwise, you need assistance from VAT consultant for better running of your business.
Get information for main authorities:
Another important aspect that has to be considered for startups is to know about main authorities that are required to deal with before and after establishing their business in Dubai. Main authority for almost all types of businesses is Dubai Department of Economic Department (DED). If you are a trader and deals with import and export of goods, then your concerned authority is Dubai Municipality (DM).
In few selective cases, you will be required to contact several other authorities. For instance, Ministry of Health (MoH) will be required for opening clinics and pharmaceutical companies while various other departments are required for company formation in any of the free zones in Dubai.
Prohibited and restricted items:
Dubai is one of the world’s most business friendly places that allow most of the business activities and trading of products. But even then, there are few restrictions in Dubai for businesses. Apart from that, not all products can be imported and manufactured in Dubai as well. It is necessary for startups to get detailed information regarding this feature. It will assist them in avoiding later nuisance or indulging in any illegal activity.
These are few important points that startups need to know before starting their business in Dubai. There are several other things they can do for proper starting their business in the lucrative jurisdiction of Dubai. For complete information and practical assistance in this matter, you can contact Riz & Mona Consultancy. We will assist in Dubai mainland company formation, LLC company formation and others.