If you are considering starting a new business in Dubai, you’ve obviously done your homework and realise that this booming Emirate offers many advantages for businesses.
Here are just a few:
- It is perfectly positioned in the middle of U.A.E.’s coast, with several commercial ports along the Persian Gulf, making its import/export market one of world’s most lucrative.
- It is served by two international airports—one of which, Dubai International Airport, remains the busiest in the world with the highest number of international passengers.
- Because of its strategic geographic location, Dubai has access to billions of consumer markets across Europe, Asia, Africa, the Commonwealth of Independent States, and the Gulf region.
- It is truly designed for international trade, as it operates on a centralised time zone combining East and West business hours.
Even though you are settled on making Dubai the home of your business venture, you may still be considering where in Dubai to set up shop. There are several things to consider when choosing the ideal location for your business. Let’s take a look at a few:
FREE ZONE OR MAINLAND
One of the most important decisions foreign investors are faced with is choosing between one of Dubai’s Free Zones (FZE), or a Mainland location set up as a local limited liability company (LLC).
One of the major reasons Free Zone locations are attractive to foreign nationals is that they allow for 100% foreign ownership. Other advantages include:
- No corporate or dividend taxes
- Import duties exemptions
- No trade barriers
- The ability to purchase land in certain Free Zones
- Streamlined procedures
- More freedom regarding hiring ex-patriots
- Opportunities for long-term leasing
- Repatriation of profit and capital
The major downsides to operating in a Free Zone in Dubai is that rents are typically higher, some Free Zones restrict the type of businesses that can operate within them, and goods can only be supplied to the local market (outside of the Free Zone) only through a local UAE-owned commercial agency.
Setting up an LLC in a mainland location allows businesses more flexibility in certain respects, such as allowing free trade directly with the wider UAE marketplace. This option also allows a company to open multiple offices/locations throughout the mainland.
However, a foreign investor may hold no more than 49% of ownership of the business, with 51% of share capital being owned by a UAE National. This also requires these business owners to secure a local sponsor, which can be costly and carries some risks if the company is not set up in the correct manner.
Like companies operating in Dubai’s Free Zones, LLCs on the mainland (other than banks and oil companies) pay no corporate, income, capital gains, or import/export taxes.
Once you have a general idea of how best to set up your business, the next consideration is its physical location within Dubai.
Dubai is a relatively new country—less than 50 years old. It is a truly international city with a divergence of cultures. It is the most densely populated Emirate in the UAE with a population of more than 2.5million in 2016.
The majority of residents in Dubai are males (75%), and overwhelmingly expatriates (85%)—with the largest segment of the total population being from India. British expatriates comprise the largest group of Western expatriates.
If the nature of your business is one that depends on traffic (i.e., retail, service, etc.), be sure the demographic make-up of the area you are interested in will support your endeavour.
Get to know the neighbourhood, its zoning restrictions, the types of businesses already in existence, and whether or not its population matches the demographics you need to make your business a success.
Sometimes it’s a positive sign if the area you are interested in has successful businesses similar to yours. It means that particular market has what it takes to sustain your type of business.
If people are already coming to this neighbourhood known for similar goods or services, you have a great chance of drawing from that pool. They will most likely be curious about what you have to offer, and you have the opportunity to differentiate yourself from your competition to gain their business.
There are lots of potential clients and customers in Dubai, and the economy is growing. Yet, without a suitable and easily-accessible location, your business may fail.
Citizens and tourists of Dubai are accustomed to convenience. Your business needs to be conveniently located, and easily accessible by car (with ample parking) and public transportation.
A great location with adequate lighting and great signage will make it possible for your customers to find your business.
Other basic amenities include adequate space for the business operations you will be running, acceptable telecommunication infrastructure, storage, and modern facilities.
A great option for smaller businesses is to lease office space. Contracts for leased space often include amenities such as administrative support, concierge services, and communication utilities.
THE ADVANTAGE OF PRO SERVICES
Starting a business in Dubai is a complicated process.
A PRO services company can help you navigate the tricky waters of company setup formation, saving you time, money and a great deal of hassle and complications.
Laws and regulations for businesses in Dubai are extremely complicated. From dealing with government agencies or Free Zone authorities, legal restrictions, applying for or renewing visas, securing trade licenses, deciphering zoning ordinances and more, a fledgling business would have its hands full trying to figure out and manage all the tasks necessary to starting a new business.
Without the help of a PRO services professional, companies are forced to divert time and attention away from their core business. This is deadly, especially for new companies who require the full attention and focus of its business owners to be successful.
What’s worse, companies trying to understand and handle administrative start-up duties themselves run the risk of making errors that can lead to costly fines and delays.
PRO Service providers can also aid in the sponsorship process for their contracted clients, even acting as local sponsor for those businesses opting for LLC setup in mainland Dubai. This eliminates the need for businesses to pay annual sponsorship fees. It also prevents the possibility of foreign nationals unwittingly getting taken advantage of by any unscrupulous parties posing as legitimate sponsors.
FULL TRANSPARENCY AND SCALABILITY
Legitimate PRO Services firms provide timely updates to keep you appraised of status every step of the way.
They are 100% transparent regarding set-up and administrative management processes, providing copies of bills from government agencies and Free Zone authorities, as well as all related paperwork.
They also assume 100% accountability for any errors they make, paying for any fines or delays they are responsible for.
You worked hard and did your research to choose the perfect location of your new business venture in Dubai. It just makes sound business sense to let a professional PRO services firm (familiar and experienced with Dubai’s laws and regulations) handle all the complex administrative tasks of setting up your new business.
Learn more about free local sponsorship programs available to you through ACT PRO and Business Services.