9 Questions to Answer Before Starting a Business in UAE
- How to seamlessly set up a company in UAE ?
9 Questions to Answer Before Starting a Business in UAE
UAE is an emerging trade hub and business center of the Middle East. A lot of Large and small companies are operating from UAE due to the advanced business infrastructure, favorable taxation policies, ease of doing business, and more.
There is intense competition across various industry verticals in Dubai as many companies are getting registered in the region due to the market prospects and large volume of target audience available for a product or service to conduct a test in the market.
Entrepreneurs are keen on establishing their company in Dubai and scale up the business operations.
Hence, before venturing into the rapidly growing business ecosystem of Dubai, the entrepreneurs must get an answer to a few questions that will allow them to plan the business launch more efficiently in UAE.
Key Things to Know before Setting up a Company in UAE
Here are the few key things to know for the investors before setting up a company in UAE.
What are the benefits of starting a company in the UAE?
There are numerous benefits of starting a company in the UAE for the investor. UAE is a politically stable country with favorable business policies, taxation regimes, foreign ownership, business infrastructure, and more.
It is a country that provides flexibility for investors to conduct business locally as well as internationally with limited restrictions and clearances. To effectively manage business profits, overseas traders can choose to establish a company in UAE and export the goods from a company in the home country to the UAE company.
They can invoice the trade from UAE and sell to the buyer, pay the VAT if eligible under the minimum sales turnover criteria, and send goods directly to the destination without the shipment touching the UAE Ports.
Also, businesses trading internationally can set up a company in UAE and carry out the invoicing in Dubai and sell it to the buyer without sharing the supplier invoice or details. There are many flexible ways to trade based from UAE and easily scale up the business growth.
What is UAE’s Tax Policy?
UAE has a very favorable tax policy for entrepreneurs, organizations, and employees. There is no personal or corporate tax in UAE. Only oil companies and banks have a percentage of corporate tax levied.
Other than that there is only a 5% VAT in UAE chargeable for all sales transactions conducted within the country.
Businesses must be well aware of the VAT registration and period filing of VAT returns. Also, since the introduction of VAT, organizations must keep a well-audited account and submit the reports to the authorities upon demand.
All Companies operating in UAE are not subjected to VAT, it depends on the modus operandi of the company. Also, there are certain criteria for registering for VAT such as a minimum annual turnover of above AED 375,000.
To know more read: VAT Registration Criteria in UAE
Should I open a Free Zone, Mainland, or Offshore Company?
Opening the company in the right business jurisdiction is an important aspect to focus on. It determines the future business operations of the company.
There are three business jurisdictions in the UAE – the Free Zone, Mainland, and Offshore.
Depending on the business activity chosen and the nature of the business activity, the correct jurisdiction must be chosen accordingly.
Special Approvals for Certain Business Activity
For example, if the business activity is trading of foodstuffs, and the business is focused on the local UAE market. Then taking a mainland company license and setting up a distribution office in the mainland of Dubai is the right option to keep the cost reduced due to lower rent areas in the mainland away from the main locations of Dubai.
Free Zone companies can also conduct business-to-business sales with mainland companies by clearing the customs duty for the goods at the Free Zone Customs. Free Zone can export goods to the mainland by paying the required customs duty.
Free Zones in UAE offers all types of business activities to the investors such as trading in commodities, services, consultancy, commercial, etc. It can be easily set up at the lowest cost in the Free Zone.
The business network and infrastructure in the free zone are ideal for service companies to attend to their client’s business requirements. Similarly, companies who are into global business operations and not focusing on UAE markets can opt for an Offshore Company.
However, offshore companies are treated as a non-resident of the UAE and there is no provision for applying for a UAE residence visa under the offshore company
What clearances should I Obtain from the authorities to do business in UAE?
There are certain special approvals to be obtained for business activities such as real estate, healthcare, construction, manufacturing, finance, etc.
For example, a real estate consultancy company must be registered with the Real Estate Regulatory Authority (RERA) and the registration certificate to start the operation.
In the case of healthcare companies, they must get approval from Dubai Health Authority to market or sell the product in UAE. Similarly, depending on the business activity there are certain approvals required in UAE to sell and market the products and services.
The approvals are required to protect the rights of the customer as well as the organization in case of any disputes or so occur between the parties.
How to Open a Bank Account in UAE?
Opening a Bank Account in UAE is a relatively straightforward process. Bank in UAE provides digital bank account opening services to investors based in UAE. Entrepreneurs can easily open and operate their corporate bank accounts digitally using internet banking facilities.
Investors can submit documents online using the bank’s digital portal to open and manage bank accounts and other banking services. The investor profile and business plan must be submitted to the bank for KYC compliance along with the entrepreneur’s work history in other countries, bank statements, shareholding patterns, etc.
UAE has a robust banking network with national & international banks and offers world-class banking products and services for entrepreneurs.
Ranging from business insurance to minimum balance account, to credit cards, there is a wide range of solutions available for the investors to choose for their business accordingly.
How to apply for UAE residence Visa?
The entrepreneur will be eligible for an investor visa of 3 years. The entrepreneur can take the visa under the company, sponsor one director and hire employees depending on the visa quota.
The residence visa process is hassle-free and can be applied with minimum documents from the Free Zone Visa department.
Our expert team of Business Consultants will assist you in the UAE residence visa process and ensure you have a hassle-free process.
How can set up a Branch or Subsidiary Company?
A foreign company branch can be set up in Dubai easily. It helps in expanding the business reach and scale up the business to new geographies.
The parent company documents must be attested from the UAE embassy in the home country and counter attested from the Ministry of Foreign Affairs here in UAE.
By submitting the required documents to the authorities, choosing the activity, license type, and choosing the office space, the branch office can be quickly set up in UAE.
What are the company laws in UAE?
To make the business ecosystem more transparent and compliant with global regulations, UAE has made certain amendments on laws regarding Economic Substance regulations, Ultimate Beneficiary ownership declaration, Ant-Money laundering registration, VAT Registration, etc.
These amendments to the company laws will help in creating a transparent business environment in UAE.
How to handle Business Support Services?
Entrepreneurs must always have a look at the overhead expenses and administrative requirements that will occur during the business.
Enough funds should be available to meet the expenses related to business insurance, employee hiring and staffing, employee training and skill development, office space expansion, and more.
Hence, as a whole, there are multiple headers that an entrepreneur must oversee before venturing into establishing a company in UAE and start business operations.
To know more about the cost-effective ways of setting up a business in the UAE, talk to our expert Business Consultants right away!
Contact Us: Aurion Business Consultants