How to Start a business in Dubai

How to Start a business in Dubai

Dubai is a land of opportunities for those who take the right track towards a business setup in Dubai. UAE has always provided betterment to people, which has resulted into the interest of a host of people everyday who want to invest in here.

In a highly globalized business world, where industries from all sectors are becoming more extensive, the competition amongst companies and organizations have never been steeper until now.

Before starting your business and looking into everything, make sure you meet your visa eligibility and requirements. You will need a visa that allows you to live and work in Dubai. If you plan on bringing on more foreigners onto the project, you need to work closely with your local partner in order for them to sponsor your employment visas.

The potential gains of starting and running your own business are great, but it isn’t for the faint-hearted. You need to remember that you aren’t a citizen of the country and when the time comes to leave and sell your interests, your partner has time on his side, while you might not.

Company Registration & Legal Obligations: How to Start a business in Dubai

Corporate law in Dubai is similar to that in western countries, in that businesses can be run as limited liability operations, private companies or other types of concern. As discussed, setting up a business or buying a going concern can be complex and you must obtain local legal advice and guidance about registration formalities. As a foreigner, you’re likely to use a western/Arab joint venture law firm. When choosing, seek the advice of the Arab-British Chamber of Commerce, the DTI, Middle East Association and your Embassy’s commercial sections.

Western expatriates are generally well qualified – they don’t find work if they aren’t – and these qualifications are carefully checked with the issuing bodies, irrespective of where they were obtained. Western expatriates therefore tend to occupy senior positions, with commensurate salaries and perks. Workers from south-east Asia and the Indian sub-continent (who are sometimes – politically incorrectly – referred to as ‘Third Country Nationals’ or ‘TCNs’) usually occupy menial, unskilled or semi-skilled jobs and are paid accordingly.

Even those with professional qualifications and experience as good as those of a westerner are unlikely to enjoy similar benefits, as the remuneration of foreign workers is related to what they would expect to earn in their home countries, which is invariably higher for westerners. However, this situation is beginning to change, especially in the field of technology.

The Dubai government offers different types of business models to be chosen from by foreign investors, such as direct sale, commercial agency arrangements, branch or representative office, limited liability company and special free zone investment.

LLC Company Setup: How to Start a business in Dubai

Dubai mainland company registration is said to be the prior preference by most of the organizations when establishing their business in Dubai because of the benefits of having an LLC Company. You can own 49% of the business with 51% share of local sponsor. Dubai LLC formation allows you to retain 100% profits. However, formation of a company in mainland is laborious .

Freezone Company Setup

Dubai free zones are certain economic zones offering tax free and 100% foreign ownership with free customs duty benefits to expatriate investors. This makes the free zones the most favorable locations in the Middle East for international operations and attracts many in Free zone company formation in Dubai

Fujairah Creative City

Shams Free Zone

Ajman Free Zone

Dubai South

Dubai Design District

Dubai Multi Commodities Centre

UAE Free Trade Zone

Offshore Company Setup

Off shore company or International business company is a legal entity which provides zero tax environment which results in minimization of tax burdens and improves wealth management.

Type of business: How to Start a business in Dubai

Your type of business will determine the kind of license you require. Whether it’s commercial, professional or industrial licenses, these will define the basis of your operations. However, while selecting, remember that certain activities such as food trading, jewellery trade, veterinary activities and legal consultancy require further approvals from other governmental departments.

The Department of Economic Development (DED) in Dubai has a list of over 2100 activities you can choose from. If you’re unable to find your specific one in there, you can contact the DED. Each free zone has its own regulations and approval formalities.

Ownership

As a foreign national, if you’d like 100 per cent ownership of your company, you need to opt for a license and location in one of the many free zones of the UAE. There are specific kinds of activities that each free zone caters to and clarity in the first step will help you find your best option.

If you need a local license or need to operate locally, you have to get a license from the Department of Economic Development (DED). The DED license comes with certain restrictions on share of ownership for foreigner

Legal form

Depending on your location and type of business, there are rules regarding the make-up of your firm. For example, if you plan on a legal consultancy firm, this can be done only as a branch of company or as a stand-alone company. A sole proprietor is not allowed to take up this activity. Each free zone has its own restrictions regarding company structure and you can look these up on the official website of the zone

4. Trade Name

Your trade name is a very important part of the legal procedure. The company name should ideally indicate the nature of business, unless it is a branch of another company.

5. Share capital

Minimum share capital is usually set out in the Memorandum of Association of your proposed company. In most cases, you do not need to pay minimum capital at the time of setting up.

6. Premises

Once you have your legal procedures and forms ready to go, it would be best to shortlist some offices with costs and other details. This would mean a clear path forward once you get your legal formalities out of the way. In free zones, you will get assistance to find premises suitable to your requirement along with help to set up electricity, internet, water and other amenities.

7. Employees

In most legal forms of the DED, you need to hire a manager to oversee operations and have him ready to be on board before your registration is approved. But in other cases, you may not be allowed to hire at all. For example, Intelaq license holders (license for home-based Emirati business owners) are not allowed to hire staff, but can engage contractors. For free zones, each zone has its own specific regulations regarding the structure of business.

8. Local support

For DED licenses, it is mandatory to have a local agent, partner or sponsor and this is a great support for foreign nationals.  For free zones, having a local contact can help take the business forward effectively. However, this is not mandatory and Dubai as a business destination boasts easy set-up for all businessmen regardless of nationality.

Summary of Above points: How to Start a business in Dubai

1. You must have a good knowledge of the region. Be prepared to undertake extensive research into the business sector you aim to operate within. You must have a viable business plan, which includes a study of the market conditions, the competition and your forecast results. You must be prepared to find the necessary investment from your own resources or through your bank and preferably by other means than applying locally, particularly if you’re new to the region and without a track record. A credible plan might attract local support, possibly government support.
2. The law requires that you have a local partner who holds the majority interest and can therefore control the business, which includes closing it if necessary. The partner will own 51% of the company, therefore being able to call all the shots regarding it. Be it a company or an individual, the local partner doesn’t need to contribute to the start-up investment or participate financially at all. As with self-employment, there are various ways that a partner can be remunerated. The local partner requirement is currently under review in some states, however, in order to encourage foreign investment.
3. When the business is registered, you must show the Ministry of Commerce that you have a substantial sum of money to invest. The required sum varies between the states (it’s between $10,000/£6,500 and $50,000/£33,500 in most cases) and is regarded as a guarantee against liabilities, although you may withdraw the money shortly afterwards!

Take into account that if you want to own 100% of your company and do not want to have a local partner, the only possibility is to start a business in the Free Zone. However, if your business requires to be near the city, it will probably go bankrupt quickly in the Free Zone as it is a far away place. Additionally, rental costs in the Free Zone are most likely to be higher than regular rental prices within the city.

In order to start you business, you must be aware that the process is complex and financially risky, meaning that local knowledge is crucial. You must also consult a good lawyer from the outset. An experienced lawyer will guide you through the registration complexities and his help will be vital in protecting your interests. This applies whether you’re opening a modest shop or a major enterprise. As is the case all over the world, there are unofficial businesses operating in the region, but if anything goes wrong or you’re ripped off, you have no legal recourse whatsoever.

Don’t let these warnings put you off,many people have developed successful, highly profitable businesses in Dubai. New operations are encouraged by the authorities and your local partner might be enthusiastically supportive (or he might be a severe liability, so make sure you do your research and choose wisely). Export and manufacturing industries are especially strongly supported by government, particularly as regards the acquisition of land on which to construct a factory. If you set up such a business in a free trade zone, of which there are several in the region, it’s granted exemptions from import and export duties, commercial taxes, building and property licence fees, land tax and restrictions on the transfer of capital invested in the zone.

An alternative to starting a new business is to buy a going concern, which is a more straightforward process, as it doesn’t involve lodging capital, obtaining sponsorship or registration; all you have to do is agree a price and transfer the ownership of the business.

Local Chambers of Commerce can advise about start-ups and are adept at cherry-picking potentially profitable newcomers to the region. Winning the confidence and support of a Chamber of Commerce will help your cause. Contact details are as follows:

• Dubai Chamber of Commerce and Industry, PO Box 1457, UAE
• (Tel. 971-4-221 181)
• Federation of UAE Chambers of Commerce and Industry, PO Box 8886, Dubai, UAE (Tel. 971-4-212 977)

A powerful sponsor or employer is a great weapon with officialdom, and observing his skillful negotiating can be an enlightening experience. The authorities, however, are usually helpful and don’t tend to be difficult unless they have good reason. You will find your working life in the region easier if you’re polite and patient. Smile and seek ‘advice’: requesting advice confers respect on the person asked and you will generally find that Arabs are friendly and helpful. Note that the recruitment of foreign staff is an expensive exercise for employers, including recruitment consultant fees, legal expenses and travel costs. As a result, few employers put their investment at risk by treating employees badly, and the great majority of expatriates prosper in Dubai for many years..

Reach Accountant – Online VAT Accounting Software

Reach is`the ultimate destination to use software which suits 21 different business with end to end process. You can use Reach instead of using multiple software for different functions or trying to create a customized software. Reach software are VAT complaint which simplifies business.

Being a resident of UAE or business entity it is mandatory to align business operations as per the new taxation reform. There would be many questions and perceptions running in one’s mind. One of the important concerns would be will the business be affected if new prescribed rules and regulation regards to new taxation system are not adhered. Like filing returns on time, maintaining accounts of books ,generating invoices as per VAT mandate. A mentor preferably who can be there at all time to assist and answer all the queries relating to VAT. Reach VAT software is the perfect solution proving to be your best companion in the VAT transition period.

Reach Extended services can be availed by:

The above industries can avail the benefit of using Reach VAT Software to be VAT compliant.

Features Of Reach Online VAT Accounting software:

Invoicing: Generates VAT compliant invoice of the company in the specified design as requested by the client or can choose from the available templates in the software. It also converts quotes to invoice .One of the features is the software can convert the Foreign currency invoices to base currency and further calculating the VAT at UAE standard rate.

Print Tax Invoice In Arabic: Reach software lets you print invoices in Arabic, English or both, as per the mandated guidelines of GAZT and FTA.

Auditor View: Full-fledged Financial reports, Tax reports VAT reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.

Check Post for VAT returns: As the software has been designed exclusively to aid individuals and entities to be VAT compliant in UAE, the set of rules and regulation laid by FTA (Federal Tax Authority) of UAE are embedded in the software. Hence any process error will be popped up by the application can be viewed .For instance wrong Tax Registration Number, incorrect taxable figure, wrong taxation period.

Automatic Update on Tax legal Sections: As the Reach software are cloud computed software gets upgraded to update any revised tax laws and section if any in future.

Computation Of VAT Returns: The software is inbuilt with all the detailed crucial information  on tax computation Tax Assesee can  fetch all the details of all the taxable transactions It lists down transactions which are included and excluded in the VAT return  calculate input tax, reverse charge and output tax to avail claim if any.

Mobile Application: Reach Software provides you the facility of managing business from any geographical location .The mobile application service sends you alerts as to which employee has dealt which transaction of the business process, this provides check and control measure, to track and record taxable transaction.

Tally Import: Import excel files from tally to Reach software and manage accounts with smooth transitions.

User Friendly: Software are designed is such a way that the user will find it easy to operate.

Software Integration: The client can integrate the existing software with Reach software seamlessly.

Security: Reach VAT software ensures security of all the confidential business information avoiding any kind of loss to the business.

Miscellaneous Add-ons: E-stores, Google docs, Google calendar , SMS gateways, Payment Gateways are few to name.

Pricing of the software: No upfront investment, Low monthly rentals, free servers, free routers, LAN, Network cabling not required, Anti-Virus not required, free data backup.