The UAE continues to be at the zenith of economic growth by attracting investors from all over the world. However, despite its appeal, several misconceptions surround the process of setting up a business here because of which businesses often hesitate to expand in the region.
In this post, we bust the common myths, providing clarity for those considering company formation in the UAE. Additionally, we have also listed the dos and don’ts for a compliant company setup.
Common Myths About Business Setup in the UAE
Myth 1: Setting up a Business in the UAE is Costly
Fact:
Business setup and expansion do require a minimal investment, but the cost of starting a business depends greatly on the country and industry. While some assume that the UAE is expensive for new businesses, it is actually more affordable than many Western countries.
Its tax advantages significantly reduce operational expenses. The 9% corporate tax applies only to businesses with taxable profits exceeding AED 375,000, which is still lower than corporate tax rates in most other countries.
Additionally, business setup costs here can be flexible, with options available for every budget. Business setup in the UAE free zones, for example, offer cost-effective packages with lower license fees and minimal overhead expenses.
Myth 2: Requirement of a local UAE national
Fact:
Foreign investors can now own 100% of their businesses in both mainland and free zones without needing a UAE national as a sponsor or shareholder.Previously, businesses in mainland were required to have a local Emirati sponsor holding a 51% share.
However, recent reforms have removed this requirement for most commercial activities, allowing full foreign ownership. Some business activities, particularly those related to national security and legal or financial services, may still require local sponsorship.
But for most industries, entrepreneurs can now establish and operate their businesses independently. Real estate brokerage firms in Dubai, for example, which were previously required to be fully owned by UAE citizens, can now be 100% foreign-owned.
Myth 3: Company Formation in the UAE takes time
Fact:
On the contrary, company registration in the UAE is quick and efficient when handled correctly. With the right advisory firm by your side, most businesses can obtain their license within a week. In some cases, where special government approvals are required, the process may take a few extra days or weeks.
However, compared to other global business destinations, the UAE’s business setup procedures are streamlined. Furthermore, having all necessary paperwork in place and choosing the correct company structure can significantly reduce setup time.
Do’s and Don’ts for Business Setup in the UAE
Do’s
Conduct thorough market research – Understand the business landscape, competition, and demand for your UAE business.
Set a budget – Plan your company’s incorporation, operational, and management costs before starting.
Choose a registered corporate services provider – A professional consultant can help you navigate regulations and handle all necessary paperwork.
Obtain the right business license – Selecting the appropriate mainland, free zone, or offshore license is crucial for legal compliance and long-term success.
Select the best location for your business – The UAE offers several options, including free zones, mainland, and offshore setups. Each has its own advantages depending on your industry and business needs.
Select the best location for your business – The UAE offers several options, including free zones, mainland, and offshore setups. Each has its own advantages depending on your industry and business needs.
Don’ts
Don’t run after the cheapest – Low-cost business setups may come with hidden limitations or lack the necessary support services.
Don’t attempt to register a company alone – The process involves legal and regulatory considerations that are best handled by corporate service providers.
Don’t work with unlicensed agents – Always verify that your consultant is a registered and licensed corporate service provider before engaging their services.
Don’t start a business without proper planning – Ensure that you have enough funds to sustain your business operations.
Don’t rely solely on online information – Many websites provide outdated or misleading information about company setup in Dubai. Consulting a professional is the best way to get accurate and up-to-date advice.
Don’t attempt to open a company bank account alone – UAE banks have strict compliance procedures, and working with an experienced consultant can help facilitate a smoother account opening process.
Ready for Business Setup in the UAE?
The UAE offers an ideal business environment with its pro-business policies, world-class infrastructure, and global connectivity. However, myths and misconceptions often create unnecessary concerns for entrepreneurs.
By understanding the facts and following the right steps, setting up a business in Dubai can be quick, cost-effective, and hassle-free.
At Nimbus Consultancy, we specialize in guiding businesses through the company formation process, removing bureaucratic hurdles and ensuring a seamless setup experience.