Get To Know All About Setting Up A Business In Dubai

This is a baffling topic for so many of my friends, family. It is a fact that this article is being read by you just because you’ve got a query or 2 regarding this topic.

My concept is to provide an overview of the present economic scenario of Dubai which leads to the questions WHAT, WHY, and HOW; this is because by asking the questions WHAT and WHY, the big question of HOW will be answered.

You would have most probably got the answer for your question of "how to set up a business in Dubai" by the time you’re done going through this article I'd feel contented if one or two points which you were not aware of before is adopted by you regarding starting an organization in Dubai.

This observation commences with the reason behind the desirability quotient of people to begin doing business in Dubai. There are numerous reasons for this as opposed to a single point.

Freehold Zones

These are areas designated by the Dubai government where foreigners could invest in property (generally you are not permitted to own property in Dubai).

These are also areas where businesses aren’t taxed on corporate income. Payroll taxes also don’t apply.

Dubai was built on free trade and relaxed tariff laws and regulations, and the designation of freehold zones have encouraged MNCs to set up a presence in Dubai.

The rules and regulations for the small businesses are no different from the other businesses.

In my estimation, the best advantage the freehold zone concept provides you is the exemption from having a local business partner who has the ownership of at least 51% of your business (keep reading below).

Labor Arbitrage

As of early 2008, there are not any minimum wage laws in Dubai. Since daily wage blue collar workers arrive in droves to Dubai from the Indian Subcontinent (India, Pakistan, Bangladesh, Sri Lanka) to seek high-paying work opportunities and a better way of life for their family members and acquaintances. These workers do not get paid much. Most times, their arrival in Dubai is facilitated by employers looking to hire.

Excellent Geographical Location

Due to the distinctive geographical location of Dubai on the Arabian peninsula, it attracted several merchants, entrepreneurs, and daily wage laborers establishing Dubai as a center of finance and commerce. The petroleum sector is responsible for less than 7% of the annual GDP of Dubai. Rather, its central geographical location near water has made it a premier destination for trade.

In order to conduct business, several merchants from the continents of Europe and Asia arrive and get together at the numerous ports of Dubai. Foreign merchants find trading in Dubai even more attractive a result of the relaxed trade and tariff laws of the emirate of Dubai. Its a win-win situation for all involved.

Due to these advantages Dubai is a very good place to start a business for many entrepreneurs and even international companies. Being a multi-national, you want your company to be near your vendors and customers. If everyone is establishing a presence in Dubai, it becomes difficult for you not to. You may just lose your position in the industry you play in.

You'd like to be close to people and businesses that you frequently deal with. Majority of the people would want to be at the forefront so that you are always ready to wholeheartedly welcome any opportunity which knocks the door.

And perhaps the most underestimated reason is that local businesses and people prefer to work with companies which are locally established. Building personal relationships is very important in such cultures, and that involves the sense of sight and touch. You need to be there for that to happen!

Business Licenses

Any person needs an operating license for the business activity done by their organization so as to own a business concern in Dubai. There are 3 general types of business licenses you can apply for:

* Professional License - for organizations engaging in professional services
* Commercial License - for companies engaging in import/export trading
* Industrial License - for organizations looking to establish manufacturing operations

These business licenses could be obtained from Dubai’s economic department, a body created for the sole purpose of governing economic activity. The general application process for obtaining each of these licenses is similar; nevertheless each license application has its own nuances.

For example, if your corporation is involved in trading or certain services, the department might require that you acquire a guarantee from a local bank in Dubai. For any kind of business to be established in Dubai, the Chamber of Commerce should recognize it and provide registration. To be able to set up a successful business in Dubai, there are numerous other important things to comprehend.

The 7 types of business entities you can form in Dubai:

* Public Company (Traded in the Stock Exchange)
* Private Company (Not required to disclose publicly)
* Joint Venture Company (JV)
* Limited liability Company (LLC)
* General Partnership
* Partnership-en-commendams
* Share Partnership Company

My personal choice has always been an LLC. At the time of writing this discussion, there have been numerous LLCs registered in my name. I find them to be the most flexible. At the same time I get the liability protection from separation of business from personal assets.

I would recommend you go with an LLC as well. You won't be alone if you choose to set up a limited liability company in Dubai. Many successful companies in Dubai that have been in existence for a while are LLCs. It is the number one choice of business entity.

There are a few key things you need to know regarding an LLC in Dubai, if you’re used to the western business laws. A minimum of two individual shareholders are required for your LLC. You could have as many as 50 (somewhat similar to an S Corporation in the United States).

So as to establish an LLC, there’s even a minimum capitalization requirement. This number is approximately 300,000 Dirham or just around $80,000 USD in 2008. Either cash or capital assets are accepted.
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