Many of my friends, family, feel that this is a confusing topic. I'm sure you too have one or 2 questions or you would not be going through this discussion.
My concept is to provide a bird's eye view of the present economic scenario of Dubai that leads to the questions WHAT, WHY, and HOW; This is due to the fact that by asking the questions WHAT and WHY, the big question of HOW will be answered.
By the time you're done reading this I hope to have addressed your query of "how to set up a business in Dubai". I would feel happy if 1 or 2 points which you did not know before is adopted by you regarding starting an organization in Dubai.
This observation commences with the reason behind the desirability quotient of individuals to start doing business in Dubai. There is not one single reason for this but rather a mixture of many.
Foreigners are allowed to make investments in property in freehold zones, due to the fact that these areas are designated by the Dubai government (typically you are not allowed to own property in Dubai).
These are also areas where businesses are not taxed on corporate income. Payroll taxes also do not apply.
The economic miracle of Dubai has been built on free trade and relaxed tariff laws, and the design 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 early advantage the freehold zone concept provides you with the exemption from having a local business partner who has the ownership of no less than 51% of your business (keep reading below).
As of early 2008, there are not any minimum wage laws in Dubai. Labor is really cost effective in Dubai since workers from nearby nations such as India, Sri Lanka and Pakistan usually head to Dubai to seek work and a better life-style for their families. These workers do not get paid much. The arrival of these persons is facilitated, more often than not, by the recruiting branch of the numerous corporations in Dubai.
Excellent Geographical Location
Due to the distinct geographic location of Dubai on the Arabian peninsula, the port city of Dubai attracted a lot of merchants, entrepreneurs, and daily wage laborers establishing Dubai as a hub of finance and commerce. The petroleum sector is responsible for less than 7% of the annual GDP of Dubai. Rather, its central geographic 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 convene at the numerous ports in Dubai. Foreign merchants find trading in Dubai even more attractive due to the relaxed trade and tariff laws of the emirate of Dubai. All the people involved in this emerge victorious.
Due to these benefits Dubai is a really good place to start a business for many entrepreneurs and even international companies. Being a multi-national, you want your corporation 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 want to be close to people and businesses which you frequently deal with. You want to be at the forefront so that you're always ready to wholeheartedly welcome any opportunity that knocks the door.
And despite the most underestimated reason is that local businesses and individuals prefer to work with companies that are established locally. Building personal relationships is really important in such cultures, and that involves the sense of sight and touch. You should be there for that to happen!
Any person requires an operating license for the business activity done by their company in order to own a business concern in Dubai. The three general types of business licenses you could apply for are as follows:
* Professional License – for organizations engaging in professional services
* Commercial License – for corporations engaging in import / export trading
* Industrial License – for companies looking to establish manufacturing operations
The economic department of Dubai, an institution founded for the lone objective of managing, governing and monitoring economic activity, offers these business licenses. The general application process is similar for each; however each license application has its own nuances.
For instance, the department may require that you obtain a guarantee from a local bank in Dubai, if your company is involved in trading or certain services. For any kind of business to be established in Dubai, the Chamber of Commerce should recognize it and provide registration. Similarly, there are several other significant things to understand to be able to successfully set up a business in Dubai.
The 7 types of business entities you can form in Dubai:
* Public Company (Traded in the Stock Exchange)
* Private Company (Not required to distribute publicly)
* Joint Venture Company (JV)
* Limited liability Company (LLC)
* General Partnership
* Share Partnership Company
LLC has always been my personal favorite. I have multiple LLC registered at the time I'm writing this discussion. I find them to be the most flexible. At the same time I get the liability protection from separation of business from personal assets.
My suggestion is that even you select to go for an LLC. You will not be alone if you decide to find a limited liability company in Dubai. Many successful companies in Dubai which have been in existence for a while are LLCs. It's the number one choice of business entity.
If you're used to the western business laws, there are a few Crucial things you must know regarding an LLC in Dubai. A minimum of two individualholders are required for your LLC. You can have as many as 50 (somewhat similar to an S Corporation in the United States).
In order to establish an LLC, there is even a minimum capitalization requirement. As of 2008 this number is about 300,000 Dirham or just around $ 80,000 USD. You can have this in either cash or capital assets.