subject: Get To Know All About Setting Up A Business In Dubai [print this page] Get To Know All About Setting Up A Business In Dubai
Many of my friends, family, feel that this matter confuses them. Its a fact that this article is being read by you just because you have a query or 2 regarding this topic.
So the idea is to give you a synopsis of the key aspects of doing business in Dubai and then lead into the "How" question. I am a big believer in that the "what" and the "why" should be understood clearly before the "how" aspect of a complex question is answered.
By the time you're done reading this I hope to have addressed your question of "how to set up a business in Dubai". Even if you perceive that you know everything there is in order to start an organization in Dubai, I'd be delighted if you took away a thing or two from this discussion that you weren't aware of before.
To start off let me talk about why Dubai is such a desirable place to do business. There isn't one single reason for this but rather a combination of many.
Freehold Zones
These are areas designated by the Dubai government where foreigners are allowed to invest in property (generally you aren't permitted to own property in Dubai).
These are also areas where businesses are not taxed on corporate income. Payroll taxes also don't apply.
Dubai was built on free trade and relaxed tariff laws, and the designation of freehold zones have encouraged MNCs to establish a presence in Dubai.
The laws are no different for the small mom and pop business.
In my opinion, the most amazing advantage the freehold zone concept provides you is the exemption from having a local business partner who owns at least 51% of your business (keep reading below).
Labor Arbitrage
As of early 2008, there are no 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) in order 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 seeking to hire.
Excellent Geographical Location
Dubai's wealth was made through trade, not oil. Less than 7% of Dubai's annual GDP is oil driven. Rather, its central geographical location near water has made it a premier destination for trade.
So as to conduct business, numerous merchants from the continents of Europe and Asia arrive and get together at the numerous ports of Dubai. Dubai's relaxed trade and tariff laws make trading in Dubai even more attractive for foreign merchants. All the individuals involved in this emerge victorious.
Because of these benefits Dubai is a really good place to start a business for many entrepreneurs and even international companies. As a multi-national, you want your company to be near your vendors and customers. It becomes difficult for you to not establish a business in Dubai when everyone is doing so. You may just lose your position in the industry you play in.
Majority of the individuals would want to be close to people and businesses that 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 perhaps the most underestimated reason is that local businesses and people prefer to work with companies that are locally established. In such cultures, building personal relationships is very important, and that involves the sense of sight and touch. For your business to prosper, you must build holistic interpersonal relations while conducting business!
Business Licenses
As a business in Dubai, you will need an operating license for the business activity your company conducts. There are 3 general types of business licenses you could apply for:
* Professional License - for corporations engaging in professional services
* Commercial License - for companies engaging in import/export trading
* Industrial License - for corporations 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. Inspite of the fact that each license application has its own fine details, the general application process is similar for each.
For instance, if your company 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 founded in Dubai, the Chamber of Commerce must recognize it and provide registration. Similarly, there are several other important things to understand so as to be able to successfully set up a business in Dubai.
There are basically 7 types of business entities which could be formed in Dubai. They're as follows:
* 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.
My suggestion is that even you select to go for an LLC. You will not be alone if you decide to set up a limited liability company in Dubai. LLCs consist of the majority of the numerous successful companies in Dubai. It's the number one choice of business entity.
There are a few important things you must know about an LLC in Dubai, if you are used to the western business laws. Your LLC would need a minimum of 2 individual shareholders. You could have as many as 50 (somewhat similar to an S Corporation in the United States).
There is also a minimum capitalization requirement to institute an LLC. This number is approximately 300,000 Dirham or just around $80,000 USD in 2008. You could have this in either cash or capital assets.
