Doing business

Overview

Doing business in Dubai: how to set up a company, taxation, and benefits

Starting a business in the United Arab Emirates is relatively easy, and many companies and foreigners are jumping at the chance. In this article, we'll provide some useful information about the rules for incorporating a company in Dubai.

Over the course of several decades, the Emirates have undergone an incredible transformation. From a virtually unknown nation, it has become a financial powerhouse with thriving companies in many sectors. Furthermore, the country boasts a stable political system, strong capital flows, favorable taxation for businesses, and few trade restrictions. As a result, the country has become an increasingly popular investment option .

Company Formation

Opening a Company in Dubai: Why, Requirements, and Regulations

Starting a business in Dubai is definitely not a bad idea these days. The local government is encouraging investment and startups in many ways, so now is a good time to jump on board. It's also relatively easy for foreigners to do business in the Emirates. It's easy to set up a company, and combined with the government now offering long-term investment visas, entrepreneurship in Dubai and the UAE is booming.

In 2017, there were 131,000 registered businesses in the UAE. When combined with the fact that 80% of residents are foreign-born, it becomes clear that there is considerable scope for foreign investment.

Furthermore, since 2019, it has been possible to establish 100% foreign-owned companies in 122 economic activities across 13 sectors. These include growth sectors such as renewable energy, logistics, hospitality, food services, and manufacturing. However, it is important to note that each emirate can impose its own restrictions.

Although conservative and hierarchical, the local business culture in the United Arab Emirates is relatively easy to understand. Personal relationships are crucial, and face-to-face communication is highly valued. As a result, anyone who behaves appropriately can succeed in business in the country.

Anyone thinking of starting a business here needs to consider several things. To begin with, you need to identify which sectors are popular. You also need to understand what services are lacking or what goods people are seeking. Currently, the automotive and aerospace industries are doing well, as are oil and gas. Likewise, there's room for growth in food and beverage, as well as marketing and advertising.

Setting Up

Where to set up a company

Starting a business in Dubai is quite easy. In fact, almost anyone can do it. This is because the government offers numerous incentives for starting one there.

The main thing to know is that the 51% rule for a local partner with Emirati citizenship has been removed for almost all businesses. After that, you simply need to follow the registration process and obtain a business license. In some cases, you may also need to meet minimum capital requirements.

The most interesting aspect is the free zones, often called "free zones." These are unique areas and are very popular among foreign investors. This is because they offer 0% corporate and personal taxes, along with 100% foreign ownership, as well as exemptions from import and export taxes.

There are many types of offices available in the United Arab Emirates. However, traditional offices are not particularly popular because they can be expensive and difficult to customize.

For those just starting a business in the United Arab Emirates, coworking spaces are a good choice. They allow for complete flexibility, and many also offer business features like printing, faxing, emailing, mail reception, and secretarial services.

If you have employees, a serviced office might better meet your business needs. This type of office feels more like a traditional office space. However, it offers many useful benefits. Often, there are staff members on hand, such as receptionists and assistants, who are used by different businesses in the same space. Additionally, there are cleaners to keep everything clean and tidy, and an IT team is available in case of any technical issues. This type of serviced office is among the most popular choices, especially in free zones.

Taxation

Taxation for doing business in Dubai

When starting a business in the United Arab Emirates, you also need to remember to be compliant with tax regulations. The country typically imposes two types of corporate taxes: excise duties and VAT.

Excise taxes are levied on carbonated beverages, energy drinks, tobacco, and their derivatives. They may also apply to products considered harmful to the human body. Different tax rates apply to different types of products, such as carbonated beverages, sugar-added beverages, tobacco, energy drinks, and electronic smoking devices.

VAT in Dubai is 5%. VAT applies to all businesses registered for tax purposes in the UAE mainland and free zones. If the company's annual turnover exceeds AED 375,000 (approximately €88,000), registration is required. Otherwise, registration is optional.

There are two types of VAT tax periods. Companies operating below AED 150 million (€35 million) must file quarterly returns. Companies operating above that level must file monthly returns.

In both cases, all companies must retain all documentation relating to VAT invoices and costs.