Starting a small business in UAE? Consider these factors!

UAE is such a territory that is loved by people all over the world. The count of its visitors every year crosses in millions.

The nation’s rapid economic growth attracts individuals from every category. Either they may be entrepreneurs, investors, or some businessmen. It is one of the speediest developing regions/economies in the world.

There are lots of opportunities booming in every aspect of career and businesses, especially in Dubai. With the economic boom, it is one of the major hubs for businessmen and entrepreneurs. You can find new chances for career growth in every category like education, travel & tourism, entertainment, business, etc.

UAE provides full support with appropriate laws and regulations for expatriates who want to start their business there. They have the most attractive and liberal environment, plus a system for business setup.

Like a business set up in any other place, you have to put in the same effort and adequate information to start a small business in Dubai. And since it is the most sought-after place/location for new companies and SMEs, you have to consider many other factors. For instance, your business type, technological advancement, managing your employees, integrating payroll and HR software or not, operation & distribution, etc.

If you reach this page, you will find some factors that are to be considered to start your small business (or any business size) in UAE. These factors are obviously not all of them, though.

Your business location/establishment

You choosing the best business hub as Dubai for your business location is not enough. It is strongly recommended to go for the “free zone” area or “free trade zone” for your small business setup.

A free trade zone is a particular area with low trade barriers and tax-free status. This zone is governed by the Free Zone Authority (FZA) and operates as per its own rules and regulations. You need not have to pay any customs tax for goods manufacturing, goods import/export, handling and configuration of goods, etc.

Starting your small business in free zones will benefit you with complete ownership and rights over your business. Because outside of free zones, you will have to partner up with some local company. This would lead to sharing of managerial rights and ownership of your small business.

You can locate these free trade zones around national borders, major seaports, and international airports. In UAE, you can find seven free trade zones in total. These geographical locations are strategically chosen for maximum trading benefits to the business in that area.

In brief, these are the advantages that you will reap from free trade zones:

  • Get complete foreign ownership of your business/enterprise.
  • Total exemption of import & export taxes.
  • Full repatriation of your business’s capital & profits.
  • Exemption of corporate tax up to 50 years.
  • No need to pay any personal income tax.
  • Get employee recruitment assistance and additional support services like housing and sponsorships.

Suppose you do not set up your small business in the free trade zone. Then, you would need to link up with a local company depending on your business type. To start a business outside of the free zone area, a local partner is necessary for foreign business setups. Certain types of businesses need a local partner who must own not less than 51% of your company’s executive powers and shares.

However, the local partner is not bound to financially invest in your company. Finances of the company are still your sole responsibility. You should make a proper and transparent negotiation before partnering with a local company or individual.

Your business registration

You would need a trading name for setting up a small business in a foreign nation, UAE. You can choose a suitable trade name and contact the Department of Economic Development or the local Free Zone Authority. This is to see whether your trading name is available and acceptable as per the regulations.

Because, as per UAE state law, a trading name must not violate any public morals. It must be previously unregistered and comply with your business’s purpose and legal status.

You can apply for your business license after approval of your trading name. You can get your business license depending on the UAE’s available business industry like tourism, commercial, industrial, and professional.

You can do the registration and license of your business at the same time. There is also a one-time fee for business registration, whose amount differs as per the trade zone area. You need to apply to the relevant FZA for your business registration along with the following documents:

  • Complete and correct application form.
  • Your business plan.
  • Shareholders/director’s passport copies.
  • Shareholders/directors’ specimen signatures.
  • Letter of intent.

Employee/staff recruitment

Starting a business and its operation plus management is never a one-man thing. You would need employees to handle different aspects of your business. And in UAE, it is mandatory to fulfill the local employment quota by companies. For example, in the banking industry, the minimum local employment reservation is 4% and 5% in that of the insurance sector.

Suppose you decide to employ UAE nationals as your staff. Then, you must forward the information to the labor department within 15 days after employee recruitment.

If you decide to hire ex-pat staff, you should apply to your local emirate through the General Directorate of Residency and Foreigner Affairs and the MHRE. The ex-pats must meet specific qualifications and also sign an employment contract.

However, you can also hire foreign staff in your business if it is in the free trade zone. For that, you need to directly apply to the local Free Zone Authority. The foreign candidates must meet specific requirements such as between 18 and 60 years of age.

And, as an employer in UAE, you must provide mandatory health insurance to your employees. Along with that, you might also have to provide a housing allowance for foreign employees, their children’s education, and flight tickets. However, an annual leave of 30 days and a sick leave of 90 days is standard.