When you evaluate the possibility of setting up your own business in the UAE, there are many questions that come up, from visas and documentation to travel options and office space.
Here, we answer all your questions:
How long does it take to set up a business in Dubai?
While this depends on the licensing authority, the time period can be as short as one week for a small business where visas aren’t required, or as long as 16-24 weeks for a company with staff, premises and third party approvals to be considered. (Example: finance, insurance, real estate, medical, education and so on.)
What is the difference between a free zone and a non free zone licence?
A free zone licence allows for ownership to be 100% retained by a foreign national or entity. A non free zone licence, also known as a local or DED licence, must be owned, at least to the extent of 51%, by a local sponsor. There are a few exemptions on certain activities and business structures, but the general percentage rule is 49/51.
What is an offshore company? What are the benefits and limitations of being an offshore company?
An offshore company cannot trade in the UAE market but is an internationally recognized vehicle used for holding assets. It can be owned 100% by a foreign entity or person.
How different is forming a free zone company from an offshore company?
This is dependent on the jurisdiction in question. UAE offshore companies such as JAFZA, RAK and DIFC are located in their respective free zones, with similar incorporation requirements in terms of due diligence and knowing your client. There is no need for a physical presence or office with an offshore company but it cannot trade in, or conduct business within the UAE market. UAE offshore companies are traditionally used for asset holding and/or facilitating a particular transaction. It is usually quicker to set up an offshore company but some free zone authorities now set up certain company types in five days.
[Related: Finding the right UAE free zone]
What are the differences in regulation for setting up free zone versus offshore companies?
In the UAE, free zone companies are regulated by their respective free zone regulatory authorities such as the DMCC or DIFC. However, depending on the nature of business, certain companies require external regulation from bodies such as the Central Bank, DFSA, Health Authority and so on.
These types of licences aren’t applicable to the offshore market, where the purpose of business is different. However, each company is required to adhere to its constitution and directors and officers must adhere to the company code of conduct.
Does setting up a business come with a visa?
If a visa is required, then the licence applied for should be one that allows visas. There are some Emirates and free zones offering licences without visas, making this an attractive option for multiple business owners and those under spouse sponsorship.
I am currently on my husband’s visa – do I need to get my own visa to set up a business?
Not at all. There are now several licensing options that don’t provide visas and are better-priced than those that do. Some free zones though, require an NOC from the spouse to incorporate the company. In any case, it is always handy to have an NOC on file even if not required.
What are the main challenges I can expect when setting up a business in the UAE?
Banking is probably the biggest challenge and this is reflective when opening and operating bank accounts.
Besides well-established infrastructure, what other advantages can a business owner leverage if he chooses the UAE as a base for business?
The connectivity to Europe, Asia, and Africa is a logistical advantage. As a relatively new market, there’s plenty of room for improvement in areas such as customer service, so if you have a business idea that other companies are already doing, don’t worry – there’s scope for you to create a successful business by doing it better than your competitors.
Is 2016 the right time to set up a new business?
It depends on the risk appetite of the entrepreneur and his experience in starting and running a business in an uncertain market. However, the number of new businesses in the UAE is growing each year, and 100% of our existing clients have renewed their licences for 2016 so far. At the end of the day, it comes down to a well-researched business plan, solid market intelligence, and sound advice.
With Expo 2020 around the corner, is there a new format for company set up, such as a temporary company for a one-year period only?
Any company can set up and operate for one year and then liquidate. The cost of set up versus the cost of renewal does not differ greatly. I do however think there could be some better pricing options for single entrepreneur companies or freelancers.
What services do you provide clients after company set-up? What are your areas of expertise?
Obtaining a valid trade licence involves a lot of research to ensure it suits the company requirements and budget as well as the business plan, but the reality is that it’s just one of the first of many steps.
A business plan is key to getting started, followed by obtaining a licence. This is then followed by a long list of services that may be required to enable the company to progress and succeed, from corporate banking and sound legal advise for contracts, to a great website, attractive business cards, reliable freight and shipping options, strong branding and more.
Each business has different needs but it’s very hard to find tried, tested and trusted service providers to fulfill these requirements. Over the years, through trial and error and listening attentively to client feedback, Vital Corporate Solutions (VCS) has built an informative book of recommended contacts and suppliers to help our clients develop their business.
This article is written by Amanda Perry, Managing Director of Vital Corporate Solutions.