How to start a business in Dubai?
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How to start a business in Dubai?
The Dubai government offers different types of business models for foreign investors: direct sale, commercial agency arrangements, branch or representative office, limited liability company and special free zone investment.
Here are the three things you must know before you start your business in Dubai:
- Good knowledge of the region (deep research and analysis of the business sector you aim to operate within). You must have a viable business plan, which includes a study of the market conditions, the competition and your forecast results. Moreover, it is neccessary to prepare investment from your own resources. A credible plan might attract local support, possibly government support.
- The law in Dubai requires that you have a local partner who holds the majority interest and can therefore control the business, which includes closing it if necessary. The partner will own 51% of the company, therefore being able even to close it. Be it a company or an individual, the local partner doesn’t need to contribute to the start-up investment or participate financially at all.
- When the business is registered, you must show the Ministry of Commerce that you have a substantial sum of money to invest.
Take into account that if you want to own 100% of your company and do not want to have a local partner, the only possibility is to start a business in the Free Zone.
In order to start you business, you must be aware that the process is complex and financially risky, meaning that local knowledge is crucial. You must also consult a good lawyer from the outset. An experienced lawyer will guide you through the registration complexities and his help will be vital in protecting your interests. This applies whether you’re opening a modest shop or a major enterprise.
The latest data shows that many people have developed successful, highly profitable businesses in Dubai. Foreign nvestments are encouraged by the authorities and your local partner might be enthusiastically supportive.
If you set up your business in the one of the several free trade zone, it’s granted exemptions from import and export duties, commercial taxes, building and property licence fees, land tax and restrictions on the transfer of capital invested in the zone.
An alternative to starting a new business is to buy a going concern, which is a more straightforward process, as it doesn’t involve lodging capital, obtaining sponsorship or registration; all you have to do is agree a price and transfer the ownership of the business.
Local Chambers of Commerce can advise about start-ups and are adept at cherry-picking potentially profitable newcomers to the region. Winning the confidence and support of a Chamber of Commerce will help your cause.
Before starting your business and looking into everything, make sure you meet your visa eligibility and requirements. You will need a visa that allows you to live and work in Dubai. If you plan on bringing on more foreigners onto the project, you need to work closely with your local partner in order for them to sponsor your employment visas.
Legal aspects
Corporate law in Dubai is similar to the one in western countries (businesses can be run as limited liability operations, private companies or other types of concern). As it is mentioned before, setting up a business or buying a going concern can be complex and you must obtain local legal advice and guidance about registration formalities.
The authorities, however, are usually helpful and don’t tend to be difficult unless they have good reason.
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