How to set up a business in UAE

By Avanish Tiwary

Apart from its skyscrapers and malls, UAE is attracting a lot of attention for the ease with which one can set up and run a business there. World Bank's report, Doing Business 2013, puts Dubai on 23rd position for the ease of doing business, up by three positions compared to 2012.

Currently, UAE attracts businesses in sectors such as finance, manufacturing, IT services and media. Of note are the Free Zones in Dubai that allow startups to set up a business easily with 100 percent ownership to the proprietor.

In setting up a business in Dubai, things like the type of venture, business license, ownership, etc. play an important role. The entrepreneur also has to decide if he needs a local partner or wants to own it wholly. It is advised to run the business through ones own funds as loans for setting up a business are not easily available and neither is the investing community fully developed in the country.

Here are a few pointers on what to think of before starting your business in the UAE.

- Ownership or partnership

You must decide if you want to go solo or partner with a local business, who would know everything about the local market, buying behavior, etc. To start a business in the UAE, you have to partner with a local company that must own at least 51 percent of the business.

The benefits of working with a local partner is that he would know all the technical details of setting up the business. Businesses should invest time and effort to get to know their local partners and build a good rapport with them.

However, if you want to go for a sole proprietorship, you will have to open your business in Dubai's Free Zones that allow people to set up businesses without partnering with a local trader.

The cost of setting up businesses in the Free Zones is relatively higher due to the expensive real estate prices. Moreover, if your business requires consumer interaction, these zones are not such a good idea. The benefits in setting up the business in these zones are that the founder gets to control everything and he saves on customs and duties.

- The fees

Even though the UAEs tax free nature invites a lot of entrepreneurs to start their own ventures there, one has to keep in mind the fees and extra charges involved in issuing a new trade license.

For people wanting to set up a fully-owned business in one of the Free Zones in Dubai, you should know that each one of them has a different procedure and setup fee. Also, if an entrepreneur is setting up a new business in the Free Zone, he is required to have a minimum capital. However, this rule does not apply if its a branch of an existing business.

- Getting visas

UAE gives visas for almost all kind of businesses and it is relatively easy for one to get a visa for setting up business due to relaxed norms for foreign investors.

However, the numbers of visas issued vary on business type, office size, investors, etc. In addition, the entrepreneur is required to sponsor and provide for the visa and paperwork of all their employees bar none.

- Rules can change

Like elsewhere in Asia, rules can change quickly and silently in the UAE. Before you act on any rule or process conveyed to you, confirm the veracity of the information yourself as they are prone to change. In the Free Zone, the procedures change depending on the type of business or the kind of location you want. Try contacting the authority yourself or talk to a consultant about your business prospect.

Similarly, while choosing a license in UAE, always choose the one which will give you the freedom to tweak the business and revenue model, if need be you might need to change your model later to suit your needs. Choose the license type which allows you to operate in that possible environment.

- Hire consultants

Unless you are opening a business in the UAE with a local partner who knows the procedures well, consider hiring a business consultant who will not only help you understand the processes, but execute them for you.

The consultant will chart out the process for setting up the business and help you all the way through to business registration.