Business in Dubai: Know the Advantages and Rules of Setting up A Company

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Published: 16th March 2010
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The United Arab Emirates has opened its doors to companies based outside the country. The seven federal emirates have created an economic environment committed to promoting a liberal and well-organised business conditions. For this reason, Dubai and the rest of the emirates has been the most sought business destination over the last decade even in the midst of the global financial crisis which struck many countries across the world.

International companies have been given a wide range of options in setting up their businesses in Dubai. Your presence in the Middle East particularly in Dubai can give you benefits as the place is serving one of the biggest consumers including India, the Arab region, and the rest of North Africa which comprise of more than 1 billion people. Dubai continues to be one of the top business destinations in the world and has progressed beyond the crisis positively more than any other place in the world.

Advantages of Setting up a Business in Dubai

International companies seeking to establish business relationships in Dubai have many advantages. The low tax system of Dubai has been the primary reason. The UAE maintains its free market and is not subject to any custom duties. There is an extensive choice of business in Dubai as every sector is available from the construction and hospitality, to finance and media sectors.

Unlike in many American and European business setups, doing a business in Dubai involves mainly in building personal relationships and this is an important factor if you want to grow and succeed. The buying patterns of some countries serviced in Dubai have been irregular and for this reason, there is a need to monitor markets and offer first class market information.

Companies based outside the UAE are given the option to setup business through local agents commonly known as 'sponsors'. The main duties of the sponsors are liaising with government officials that include arranging legal matters as well as obtaining trade license for the company. There are other options for international and locally-based companies to establish their businesses in Free Zones (FZ) in Dubai such as Dubai Airport FZ, Jebel Ali FZ, Dubai Technology, Electronic, Commerce and Media FZ, and other developed zones across the UAE. This alternative entitles foreign companies 100% ownership of their company where they do not need a sponsor. Companies based outside the UAE that is setting up business in free zones may have only a single shareholder and director. These companies also have the privilege to sponsor their own personnel, arrange paper works through Free Zone officials rather than sponsors, and they have their control over profits, wages, and transfer of capitals which is not restricted.

Essentials in Setting up a Business in Dubai

A foreign company can become a shareholder incorporated in the UAE through a Limited Liability Company (LLC). In establishing such LLC, the shareholder needs to look for a local agent or sponsor, sometimes arranged by certain companies specialising in the service like Sentinel Business Centres. A sponsor who has 51% shares requirement from the company has been arranged, he will coordinate with local officials to obtain a license for the company. The foreign shareholder is required to pay the initial share capital, where the sponsor is exempted to pay, of at least AED300, 000.00 in cash or any kind. The foreign shareholder having 49% shares cannot buy the shares of the sponsor according to the Companies Law.

Setting up a branch office of an international company in Dubai is another option which requires registration to the authorities through a sponsor. Legal matters such as registration of license and work permits are the responsibilities of the sponsor. Branch offices are recognised in the Companies Law and usually, the sponsor governs the operation of the branch office. After becoming a licensed branch office in the UAE, you can lease office anywhere in Dubai, hire and sponsor your own personnel, and enter into contracts using your own company name. Import of goods is restricted and requires a sponsor to arrange to the authorities.

Direct ownership of your company in Dubai is possible when you set up your company in one of the free zones. In most cases, a sponsor is not needed but this may require a big capital which is paid and arranged through Free Zone authorities. Some companies still arrange a sponsor that acts as PRO. While English language is widely used in the country mostly among expats, the dominant language is still Arabic and is used by government authorities. So hiring a sponsor might be a good option and would make communication more convenient and easier.

This article was provided by Sentinel Business Centres - Dubai. To find out more, please go to:

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