Starting your Business in Dubai

Dubai has been known for the past decade as the business destination in the Middle East and North Africa. With its location at the centre of a 1 billion regional consumer, Dubai offers the perfect business spot for international companies. Dubai is one of the few cities where the East meets the West. Foreign companies looking to establish itself in the region are given different options. Today, there are over 10,000 companies who have set up businesses and offices in Dubai.



The global financial crisis that affected several companies all over the world in the past few years has served as a challenge for the tax-free Dubai economy but since then, the business activity in Dubai has improved significantly. If you are seeking to establish your business, Dubai is one of the very few places in this time of downturn. Businesses in Dubai range from the hospitality and construction, to media, finance, and energy. Companies based internationally and locally enjoy low tax system and open business opportunities.



The government has provided several options for international companies seeking to set up their companies in Dubai. A foreign shareholder can become a shareholder in a Limited Liability Company (LLC) based in the UAE. The privilege of acquiring shares is up to 49% since the local agent or sponsor must have 51% shares of the company. The initial share capital must be paid prior to organising an LLC. Currently, it is AED300, 000 contributed in cash or any kind. Individual shares should be at least AED1, 000.00 each and the subscription is verified by the bank. Distribution of profits in direct proportion between shareholders is not necessary. There are pre-emption rights which are observed under UAE Law. For example, a foreign shareholder having 49% total shares cannot buy the shares owned by the local sponsor. Also, a selling shareholder has to sell his shares to other shareholders only.



Companies based outside the UAE can set up a branch or regional office. This requires registration with the authorities and the Companies Law states that foreign businesses must arrange a sponsor which will govern the operation of such branch office. The branch office is permitted to carry its own business once registered. The branch office can sponsor its personnel, enter into contracts under its name, and lease offices anywhere in Dubai. Import of goods is restricted though a company through its local agent can arrange this with the authorities.



The sponsor's duties in a branch office include obtaining license for the company and administering other legal matters to get work permits. The sponsor is entitled to a fee depending upon the type of business the branch office is involved. However, the sponsor is not liable for any duties of a branch office's operations. Also, they are not required to invest in any capital of the branch office.



There is also an option for companies based outside the UAE to set up their businesses in one of the UAE's free zones (FZ). The first free zone is Jebel Ali FZ which includes one of the most important ports in the UAE serving the Middle East, India, and North Africa. There are other zones developed in the UAE which has played a significant role in the business activity in the country. Dubai Media City and Dubai Internet City houses all media companies from around the world. Dubai Airport FZ handles all companies related to shipping by air. Some major free zones outside Dubai include Ras Al Khaimah FZ, Hamriyah FZ, and Ajman FZ.



Setting up a business in a free zone may require a huge capital, international companies are entitled full ownership of the company with flexibility in corporate structuring. It is also possible to have a single shareholder and director from such FZ LLC. The most attractive is the tax-free operation of such companies. There are no restrictions in change of shareholder, profits, and repatriation.



Although arranging with a local agent or sponsor is not necessary, they play an important role in administering and liaising with local authorities. Setting up in a free zone is the most convenient way of establishing a presence in Dubai. There are Free Zone authorities dedicated in providing assistance in obtaining trade licenses and issuance of work permits.



Dubai has been very warm and business-friendly with the economy continuously progressing. While maintaining its status at the top business destination in the region, Dubai provides a first-class environment to those looking to establish in the Middle East.



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