November 12, 2015
Why businesses are targeting Dubai for trade investments?
1. No restrictions on Foreign exchange control
2. Income tax, withholding tax & corporate tax are nil
3. Dubai has the world’s highest per capital income
4. Import duty exemptions are minimal (around 2%)
5. Dubai implements the most modern infrastructure
6. No trade restrictions
7. No restrictions on import & export
If you are planning a trade investment in Dubai, then Dubai government provides you with a number of business models that mainly applies for foreign investors and these include:
Also read: Business Setup Dubai
There are 3 major factors that you need to take into consideration if you are planning to start a business in Dubai and these are:
For any kind of business formation that you are planning, you need to have a profound knowledge and expertise in the preferred sector. Conduct an extensive research across the business sectors that you plan to operate on. Strategize a feasible business plan including a detailed research on the market influence, the competitor analysis, & calculate the outcome. Remember, it is not an easy task to find an investment source unless you are a local, so it will be best if you can use your own resources or choose to fund your business via your bank. If your plan is genuine, it can generate local support ultimately attracting the government attention and support.
The law states that you need to organize your business with support from a local partner, who will have the major power and can exercise control over your business and even close it if necessary. Your partner should have around 51% of ownership rights over the business. No matter whether the partner is an individual or a business, they need not make a start-up financial investment or any other kind of investment at all.
Once you are done with the legal formalities and your business is registered, you need to seek the approval from the Ministry of Commerce. This can be done by showing them the proof of your resources; they will approve it once they find out that you are capable of investing a substantial amount of money. You need to produce an account summary (that shows you have fund amount that ranges between $10,000/£6,500 and $50,000/£33,500) and this amount usually varies from state to state. The Ministry of Commerce views this as a guarantee against any liabilities that might arise in the long run. Once the Ministry is satisfied and approves your request, you can withdraw the money after a while.
If you want to own the sole proprietorship of your company without partnering with a local business or individual, opt for doing business in the Free Zone.
Benefits of choosing Dubai Free Zone for trade investments:
1. You can enjoy 100% Ownership rights
2. You own the sole proprietorship
3. You can open bank account in Dubai
4. 100% Confidentiality
5. No Tax
6. Minimal Renewal Charges
7. You can close it at anytime
8. Provides international business opportunities
But before choosing to invest Freezone setup in UAE you need to consider a few factors like whether your business needs to be closer to the city, if so then it can lead you to bankruptcy as Free Zone is towards the outer skirts. Even, rental costs in the Free Zone are higher when compared to the rental prices within the city.
No matter whether you are planning to setup a retail outlet or an enterprise, you need to have profound knowledge about the business processes that follow. The process is actually complicated and financially risky too, so you need to seek local assistance for getting it done appropriately. Seek legal assistance; look for lawyers who have a great professional expertise in the processes related to business formation. An experienced lawyer can help you with the trademark registration and intellectual property rights processes.
These are just the other side of the coin; don’t let it shake your interests for making trade investments in Dubai. People have overcome all these complexities and successfully emerged as reputed brand names in Dubai. The Dubai government encourages new business ventures and you will be supported by your local partner which will lead your business to success.
You can choose to buy a going concern which is an alternative to forming a new business and is less complicated as it does not involve:
1. Lodging capital
2. Sponsorship or Registration
You can also seek assistance from the Local Chambers of Commerce as these possess profound knowledge at providing the complete guidance for start-ups.
Now that you have set up the dais for company formation in Dubai, ensure that you meet the visa eligibility and requirements as it is mandatory if you wish to live and work here. If you plan to acquire more number of foreign resources on your project, you need to seek your local partner’s support and get their approval on sponsoring the employment visas. Remember you do not own Dubai citizenship and your partner’s support matters if you are to quit or sell your business under any circumstances at some point of time or the other.
The Corporate law that rules the Western countries prevails in Dubai which states that businesses can be run as:
1. Limited liability operations
2. Private companies or any other types of concern.
Usually forming a business or buying a going concern is a complicated task and you need to seek local legal advice to complete the registration formalities. Foreigners can seek assistance from the Western/ Arab joint venture law firms to help with their legal processes. Also the Arab-British Chamber of Commerce, Middle East Association, the DTI & your Embassy’s commercial sections can advice you with the processes related to business formation in Dubai.
These points cover the various aspects of trade investments in Dubai; though in our next blog we will be discussing the business set up processes in Dubai in detail.
Legal Maxims is one amongst the leading corporate law firms offering all kinds of legal and corporate assistance services. If you have plans to set up business in Dubai and need assistance then contact us today and we will help you.