Over the years, the United Arab Emirates (UAE) has become one of the most favourable locations for starting a business. The relaxed taxation, ease of doing business, world-class infrastructure and the diverse pool of talent make it all so much easier to grow your business. However, you might still run into a few blockers if you are not careful enough. The UAE has set various compliances and regulations to facilitate smooth business operations in places. In this article, we will discuss the various challenges you might face if you are unaware of the regulations and compliances. There are also going to be suggestions to overcome the challenges. So let us get started.
1. Finding the right location Location plays a huge role when it comes to setting up a business in the UAE. It is the location which determines what business activities you can carry out. And there are multiple nuances to it. The first consideration when picking a location is choosing between mainland and free zones. Setting up a business in the UAE mainland comes with various advantages like no currency restriction, the ability to trade anywhere in the mainland, a wide range of licence types and more. However, there are some downsides to it as well. For instance, you would need a local sponsor and you might not be able to own 100% of the business based on the nature of the activity. Free zones in the UAE are specific economic areas which operate under their own set of regulations. If you set up a business in the UAE free zone, you get to enjoy 100% ownership and significantly lower tax rates. The only downside is that you might not be able to trade with the mainland if the business is set up in the UAE free zone. There are more than 40 free zones in the UAE promoting specific sets of business activities. We think setting up a business in the UAE free zone is a great option if the nature of your business activity allows it. 2. Getting a visa Another challenge you might face when setting up a business in the UAE can be regarding visas and work permits. Oftentimes it is the case that if you are setting up a business in the UAE, you would need a visa not just for yourself but for others too. For instance, it might be the case that you require a visa for your employees or family since you will be moving to the UAE. In such cases, managing various compliances and documentation can get tricky. Additionally, there are parts of the process such as medical checkups and biometrics that need to be taken care of. It is highly advisable to get help from competent authorities in such cases. For example, if you plan to set up your business in Ras Al Khaimah Economic Zone (RAKEZ), then you can utilise their free zone visa services. There are various visa options ranging from investors to dependents. Based on your requirements, you can avail visa services for relevant individuals. 3. Finding office space and warehouse The majority of business activities in the UAE mandate a physical office. There are a few exceptions but for a limited number of business activity types. Additionally, your business might be such that you require more than an office space. The needs could include warehouses, workforce accommodations and more. But if you set up your business in a free zone like RAKEZ, you can easily take care of all these requirements. They provide everything from a coworking office to shell and core offices that you can modify as per your requirements. If you want to rent a warehouse, it is easily doable in RAKEZ. Check out the wide range of facilities available in RAKEZ. 4. Understanding the tax structure The UAE offers some of the lowest corporate tax rates around the globe. However, there are still various things you need to take care of to make the most of these lenient tax policies. In the UAE a corporate tax of 9% is applicable on taxable income above AED 375,000. However, you can still avail 0% corporate tax rate if you are a Qualifying Free Zone Person. As the name suggests, you need to set up the business in the UAE free zone to avail the tax benefits. But that is not all. There are a few more conditions you need to meet to be a Qualifying Free Zone Person. 5. Sourcing the right talent Another challenge you might face while setting up a business in the UAE can be sourcing the right talent for your business. Based on your specific requirements you might have to either arrange visas for your employees or hire locals. In both cases, there will be a few things you need to be careful about. If you need to arrange visas for your employees, then you must be aware of the compliances and regulations to ensure a smooth visa process. There can be additional stuff for you to figure out such as accommodation for employees. A competent authority like RAKEZ can be extremely helpful in such cases. You can get easy consultancy on various visa-related issues.
It is nearly impossible to predict all the hiccups that you might encounter while setting up a business in the UAE. However, the business ecosystems in the UAE are set up so that they protect you from most of these unwanted situations. For instance, if you decide to start a business RAKEZ free zone, they help you every step of the way. This includes help with licence, visa, workspace and more. And their world-class infrastructure ensures the ease of operation. Contact RAKEZ to start your business in the UAE today.
1. What are the main differences between setting up a business in the UAE mainland and a free zone? Answer: Setting up a business in the UAE mainland allows you to trade anywhere in the UAE and offers a wide range of licence types. However, you may need a local sponsor and may not own 100% of the business depending on the nature of the activity. In contrast, free zones offer 100% foreign ownership, lower tax rates and streamlined processes but limit your ability to trade directly with the mainland. 2. What should I know about the tax structure when setting up a business in the UAE? Answer: The UAE has a corporate tax of 9% on taxable income above AED 375,000. However, businesses set up in free zones can qualify for a 0% corporate tax rate if they meet certain conditions. It is essential to understand these requirements to maximise the tax benefits available. 3. How can I source the right talent for my business in the UAE? Answer: Sourcing the right talent may involve arranging visas for foreign employees or hiring local talent. Understanding the visa regulations and providing necessary accommodations for employees is crucial. Authorities like RAKEZ offer consultancy services to help navigate these challenges and ensure a smooth hiring process. 4. What are the key considerations when choosing a business location in the UAE? Answer: Key considerations include deciding between mainland and free zone locations. Mainland set-ups offer broader trade options and diverse licences but may require a local sponsor. Free zones provide benefits like 100% ownership and lower taxes but restrict mainland trade. Choosing the right location depends on your business activities and long-term goals.
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