Business Setup in UAE


It used to be that Dubai and Abu Dhabi almost entirely relied on oil for income.

Since the discovery of sizable oil reserves more than 30 years ago, the UAE has transformed from an impoverished region comprised of a collection of small desert villages to a modern state that boasted a high standard of living.

Recently, the UAE is again undergoing a transformation. Massive efforts of economic diversification has reduced the percentage of GDP derived from oil and gas reserves to just 25% today.

Dubai is leading this revolution in its bid to become a premier tourist and business destination. Countless companies have already started operations in the bustling state. Despite a setback in 2009, all indications point to the trend started by Dubai to continue.

So what does this mean to a businessman looking to expand? The growth of the region is unlikely to slow any time soon; saturation point is a long way off in the region’s biggest revenue generators apart from oil – tourism, energy, construction and manufacturing to name a few. Opportunities abound and companies can still establish a sizeable presence in a not-too-crowded field

However, there are things that are done differently in this part of the world and it would be wise to know these in advance.

First, the law requires a local partner for foreign investors, and this foreign partner is required to own a majority stake in the venture. Not the most conducive to motivating investors to do business in the region, but not a deal-breaker either.

For starters, the right partner can make market penetration easier with invaluable local knowledge and an established network. It is hard for a foreigner to fumble his way around policies, laws, and miles of red tape – but the right partner can help in this area.

The next consideration is a requirement by the Ministry of Commerce for you to prove that you have ample funds for a start-up, business for sale in the UAE or a franchise for sale in the UAE. Figures range between $10,000/£6,500 and $50,000/£33,500 in most cases. They do not get to keep this amount but you still have to have it upon registration of your business.

One recourse is using the region’s many Free Trade Zones, where 100% ownership of assets by foreign nationals is permitted and there are no business taxes. Another option is buying a going concern which only requires you to meet the price of the seller – all necessary requirements have been taken care of, and the process is relatively straightforward.

There are many quirky laws that are counterintuitive and this requires sufficient research before plunging headlong into a venture. This is not meant to discourage those interested in venturing to the UAE – as opportunities still outweigh the risks in this region.