5 Tips For Starting A Successful Business in Dubai


Over the last decade, Dubai has emerged as a lucrative spot for business setup. It has established itself as an economically stable market that is drawing investment from all over the world.

Things look promising for Dubai; with an influx of tourists in the country, thriving trade of commodities, a flourishing services sector and rising standard of living, Dubai is set to become on of the most important economic hubs in the world.

If you are an investor trying to make inroads into the UAE market, it’s important to take some time out to understand the business landscape in Dubai. Here are 5 tips for starting a successful business in Dubai:

  • Pick a Local Sponsor

This is for those who want to set up a locally registered LLC company. Establishing a locally registered company has various benefits. If you are running a locally registered company, you have the freedom to set it up anywhere within the city.

This is an enormous advantage, considering how important location is for a business. If you select a reliable local sponsor, you can pick from the best locations in Dubai, which is a huge plus point.

In order to create a locally registered enterprise, you need to have a UAE national as a 51% partner. This partner is your ‘local sponsor’ and you will have to pay an annual fee to them that can be easily negotiated. Make sure you maintain a cordial relationship with your local sponsor because you would require their help to engage with the authorities.

  • Choose a Free Zone

If you are not comfortable picking a local sponsor and you want 100% ownership of your business, you should consider alternative routes to business setup in Dubai. The only way you can bypass a local sponsor is by establishing your business in a free zone.

Starting out in a free zone has its own advantages but if the location is a major consideration for your business, you might want to reconsider. For instance, if you run a restaurant or a retail store, location is pretty important and you need to be based in a busy market.

You should also look into your budget constraints because purchase or rental expenses in a free trade zone might cost you a fortune.

Operating from a free zone offers its own set of advantages though. You can retain 100% ownership of your business and benefit from duty-free customs boundary. Your business will also thrive sooner because free trade zones allow for speedy setup.

  • Select the Right Location

As we have mentioned before, the location you choose to operate from is crucial. So if you have determined your business model, you should spend some time finding the right locality for your business. Once you have identified the right venue, you should seal the deal with an official tenancy contract.

The sort of commercial venue you choose for your business depends heavily on the nature of your business. If you are thinking of establishing your business in a free zone, you need to factor in things such as costs, distance, business requirements, and your final product.

If you are planning on starting a small business, then you should also factor in connectivity and the availability of basic facilities such as telecommunications. Make sure you pick a location that is spacious and has ample storage space.

  • Find a Registration Agent

Starting a new business from scratch can be tricky, especially if you are investing in a foreign location. With so many rules in place and thick volumes of legal jargon, it can get very confusing. That is exactly why business setup consultants exist.

Hiring an experienced business registration agent can make company formation in Dubai a hassle-free and smooth process for you. Not only would they get your business registered but they would also help you set up your company by taking care of logistical tasks like opening a bank account and arranging an auditor for you.

If you are setting up in a Free Zone, a registration agent can help you navigate bureaucratic procedures and serve as an intermediary between your business and Free Zone authorities.

A registration agent can also help you with finding the right location for your new enterprise, budgeting, and computing setup costs, strategizing and finding licenses.

  • VAT Registration in the UAE

VAT registration was made compulsory in the UAE on January 1, 2018, so it is still a relatively new concept for businesses there. VAT or value-added tax is paid by the end-consumer but businesses are responsible for collecting the tax on behalf of the authorities.

VAT registration in the UAE is compulsory on businesses that have annual sales of AED 375,000 or more. Businesses that have a sales turnover of AED 187,500 or more can opt to register for VAT on a voluntary basis in the UAE.

The inability to comply with VAT guidelines issued by the FTA can cost your business dearly. If you fail to register your business for VAT in the UAE, you will have to pay a legal penalty of AED 20,000.

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