Setting up a business in Dubai requires adherence to rules and regulations of the land. It may appear tough for a foreign national to start a business in Dubai. However, with careful study of jurisdiction, type of business and adequate preparations, it will be easier to start a business.

Here are the factors to be considered before setting up a company in Dubai:

Designated Zone and Non-Designated Zone

Free Zones in Dubai have been classified into two: Designated Zone (DZ) and Non-Designated Zone. Twenty Free Zones have been designated as Designated Zones for purposes of imposing Value Added Taxes and twenty under non-designated Zones. Business transactions within DZ are not subject to VAT while those happening between DZ and Non-DZ are subject to VAT. 

VAT Registration

Although companies registered in UAE are exempt from corporate tax, they are still liable for Value Added Tax (VAT). VAT registration is mandatory for those businesses whose taxable supplies and imports exceed AED 375,000. Voluntary registration is allowed for businesses that exceed AED 187,500 in imports and taxable supplies.

Anti Money Laundering

Anti Money Laundering (AML) laws are in force in Dubai which makes it impossible for businessmen to receive money into bank accounts from undisclosed sources out of Dubai. It also includes remittances from high-risk countries. Money transfers have to be done with an approved list of customers. The AML guidelines stipulate that the banks should ensure new and existing customers  follow the AML guidelines.  Now businessmen need to provide details to banks about important customers, suppliers, areas of operation and the products dealt by them. This makes the initial procedures for starting a new business involve more paperwork and disclosure of information for registering in the Free Zone.

Economic Substance Registration

New companies registered in UAE have to follow the Economic Substance Regulations (ESR) which was introduced as per UAE Cabinet of Ministers Resolution 31 of 2019. This law was introduced to prevent the transfer of profits by companies that have no real economic activity in the UAE. As per ESR, companies are mandated to inform the government of such details as banking, insurance, investment and fund management, leasing and finance. shipping, business at headquarters, intellectual property business, holding company business and distribution and service centres.

Bank Account Opening

The introduction of AML regulations has made it more cumbersome for opening a bank account as Know Your Customer (KYC) procedures have to be strictly followed. The European Union (EU) had previously blacklisted UAE for not meeting the banking standards of the EU.  It is now mandatory for banks to ensure that businesses that open accounts have physically verified offices and tenancy contracts and UAE resident visas. Those operating from co-working spaces known as Flexi Desk or hot desk with no tenancy contracts cannot have an operational bank account.  Trading with high-risk countries such as Africa, Iran, Iraq and 17 high-risk nationalities such as Africa, Iran, Afghanistan among others makes it difficult for a new enterprise to open accounts.

Seeking Help

Considering the enormous procedures to be followed for setting up a new business, you may seek the assistance of business set up consultants who have rich experience in knowing the procedures and regulations for setting up a new company in Dubai. Rules and regulations keep changing from time to time. Hence, it is advisable to avail services of business consultants to ensure that you comply with all the international and UAE norms for starting a new business. If you are looking forward to launching a new business venture or setting up a new company in Dubai, Youfirst can provide the support and assistance to ensure you comply with all rules and regulations to ensure hassle-free operation of the enterprise.