Starting a Business

If you're fed up with working for someone else, or see a gap in the market, you are just a few steps (and a small bundle of red tape) away from setting up your own business and being your
own boss. First things first: do some market research, either with an official market study or some personal legwork and investigation, and be aware of the business climate. Bankruptcy laws are not as defined as in other countries and mismanagement of funds could result in harsh repercussions, including deportation or even jail time.

Your options
Although there is no minimum capital requirement to start a business – unless you opt for a general trading licence, in which case the capital requirement is Dhs.300,000 – there are rules to adhere to. If setting up a Limited Liability Company (LLC) or private/public shareholding company, you will need to sign a Local Agency Agreement with a UAE sponsor, who will assist with all government related issues such as obtaining trade licences and visas, and will own 51% of your company; this does not mean that 51% of profits always go to the sponsor, as typically it is agreed that he will take an annual fixed fee or an agreed percentage of revenues. If setting up a sole proprietorship, civil business or a branch office you must appoint a local service agent who is paid a fixed fee for their services and does not receive any commission or profits.

Alternatively you could set up in a free zone, where full private foreign ownership is permitted. The licensing process for opening a business in a free zone is more streamlined and you can get assistance from the free zone organisation.

Employment law
Employment in the UAE is governed by the federal UAE Labour Law, which imposes certain minimum standards on working hours, vacation and public holidays, sick leave, maternity leave, and termination of employment.

Most free zones have their own employment laws, which often take precedence over the federal employment laws.

There is no federal corporate or income tax levied in the UAE (except on oil companies and banks), and there is currently no value added tax or sales tax either.

Commercial property
Only UAE nationals or entities that are wholly owned by such persons can own commerical property in the UAE, meaning that foreign businesses must lease their office spaces; the exception is in certain free zones where foreign businesses are permitted to both own and lease property.

Getting started
Government and privately sponsored initiatives are helping to spur growth and educate potential business owners. The Mohammed Bin Rashid Establishment for SME Development was set up to help entrepreneurs understand the procedures and potential costs of setting up in Dubai. The organisation provides guidance and information to Emiratis and expats hoping to start their own business.

Among its varied schedule of events, arts community hub Shelter also hosts a programme of workshops for entrepreneurs, as well as providing hot desk facilities for creatives. If you want someone to handle all of the red tape for you, companies like Sentinel Business Centres and Creative Zone can help you set up in a free zone or even help find a local sponsor for your business.

There are various business groups in Dubai that help facilitate investments and provide opportunities for networking. Some provide information on trade with their respective countries, as well as business opportunities in Dubai and internationally. Most arrange social and networking events. Before you set up, contact the Dubai Chamber of Commerce & Industry and the Ministry of Economy. Both can offer excellent advice.

Embassies or consulates can also be a good business resource and may be able to offer contact lists for the UAE and the country of representation. For further information, refer to Explorer’s Working In The Gulf, the Dubai Commercial Directory or the Hawk Business Pages.

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