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Starting a business in Dubai and the UAE with small investment opportunities

Starting a business in Dubai and the UAE with small investment opportunities

Business in the United Arab Emirates attracts the attention of a large number of entrepreneurs, businessmen and investors, since there are no taxes on income, personal profits and dividends in the UAE. More than 560,000 business licenses have been issued in the Emirates over the past six months. Every year the number of licenses issued grows by 3-5%. In 2021, the United Arab Emirates took the 25th place in the ranking of the best countries to open their own business or startup, while overtaking all other Arab states. One of the advantages is that a minimum investment is required from a businessman to start a business in Dubai. It is not only profitable, but also affordable.

Why choose UAE for starting a company?

The Arab Emirates are developing by leaps and bounds. A few years ago, the basis of the economy was oil, but the government of the country is trying to abandon this type and attract new investors. That is why the conditions are favorable for starting a business.

Pros:

  • Taxes on capital gains, wages and profits — 0%. VAT on the sale of goods to countries that are not part of the Persian Gulf region — 0%;
  • Stable dollar and euro exchange rates;
  • Simple and clear reports;
  • Certificate of tax residency (Tax Certificate), which can be obtained in six months;
  • Government loyalty to business;
  • In addition, you can open a company even with small investment opportunities in Dubai. Of course, this does not mean that the investments will be tiny, but still, everyone has the opportunity.
  • Absence of corruption.

What is the minimum investment to start a business in Dubai?

minimum investment to start a business

It should be understood that in such a prosperous country, investments will not be absolutely minimal. In other countries with a tax-free regime and the ability to open offshore companies, investments will be less, but the conditions are less favorable. The final price will depend on the selected region and the type of company.

For Businesses Established on The Mainland

A mainland company is an onshore business structure. Remember that the opening of this type of company requires compliance with certain conditions. The price for registration and license is slightly lower than in the free zone. But here it is necessary to estimate the total amount, because in the free zone they offer a set of services, and here you will have to pay for each item yourself.

For Business Established in Free Zone

There are several free zones in the country that differ in a simplified business procedure. You are offered optimal conditions, but it should be remembered that these areas have their own rules. In principle, the registration procedure is similar, although there are some differences. Those interested can get the following types of permissions:

  • with the provision of one investor visa, 17900 dirhams;
  • without a visa, 11900 dirhams.

Before you start collecting documents, you choose which company you plan to manage, and it’s not just about the activity itself, but also about the price of the issue.

Incurred Fees

Naturally, investments are required to start a business. Minimally, you will need to pay for registration and obtaining a license. In addition, you will need to rent. Although in some free zones you can buy a full license package, which already includes the cost of renting a room. Do not forget about the visa. Obtaining a visa is also a paid process.

Registration Fee

Registration Fee

If you plan to apply for registration, you will have to pay. The average cost is $ 1,000, but depends on the type of company and the place of application. It should be remembered that the fee is paid for the registration process itself and does not affect the decision in any way.

License Fee

A license is obtained for any type of activity, but the price depends on the specific type. It should be remembered that if you want to open a company in more prosperous areas of the country, you will have to pay more.

Office Rental Fee

Hiring office space for local companies is a mandatory condition. This allows officials to conduct inspections, monitor transactions and ensure that entrepreneurs comply with immigration laws. The period depends on the terms of the contract.

How to start a business in Dubai?

The first thing you need is to learn the specifics of business in the country. This is the only way to understand what actions should be taken.

  • Identification of your activity.
  • Choice of jurisdiction.
  • Approval of the trade name.
  • Cooperation with partners (if required).
  • Preparation of a package of documents.
  • Obtaining a license and other approvals (if necessary).
  • Registration of a legal address.
  • Opening a bank account.

Pay attention. Despite the fact that the recent introduction of amendments to the Law on Commercial Companies eliminates the need for non-residents to enter into partnership with a sponsor from the Emirates to register a company on the mainland, some activities still require businesses to follow this rule.

Step 1: Choosing a Trade Name

Dubai

The price of registration depends on which name you have chosen. It includes payments for:

  • booking;
  • commercial name;
  • the name of the foreign company, etc.

Step 2: Prepare the required documents

The minimum package of documents includes:

  • a copy of the preliminary permission, which must be on hand;
  • a copy of the lease agreement;
  • founding agreement;
  • license;
  • a notarized contract with a service agent;
  • a copy of the passport;
  • 3×4 color photo.

Step 3: Preparing the Shareholding Agreement

The partnership agreement depends on the type of company and the number of participants. If you plan to open a company together with partners, first find out how many shareholders are allowed for a certain type of company.

Step 4: Getting the Required Approvals

To legalize business activities in the UAE, an entrepreneur submits a corresponding application, statutory documents and passport data of all partners of the organization to the UER. After entering the company’s name into the Commercial Register, the state agency sends the dossier to the Federal Ministry of Economy, which issues an approving letter on the creation of a new legal entity. Next, the company submits an application for a license written in Arabic to the UER. To obtain permits and membership in the Chamber of Commerce and Industry, the applicant must pay fees in the amount of 1,500 USD. The duration of the procedure is 3 days.

Step 5: Fee Payment and Obtaining the Trade License

Fee Payment

In order to transfer excise duty and VAT to legal entities who are required to pay them according to the legislation, it is necessary to register with the Federal Tax Service. In this state agency, you can also request a certificate granting the right to exemption from double taxation — this rule applies only to companies that exist in the UAE for at least a year. Excise duty, as well as VAT, is paid every quarter, the declaration must be submitted during or at the end of the tax period (for VAT — within 28 days from the date of its end).

Step 6: Business License and Corporate Bank Account

The United Arab Emirates is recognized by many entrepreneurs around the world as one of the main financial centers on a global scale. The region has a stable banking sector regulated by the Central Bank. To open a bank account in Dubai, you will need to prepare a package of documents. You can choose not only a local organization, but also an international bank.

List of Low investment Business Opportunities in Dubai

The main criterion for choosing the best ideas was not profitability, as you might think at first glance. Of course, you can carry out absolutely diverse activities in the Emirates: sell goods, provide various services, etc. However, in order to perform some functions, enterprises need permits, which are quite expensive to obtain.

Food Business

The UAE is the second largest food market in the Persian Gulf countries. The large investments of the state in the research of innovative FoodTech and Aggrotech technologies and the active support of local producers from the government strengthen the country’s position as a leader in this sector.

The most interesting direction in this area is the provision of services and services. It is expected that by 2025, the volume of services consumed in the UAE will increase by 88%. These figures are several times higher than forecasts for traditional industries — production and trade. The success of service companies is explained by a healthy competitive environment, as well as high demand for quality services. If you are planning to open a small investment business in the UAE, then you can start with the food sector. This direction always brings income, and the company can pay off in just six months.

Catering Service

Catering Service

Sports, cultural and entertainment events are often held in the UAE, where professional field service is required. This service is also popular among wealthy citizens of the UAE.

Bakery Production

The UAE has a high standard of living, so residents prefer to eat quality food. But you rarely find good pastries or exclusive cakes in stores. Small pastry shops are popular.

In addition, the cost of the product is low, and the profit grows with each new customer.

Food Delivery from Home

There are various services in the UAE that deliver fresh fruits, vegetables, meat and seafood. However, there are almost no companies in the country that accept orders for the delivery of ready-made food. Thus, the market is completely open to new players.

Consultation Service

That is why the consulting field remains very attractive and profitable for foreign entrepreneurs in the Emirates. Practice shows that if you open a consulting in Dubai, the amount of work will be enough for many years to come. After all, the metropolis of Dubai has become home to hundreds of thousands of international companies operating in various market niches.

Legal Consultant

Legal Consultant

More and more people are coming to the UAE, for work or for business organization. When it comes to preparing the necessary documents, most people start having serious problems. Obtaining the necessary papers requires considerable time, and the procedure itself can consist of many stages. People simply do not have enough time to study all the nuances of the UAE legislation. It is around this problem that you can build your own profitable business.

Business Consultation

The Emirates are one of the richest countries in the world, so it is not surprising that a considerable number of wealthy businessmen live within their borders. Rich people can’t always manage their own affairs on their own, and this is a great chance for optimistic and intelligent people to show their abilities.

IT Consultation and Digital Marketing

The information technology sector is one of the fastest growing in the Emirates: in 2021, the volume of investments in this sector amounted to about $ 420 million. The government strongly encourages the development of the industry. The main strategic task here is the introduction of digital technologies in all spheres of public life, including education, healthcare, energy and construction.

Other government goals in the field of IT include strengthening the country’s cybersecurity. In this regard, the demand for technological services from both the state and private business is constantly growing. In addition, there is a constant inflow of capital into innovative projects in the UAE. Venture investors are showing great interest in companies and startups from the IT sector.

Content Writing and Copywriting

Copywriting

The world of copywriting is growing. Professional copywriters are regularly required in the UAE. If you can offer high-quality services, then you will soon get a real benefit.

Real Estate

In recent decades, there has been a construction boom in the Emirates, which impresses the entire world community with its scale. Preparation for the World Expo 2020 exhibition gives an additional impetus to commercial construction and lays the foundations for further development of the country’s economy for many years to come. Business centers, offices, logistics facilities, shopping malls and production sites are all objects for profitable investment in the rapidly developing economy of the UAE.

In the context of the flourishing commercial real estate market and the increase in business activity in the country, the demand for the services of real estate companies providing comprehensive support for real estate purchase and lease transactions is increasing. Specialized websites and aggregators are gaining popularity, which help to independently select commercial and residential premises according to the specified parameters. Accordingly, any technological solutions in the field of rental and acquisition of real estate are a promising type of activity and an object for investment.

Common Myths vs Reality in Starting a Company in Dubai

There are a variety of myths around the world related to doing business in the UAE, which, as a rule, have nothing to do with reality. Let’s look at the most persistent stereotypes and find out how true they are.

Myth 1: Business Setup in UAE is very Expensive

Business Setup in UAE is very Expensive

Of course, starting a business is not available to everyone. However, now even in the usual offshore jurisdictions, companies are subject to fairly stringent requirements, for example, the requirement to conduct real business in the jurisdiction of registration. The Emirates have similar requirements; however, they offer a wide range of advantages. In the Emirates, it is not required to invest hundreds of thousands of dollars in government bonds or real estate. For reasonable funds in the Emirates, it is possible to open a company with zero taxation. Moreover, such a company will be able to demonstrate a real “substance”. To save money, it is allowed to rent a combined workplace instead of a real office.

Myth 2: Obtaining Funding in Dubai is Extremely Difficult

Almost any entrepreneur believes that his most important point was to find and determine the right way to finance his business. Problems such as the lack of venture capital and high rates on bank loans are a big obstacle for startups and small and medium-sized enterprises.

Fortunately, Dubai’s entrepreneurial environment provides many financing options, and the ease of access and relatively less time-consuming approvals of initial investments make Dubai one of the best cities in the world to start your own business.

Myth 3: Business License in UAE is Complicated

The Emirates’ investment legislation protects the interests of foreigners. In order to ensure a constant inflow of external capital, the procedure for opening a company by a foreign citizen is simplified as much as possible.

Myth 4: Knowledge in Business and Tax Law is Must for Business

Knowledge in Business

If you are a novice startup without experience and special knowledge, then starting a business will also cause a lot of inconvenience. The fact is that many are ready to provide their services and become an assistant in the business world. They will tell you how to open a company correctly, and what pitfalls you should beware of.

Myth 5: Mainland land Business requires a Local Sponsor

This statement is true only for certain types of activities. For example, to open a chain of stores, you need to sign a partnership agreement with a local resident and specify in it a fixed amount of remuneration for him. If the type of activity allows you to register in a free economic zone, a foreign person can own a company with a 100% stake.

Myth 6: Offshore companies are only for tax evasions

The companies registered here enjoy a high reputation, unlike similar ones opened in the Virgin Islands, in the Dominican Republic, even in Cyprus and in some other European countries. Investors from any country are willing to cooperate with offshore companies in the UAE.

Offshore business registered in the UAE is most suitable for enterprises engaged in logistics, import-export business, international trade, consulting, sea transportation, delivery.

The United Arab Emirates is a popular investment destination. The UAE economy has experienced significant growth, attracting investors, and the region itself is considered a global financial center. The forward-looking policy, as well as the need for minimum investment to start business in Dubai, ensure high confidence in the emirate. Dubai’s profile as a preferred investment destination in the Arab world makes it a profitable destination for entrepreneurs from all over the world.

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Vladimir Sviridov
Vladimir Sviridov
General Manager RLC Consulting
With a Postgraduate Masters in Finance from The, Moscow State University, Russia. Vladimir started his professional career as an auditor of the financial sector of EY. After that, he worked for several years in senior positions in corporate banking. In 2018-2021, he managed the finances of a large agricultural holding, and is currently responsible for strategic planning, corporate partnership and financial management in the role of General Manager of RLC Consulting GROUP in the UAE.

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