The United Arab Emirates is a popular destination for entrepreneurs looking to expand their business globally. With its strong economy and strategic location, the UAE offers many advantages for companies of all sizes. However, there are also some drawbacks to setting up a business in Dubai that potential investors should be aware of.
The Confinement of the Free Zone
One of the main issues for foreign companies looking to start a business in Dubai is the confinement of the free zone.There are more than 20 different free zones in Dubai, all of which offer tax-free registration and easy company setup. However, these free zones are limited in scope and do not allow businesses to operate within the jurisdiction of the UAE.
Local Partner or Sponsor
In order to start any business on the continent, foreign companies must have a local partner or sponsor who owns at least 51 percent of the company. This can be a challenge for some investors, as it requires them to share ownership of their company with someone from the UAE.Additionally, there are business creation consulting firms that can help facilitate the process of setting up a company in the UAE.
Managing Local Workforce
Another challenge of doing business in the UAE is managing the local workforce efficiently and in accordance with local laws and compliance. It is important for investors to understand the features and benefits of each free zone before deciding on the perfect destination for their business setup. The government has taken steps to ensure that foreign merchants have no problems establishing and managing their businesses.Funds RequiredAny foreign entity that wishes to set up a business in the UAE also needs sufficient funds to carry out its operations smoothly. This can be a challenge for some investors, as they may not have access to enough capital to cover all their expenses.
The Benefits Outweigh The Challenges
Despite these challenges, there are many benefits to setting up a business in Dubai that make it an attractive option for entrepreneurs looking to expand their operations globally. The UAE offers tax-free registration, easy company setup, and access to a large pool of skilled workers.Additionally, there are numerous incentives available for businesses that choose to set up shop in Dubai, such as access to world-class infrastructure and a supportive government that is committed to helping businesses succeed.
