Doing Business in the UAE – A Global Expansion Guide

1. Strategic location

Located strategically between Europe, Asia, and Africa, the UAE is considered a central trading hub for shipments from the east to the west and vice versa. Its central location and access to the Arabian Gulf make it a perfect spot for trade. It also provides easy access to the Middle East markets.

Because of its position, the UAE is an ideal location for many companies.  India and China are the major trading partners and primary sources of raw materials and the European Union, a significant export market. Moreover, an income tax-free regime, steady growth, extensive needs, and investor-friendly processes make it an appealing proposition for most investors.

 

2. Incentives for Businesses

Apart from providing facilities to large investors, the government of Dubai supports small and medium-sized businesses by offering incentives for specific business types. For example, the Khalifa Fund for Enterprise Development was launched in 2007 by the Ruler of Abu Dhabi and the President of the UAE to foster local investment and entrepreneurship and support and nurture small and medium-sized investments in the Emirate.

Businesses that are already setup can obtain guidance on the type, method, and category of business licensing, and access discounted rates for office spaces. Dubai SME also runs a Government Procurement program. All Dubai government departments allocate at least 5 percent of their annual purchase budgets for buying from UAE citizens who own and operate small and medium-sized businesses. By doing so, small, and medium-size companies enhance their capacity to compete with larger companies and market their products and services to government departments.

 

3. Business-friendly Policies

To create a distinct and open economy, the UAE government empowers young individuals to generate contemporary solutions for crucial challenges in business, science, government, and other industries. This focus on innovation, coupled with the UAE’s business-friendly policies, has contributed to the UAE’s booming tech system and productive startup culture, which also offers an exciting environment for investors. In addition to providing zero taxes and 100% foreign ownership, the country’s free trade zones attract foreign investors.

 

4. Access to Talent

Because of the progressive labor laws, the UAE attracts talented employees from across the globe. Moreover, since the taxes are low and wages are high, it is favourable for employers and employees alike. Therefore, it may surprise you that only 0.5% of the total workforce is Emirati.

1. VAT Applicability

VAT is an indirect tax on all commodities and essential services, with fundamental food essentials, education, and healthcare items as exceptions. The Gulf Cooperation Council (GCC) implemented VAT in January 2018. VAT is a 5% rate that applies to goods and services and simplifies taxation for businesses. Therefore, one of the most imperative facets of doing business in the UAE is getting used to the VAT system. Furthermore, companies that do not comply with the tax system or delay their registration may face fines.

 

2. Real Estate

A company’s business license is associated with its registered address. And it is often difficult for small businesses to enter the market because of the requirement that they operate from a physical office. The UAE offers investors more than 40 multidisciplinary free zones, in which expatriates and foreign investors can have full ownership of companies. These zones are characterised by their highly efficient infrastructure, and distinct services that facilitate smooth workflows, saving businesses considerable time and effort.

The right local partner can help businesses setup in the most efficient and cost-effective manner.

 

3. Employee Management

As part of doing business in the UAE, it is vital to manage the local workforce efficiently as per UAE laws and compliances. Employee management can be highly challenging due to cultural differences, language barriers, and administrative approaches. Payroll management and taxation may also be challenging due to UAE laws.

What are the different types of employment?

• Permanent Employment – The United Arab Emirates labor code permits the conclusion of a permanent employment contract in specific situations.
• Fixed-Term Contracts – The United Arab Emirates’ labor law includes provisions for limited-term employment agreements that designate the start and end dates of the employment period. A fixed-term contract can last up to two years (can be renewed by mutual agreement).
• Temporary Employment – The United Arab Emirates’ labor law includes temporary employment in federal entities. The contract consists of total daily working hours on workdays and is valid for up to three months, with the alternative to renew for similar periods.

What are the retirement requirements for employees?

In the Emirati social welfare system, employers, government, and employees are all responsible for contributing to social security.

What are the United Arab Emirates’ tax rates?

• Corporate Tax Rate: The UAE does not have a corporate tax rate.
• Value Added Tax (VAT): The standard VAT rate in the UAE is 5% and applies to most goods and services.

What are the data privacy requirements?

The Personal Data Protection Law regulates the collection and use of personal data.

Do I need a legal entity?

Establishing a legal entity is not the only way for companies to do businesses.  A company should explore their options to ensure when a legal entity is the best choice vs other options like a Global PEO Service.

As a Safeguard Global company, Global Upside can help companies expand into the United Arab Emirates by offering talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organizations (PEOs)/employers of record (EORs) services. In addition, we offer a single point of contact for establishing businesses, managing operations, and complying with Emirati laws and regulations.

Are you looking for business services in the UAE? Global Upside, a Safeguard Global company, can help businesses expand into the UAE by offering talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. 

Our comprehensive solution offers a one-stop shop for establishing businesses, maximizing operations, and complying with UAE laws and regulations.