Dubai is known for its dynamic business ecosystem, which supports multiple companies and startups. The government's vision to drive innovation and creativity through entrepreneurial activities ensures Dubai fosters diverse business industries. With top-notch facilities and a robust economic presence, the Emirate has become a prominent business destination worldwide. Despite its global appeal as a top commercial hub, there are plenty of misconceptions regarding company registration in Dubai.
This article helps clear the myths by providing facts about business formation in the Emirate.
Back to topClaim 1: It is Expensive to Start a Business in Dubai
You indeed need capital investment to start a business in Dubai, just like in any other country in the world. The investment varies depending on various factors, such as jurisdiction and business activity, among others. However, establishing a business in Dubai is much more cost-effective than in many other countries. Prominent jurisdictions levy taxes like dividend tax, corporate tax, and capital gain tax that reduce the profits earned. Dubai offers low-cost business setups, especially in free zones. Another fact about business in Dubai is that you get tax holidays and severe exemptions that increase profitability and reduce operational costs. Additionally, the only tax that you have to worry about is the corporate tax, which reduces the regulatory burden.
Back to topClaim 2: Offshore Business in Dubai is Illegal
No, offshore company registration in Dubai is not illegal. Certain offshore businesses, especially offshore banking, are often perceived as illegal because people use them for criminal activities like money laundering and tax evasion. However, anyone can open an offshore business in Dubai in free zones, including Jebel Ali Free Zone (JAFZ). Offshore companies are highly regulated to prevent illegal activities and provide benefits such as high flexibility and tax benefits.
Back to topClaim 3: The Laws are Very Strict
Dubai's regulations can seem overwhelming to expats and foreign investors. However, the Emirate's robust regulations help streamline business processes while preventing fraudulent activities. The fact about businesses in Dubai is that its regulatory environment makes it one of the safest places to scale and grow. The primary aim of the authorities within the Emirate is to ensure a competitive environment that drives innovation and creativity and streamlines the company incorporation process.
Back to topClaim 4: Hard to Start a Company as a Woman in Dubai
No. It is a common myth that Dubai is unwelcoming to female entrepreneurs. The fact about women in business is that they can leverage a wide range of benefits when starting a business in the Emirate. For instance, the government provides lower interest rates and subsidies for women entrepreneurs. The United Arab Emirates (UAE) is one of the first countries in the world to make it necessary to have a woman on your board of directors. According to the UAE's Permanent Committee on Human Rights (PCHR), about two-thirds of the public sector workforce consists of women, making Dubai one of the most inclusive business environments globally.
Back to topClaim 5: Presence of a Local Sponsor is Necessary
One of the biggest myths about mainland company formation in Dubai is the presence of local sponsors. The fact about business incorporation in Dubai is that you do not require a local sponsor to hold 51 per cent of the company for most of the business activities. The UAE passed a resolution on June 1, 2021, removing the requirement for companies to have a local sponsor in Dubai. This amendment, which aimed to attract more foreign investors, allowed for a streamlined registration process and increased foreign investment. However, some of the business activities, such as banking, financial consulting, printing, publishing, and security, require a local sponsor in Dubai.
Back to topClaim 6: Dubai is only for Large Corporations and Luxury Businesses
No, it's a myth that the Emirate only supports large business organisations. Dubai is known for its rich lifestyle and high standard of living. This image creates the misconception that only big and luxurious companies thrive within the Emirate’s business ecosystem. However, the fact about businesses in Dubai is that every company, small or big, gets equal opportunities to grow. Dubai has top-notch services and facilities like access to multiple free zones, accelerators, and diverse co-working spaces that cater to businesses of all sizes.
Back to topClaim 7: Difficulties in Sourcing Funds for Your Business in Dubai
Funding is the foundation of starting any business globally. Finding the right funding sources helps reduce liability and increase profitability. However, it is not necessarily easy. In Dubai, the authorities aim to offer a diversified business ecosystem by providing incubation access to multiple small businesses and startups. Moreover, the fact about business setup in the Emirate is that it offers various support programmes and subsidies, increasing the funding sources available to entrepreneurs.
Back to topClaim 8: Hard to Build Strategic Connections Without Speaking Arabic
One notable fact about business in Dubai is that the city’s environment easily accommodates non-Arabic speaking entrepreneurs. Although, the UAE prioritises religion and culture, so most people believe that not knowing Arabic hinders their ability to connect and build relations in the business ecosystem. But this is a myth, especially in Dubai, where there are many expats who make English a common language. Yes, it is crucial to respect the culture and religion, but not knowing the local language does not affect business operations or the ability to build strategic networks.
Back to topClaim 9: Comprehensive Knowledge of all the Regulations
A fact about business setup that you should note is that you do not necessarily need in-depth knowledge about the local legal system. However, the fact about starting a business in Dubai is that it requires only an overview of the local laws and regulations. Additionally, there are business professionals and corporate service providers who reduce regulatory burdens and ensure legal compliance.
Back to topClaim 10: Free Zones are Limiting and Expensive in Dubai
Some entrepreneurs believe that Dubai free zone company formation is limited and does not allow them to operate outside the free zone, but this is not entirely true. The fact about businesses in free zones is that they can operate outside the jurisdiction, given that they obtain authorisation from relevant authorities. The other way is to avail yourself of the benefit of dual licensing offered by certain free zones like Dubai Airport Free Zone (DAFZA). Additionally, free zones are cost-effective as most of them do not have a minimum capital requirement and offer benefits like tax holidays.
Back to topHow can Commitbiz Help?
Now that we have dispelled the myths and provided facts about business incorporation in Dubai, Commitbiz LLC offers personalised services to streamline your company formation. For more than 17 years, we have been helping entrepreneurs streamline their business processes and increase their performance in various jurisdictions. From handling all the legalities, like documentation and licensing, to opening a bank account, we provide end-to-end support. Contact us to learn more about our services and turn your business dreams into a reality!
Back to topWho oversees the business regulation in Dubai Mainland?
The Dubai Department of Economic Development regulates mainland businesses.
How many designated business-free zones exist in Dubai?
There are over 40 free zones in Dubai.
Which type of business entity is most widely adopted in Dubai?
In Dubai, the Limited Liability Company (LLC) is the most commonly used business structure.
