Top 10 Challenges of Doing Business in the UAE

by Zaara 16, Jul 2018

Top 10 Challenges of Doing Business in the UAE

The United Arab Emirates is well known for having a business-friendly environment, favorable tax structure, and a straightforward legal framework. However, the UAE, like any other country, also goes through a set of problems which potentially results in some challenges while investing in the country.

But if you are a career-driven, dedicated individual who is enthusiastic about the wider scope and outreach this country has to offer then make sure you build yourself up for these common challenges that come your way while forming a business in the UAE.

Let’s have a look at few of the most common challenges that are likely to be faced by an entrepreneur or firm in the UAE:

1. UAE Company Ownership

If an individual wants to start an onshore or LLC (Limited Liability Company) in the UAE, they’d mandatorily require a local sponsor. This compels an individual to have a UAE national as a partner who shall own 51% of the ownership. While there are few businessmen who agree on this criterion; it can be tedious for others to develop trust and reliability.

2. Finding a Local Sponsor

The challenge for an investor is to find a sponsor who is trustworthy as for the most of the legal business, having a local sponsor is a must. Thus, finding a local partner in the UAE who would own the major stake in the company and give you the liberty to deal with business on your terms could be a daunting task.

3. Implications of VAT

In January 2018 the UAE introduced 5% value-added tax, imposed throughout the Gulf Cooperation Council (GCC). This tax is applied to almost all goods and services except basic food items, education, and healthcare. Registering for VAT and going further through the process can prove to be challenging.

4. Project Funding

In case your business is in its commencement phase, it can be a difficult task to obtain funds from the UAE bank. Because the main requirement for any application for business loans is the provision of at least 3 years of audited balances with positive figures and growth indicators.

5. Cultural Tenets

Islamic culture needs to be addressed before you set up a business in Dubai or the UAE. It plays a crucial role in people’s everyday lives, in the office and outside. Islamic customs should be observed and the effects of the Islamic religion on business interactions must be respected when doing business in the UAE.

6. Communication Style

An individual setting up a business in the UAE must be aware of some of the niceties in communication they might be expected to know. Men and women are also communicated with at different tones. The level of formality in the UAE may also be hard to adapt for some of the expats.

7. Job Market

Once you start a company, you have to hire employees to run a business and the UAE has certain rules and procedures for the same. This includes the obligation of a company to provide visas to its employees; an employee is not permitted to work in the company until they get their visa. Once you get the basic ideas of the regulations followed in the UAE, there might not be many surprises.

8. Managing Revenue

Even though the UAE can provide a lot of opportunities for widening your business, it can be equally risky. It was reported by the Association of Chartered Certified Accountants that 82% of the startups fail as a result of poor cash flow management. Therefore, cost of business setup and your initial capital requirements need to be managed and then applied.

9. Business Specifics

One has to have a complete knowledge related to business setup in Dubai or the UAE. Since there are different regions to set up a business, each one has its certain particulars regarding business habits and lifestyle. Business in Dubai, unquestionably, has its specifics, and you need to be aware of them to smoothly proceed with your company setup.

10. People Management

Managing people will have a huge bearing on one’s success in anywhere in the world. Perhaps the most notable aspect is the level of diversity present in most workforces across the emirate. As you will be working with people who come from different diversities, people management can take some learning to be carried out elegantly.

Finding a local sponsor, managing your finances, and getting a clear idea about the various rules and regulations can be unnerving. And many a time, business requirements that you come across can be misleading and incomplete. We at Commitbiz not only offer to answer your questions on the various challenges in starting a business in Dubai but also help you get through it. Our staff will study your requirements and cater to your needs. What’s more, we even provide services that can assist you in having your business grow further. Contact us today, even it’s for a friendly advice.