Starting a business in Dubai: Look out for these challenges

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00

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Starting a business in Dubai: Look out for these challenges

Due to a number of factors, including the allure of foreign investment, its strategic position, and its business-friendly government regulations, Dubai lures business owners and foreign investors.

Amazing business places and an unrestrictive climate are the main reasons for this. The city is tax-friendly with a variety of business prospects. Just like every other matter, setting up a business in Dubai has both benefits and challenges.

"I always tell my clients that doing business in Dubai can be both rewarding and challenging. On one hand, the city is a hub for commerce and innovation, with a well-established infrastructure and a strategic location that provides easy access to markets in the Middle East, Asia, and Africa”, says  Peter Thomas Khazake, Legal Associate, NYK Law Firm, Dubai.

He further adds, navigating the complex legal and regulatory landscape can be daunting, especially for those who are unfamiliar with the local customs and culture. It is essential to have a trusted advisor who understands the intricacies of doing business in Dubai and can guide you through the process with confidence.

A few of the challenges of doing business in Dubai are:

  1. Physical office space

Getting office space in Dubai involves a mix of processes like getting the license, and choosing the legal entity and facility.

  1. Language and cultural challenges

English is commonly used in business interactions. Nonetheless, all employment-related paperwork, such as contracts and other papers as well as communications with employees, should be in Arabic.

Having a firm understanding of social norms and cultures is essential for running a successful business. Among its contents are social norms related to workers, local holidays, cultural norms, and post-working hours.

  1. VAT

All goods and services are subject to VAT in Dubai, an indirect tax, with the exemption of basic food necessities, educational materials, and healthcare products. Businesses that disregard the tax code or postpone registration risk receiving significant fines.

  1. Real Estate

The real estate market in the United Arab Emirates is well-known, and a company's business permission is connected to its registered address. This requirement makes having a physical office essential for a company, which sometimes makes it challenging for small enterprises to access the market. The office's location is also crucial to its efficient operations.

  1. Work visas and permits

To live and work in the nation, a foreign worker must have work or resident permission. The foreign organization bringing its employees to Dubai in particular needs to adhere to the visa requirements. The business must also abide by the rules established by the Ministry of Human Resources & Emiratization and the General Directorate of Residency and Foreigners Affairs.

  1. Getting local talent

A foreign corporation establishing operations in Dubai would need to acquire local personnel. A multinational corporation must adhere to a certain set of rules that the UAE has established for this like Emiratisation. For a small organization that is unfamiliar with these norms and practices, hiring local workers can be difficult.

  1. Market challenges

Despite being the global commercial hub and open market, Dubai presents difficulties for exporters and foreign businesses operating there. Delays in payments, uncertainty, and issues are among the difficulties.

Foreign businesses are frequently the victim of scams and frauds, especially small and medium-sized businesses.

With multiple companies advertising themself as the best advisors for setting up the business, it is very important to choose the right option who can guide you through all the process.

  1. GETTING CREDIT

Managing financial flow is essential in any jurisdiction. There are several banks and financial institutions in Dubai that may approach you and offer you different loans or financing options. It is always better to get professional guidance over matters like this.

Apart from these small challenges, Dubai offers the best location, infrastructure and facilities for your dreams.

For any enquiries or information, contact ask@tlr.ae or call us on +971526443004

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