The United Arab Emirates offers excellent infrastructure, geographically advantages and talented human resource. These perks make the region conducive for any kind of company formation. Though the benefits are in abundance – investors must consider both sides of the coins.
We have listed the pros and cons of company setup in UAE, so that you have a better understanding of the region.
Pros of company formation in the UAE
Strong and Growing Economy
Owing to the UAE’s transparent and favorable business procedures and stable politics, foreign investors enjoy a highly dynamic and growing economy. The country is the second largest economy (GDP of 414.18 billion US dollars in 2018) in the Arab world. This why UAE also provides a fertile ground for company setup in UAE. A strong and growing economy opens multiple opportunities for companies across industries.
UAE’s quick economic progress has provided a massive boost to the construction of residential and commercial projects across the country. The country almost always takes advantage of the latest technology in their infrastructure projects.
Low Import Duties
The UAE has an open trade policy with low import duties. Most goods imported to the country enjoy extremely low import duties. Which is why it is no surprise why trading businesses prefer company setup in UAE.
Cons of company formation in the UAE
Trade Limitations in Free Zone
Free zones offer a series of benefits like easy registration, no income tax and relaxed rules. Entrepreneur opting for company setup in UAE free zones are not allowed to trade within the jurisdiction. Free zone companies are not allowed to do business in UAE mainland, unless they have an agreement with a distributor.
Restricted Business Activities
Some business activities are restricted in the UAE. It is best to analyses in advance if the business activity is permitted or restricted in the region. Consult a business setup consultant beforehand and understand the possibilities of your business activity and the legalities involved.
Find a Local Partner
As per the UAE commercial law, foreign companies are required to have a local UAE national as a partner who has 51% stake in your company. It is normal for an expat to be skeptical about associating themselves with a relatively unknown investor. Nevertheless, to ensure security investors have a side agreements and partner with UAE owned companies. Such 100% UAE owned companies offer reliable local partnership to a foreign company for an annual fee.
To know more about starting a business in the UAE, speak to an expert. Contact Shuraa Business Setup to book a Free Consultation with a business setup consultant.