UAE, the global business hub and investment activities, is well known for having satisfactory tax structure, conventional legal framework and business-friendly environment. The place has benchmarked itself for being the best place for every type of business and investment activities. Thus, has turned out to be a major factor in establishing it as a business-forward nation. You can have a wide range of business options from scratch to taking over a business which is for sale. But there is a complete chance of facing some challenges while running a business in UAE.
But before you start a business or invest into one, there are certain aspects you need to have and follow. Like any other country, UAE also goes through a set of problems which potentially results in some challenges while investing in the country.
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. Implications of VAT
In UAE, registering for VAT and going further through the process can prove challenging for you especially if you are aiming at buying business in Dubai. In January 2018, the UAE introduced 5% value-added tax, imposed throughout the Gulf Cooperation Council (GCC). This value-added tax is applied to almost all goods and services except basic food items, education, and health-care.
2. Discovering a Local Sponsor
The second challenge which can annoy you the most is to find a trustworthy local sponsor in UAE. Most of the times finding a local partner who is having the capability to own a major stake in the company could be a daunting task for you. Your sponsor should have the nationality of UAE and as per norms, he will own 51% shares of your company. So, find a reliable local partner for your business which will help you to register your business as a Limited Liability Company (LLC). It will give you the freedom to start your business anywhere in the city.
3. Project Funding
In case you are thinking to buy a business in UAE by taking help from local banks, it can prove to be a grim task for you. Because the main necessity for any loan application is to provide the provision of at least 3 years of audited balances with positive figures and growth indicators, which is sometimes a very unnerving job. So, do some research and complete your paperwork before applying for loan services.
4. Cultural Beliefs
Before you step up a business in UAE, religious needs are to be addressed first. In UAE people are very particular about religion; Islamic customs should be adapted. In UAE, the impact of the Islamic religion on business interactions must be respected when doing business as it plays a crucial role in people’s everyday lives, in the office and outside. So, keep this challenge in your mind before starting your business venture.
5. Job Market
For your business, you have to hire employees to run a business and there are certain rules and procedures for the same. This contains the duty of a company to provide visas to its employees; an employee is not permitted to work in the company until he/she gets his/her visa. Once you get the basic ideas of the regulations followed in the UAE, we hope there may not be many surprises that will hassle your work.
6. Communication Style
Once you are done with all business formalities, the next challenge which can disturb your mind is communication style. In UAE, you must be aware of some of the particulars in communication, even men and women are also communicated with at different tones. This level of formality in the UAE may be hard to adapt for some of the emigrants.
7. Business Essentials
If you have made your mind of setting up a business in the UAE, it is beneficial for you to have a complete knowledge related to business setup. Incomplete knowledge can be risky! Here you can find different regions where you can set up a business but each region has certain business-specific habits. Business in UAE undoubtedly has its essentials, and you need to have the complete knowledge regarding them.
Through this blog, we tried to answer your questions on the various challenges in starting a business venture or buying a business for sale in UAE, hope we are successful in our bit. Good luck from our team!