What to ask before setting up a business in the UAE as an expat

Whether you moved to the United Arab Emirates to start a new life in the sun, or to chase a lucrative new career, there are lots of things that you need to take into consideration before starting a business as an expat. Indeed, running your own venture would no doubt give you more freedom and flexibility to work your own hours on projects you care about, but you’d also be entering into one of the most competitive business environments in the world, which means you’d need to work lots of hours and go above and beyond to succeed in your niche.

Below, we’ve put together everything you need to know about setting up a business in the UAE as an expat and share some words of wisdom for would-be expat entrepreneurs…

Will people buy your products?

It doesn’t matter whether you’ve been living in the UAE for six weeks or six years: before you get started on an international business venture, you should get to grips with the market and determine whether there’s enough of a demand for your products or services to begin the process of incorporating. Scour the internet, speak to your target audience (both expats and locals) and you’ll soon be able to see whether or not your business has legs in the market.

Would you be better off in familiar territory?

If you’re not sure you’re going to be able to make a success of a venture in Dubai or the UAE or you’re simply not clued up on the UAE and its business environment, you could choose to set up a company in your home country. Granted, you’d need to permanently or temporarily relocate, but you’d be in familiar territory and would likely find it easier to make a success of your venture. Remember to factor in the cost of transportation between the UAE and your home nation, think about the hiring employees, day-to-day operations and local taxation - if you’re not going to make much of a profit after tax, then it’s better to incorporate in the UAE.

Can an expat own a business?

As an expat living in the United Arab Emirates, you will need to apply for a business license and base your firm in one of the country’s 45 free zones if you’d like to maintain control over your business. There are some significant advantages to operating in a free zone, including:

• 100% foreign ownership allowed, without a local sponsor or service agent.
• Exempt from corporate taxes.
• Exempt from personal taxes.
• Exempt from import and export taxes.
• Repatriation of revenue and profits.
• Simplified recruitment and workforce processes, saving time and money.
• Faster company incorporation process.

There are a number of free zones, each permitting specific activities and businesses. You will need to apply for a business license from the Department of Economic Development (DED), and comply with all of the necessary restrictions and legislation associated with it.

Some sectors are restricted from 100% foreign ownership, including oil, banking, insurance, recruitment, electricity provision, fishing, road transport, air transport, publishing, medical retail and blood banks and quarantines. To operate in such niches, you’ll need to partner with a UAE national, who must own at least 51% of the firm before it can be approved.

How do you get the ball rolling?

The good news is that starting a business in the UAE takes no time at all. In fact, once you have sorted out the legal formalities, you should be able to trade in less than a week.

First, though, you’ll need to define your business operations and choose from one of 2,100 business activities on the Department of Economic Development (DED) website, which includes everything from marketing and business development through to construction, food trading and IT. You should note that setting up a business in some industries will require government approval, so factor this and the associated legal costs into your business plan. 

After that, you’ll need a trading name, which should clearly indicate the nature of your firm. In some countries, vague or unusual business names are attractive for branding purposes, but in the UAE, people should be able to know what your business does on your name alone.

Once you have filled in the necessary paperwork, you should choose a business residence for your venture. If operating in a free zone, you’ll be able to get help with your premises, like setting up the internet and other amenities and negotiating a tenancy with the office landlord.

The Department of Economic Development encourages foreign investors to hire a manager to oversee operations, and you may need to have this person ready before your business registration is approved. Again, this is dependent on the nature of your business and your free zone. In some industries, for example, you’re prohibited from hiring staff whatsoever.

Getting Support

If operating under a Department of Economic Development licence, you’ll need a local agent or sponsor who can support you through the early stages of your venture. If you operate in a free zone, then contacts can simplify the startup process, put you in touch with lucrative business partners, and allow you to get on your feet before you start trading. You can find a business agent or sponsor through your free zone, through networking, or by using a tool such as Profezo, which connects expats to lawyers, accountants, tax advisors and more.

As well as professional support, you should make sure that your family has enough money to live off of whilst you begin a new venture. Indeed, you can begin trading in no time at all, but it will take time to build up your contacts, network with potential clients and make a success of your new venture. Many expat entrepreneurs start new businesses only when they have enough in the bank to cover their living costs, wait until retirement, or take on a part-time role that affords them some flexibility in the early stages of their international business venture.

Good Luck!

Whether you’re a serial entrepreneur and want to make the United Arab Emirates your next destination to expand, or you’ve spotted a gap in the market as an expat and want to see where it takes you, we wish you the very best of luck with your new business venture. With the right product, work ethic, marketing strategy and support, you could be on to a winner.

The Money Saving Expat blog is choc-full of useful resources for expats living and working in Dubai, the UAE and indeed around the world. Make us your first-stop resource when looking to save money as an expat, and check back often for more on investing, taxation, and more.