Have you ever asked yourself: What are entrepreneurs like you looking for, when thinking of starting a business in Dubai?
Well, based in our research most entrepreneurs are looking for the following factors:
Strategic location, tax benefits, ease of doing business, infrastructure in Dubai, access to funding and organizations that could help them, diverse economy, supportive government, and quality of life, of course. In this article we will explain some of the factors and give you our suggestions to start your business in Dubai.
Dubai is known of having a favorable tax structure that offers several benefits to businesses, especially new startups. First, there is no personal income tax, which means that people who live and work in Dubai do not have to pay any income tax on their salaries or wages. You must be thinking: Isn’t that amazing? It definitely gives you a significant financial advantage if you are looking to start a business in Dubai.
Also, Dubai does not put any corporate tax on businesses, which means that businesses can keep all their profits, and they can reinvest into their businesses to make them grow further. The absence of corporate tax makes it easier for businesses to attract investors because as you may know, investors are more likely to invest in companies that offer a higher return on investment. On 31st January 2022, the UAE’s government announced it would be introducing a new corporate tax. Historically, The United Arab Emirates has not imposed taxes on the profits of corporations except those in a handful of industries such as resource extraction and foreign banks. However, from the financial year beginning on 1st June 2023, many more companies operating in the territory will need to begin paying the new 9% corporate tax rate. The new UAE corporate tax will not affect every business, and many will not need to pay the tax at all. (source by maydanfz.ue)
Dubai also does not put tax (VAT) on exports, which means that businesses that export their products and services from Dubai do not have to pay any VAT, a wonderful news for the investors. Businesses that operate in certain designated free zones in Dubai are exempt from customs duties and other taxes.
You should not forget that businesses are still required to comply with local tax regulations. This includes maintaining accurate financial records, filing tax returns, and being correct to tax filing deadlines. We suggest to consult with a tax professional to ensure compliance with local tax laws and regulations. Us at DW&P have specialized experts who can help you with these matters and offer more legal/commercial services in Dubai.
Dubai it is believed to house more than 10,000 small and medium start-ups and has made significant efforts to create a business-friendly environment that attracts entrepreneurs. It’s important to know that Dubai government has implemented several initiatives to support startups and small businesses, including the Dubai SME agency, which offers funding, training, and other support services.
The process of registering a business in Dubai is usually simple and can be completed in just a few steps. The first step is to choose a business activity and your legal structure. Once these have been determined, the entrepreneur can apply for a trade license, which is issued by the Department of Economic Development (DED). The DED also provides a one-stop-shop service, which allows entrepreneurs like you, to complete all the necessary procedures in one location, including obtaining visas and registering for taxes. Of course we can provide all the necessary support to assure the process runs smoothly.
As we mentioned above, Dubai’s free zones are an attractive option for entrepreneurs, as they offer several benefits, including 100% foreign ownership, excluding from corporate tax and customs duties, and simplified procedures for business registration and licensing. There are over 30 free zones in Dubai, each with its own set of regulations and requirements.
Let’s talk about Access to funding.
This is a critical factor for entrepreneurs looking to start a business, and fortunately Dubai has several funding options available. The Dubai SME agency offers funding to startups and small businesses through various programs, including the Mohammed Bin Rashid Fund for SMEs, which provides financing for businesses in the early stages of development. The Mohammed Bin Rashid Establishment for SME Development (Dubai SME) provides funding, mentorship, and training to small and medium-sized enterprises (SMEs) in Dubai. The organization also offers networking opportunities and access to government tenders, helping SMEs to grow and succeed in Dubai.
Dubai has also several venture capitals firms and angel investors looking to invest in promising startups. The Dubai Angel Investors Network and Dubai Ventures are two examples of organizations that connect startups with investors and we suggest you read more about this opportunity.
The opportunities don’t end, Dubai’s banking sector is well-developed and offers a range of financing options, including business loans, credit lines, and trade finance. The government has also established several initiatives to encourage banks to lend to small businesses, including the Dubai SME Guarantee Program, which provides guarantees to banks to encourage them to lend to startups and small businesses. The World Bank’s Ease of Doing Business Index ranked the United Arab Emirates (UAE) 16th globally in 2020, highlighting the ease of doing business in Dubai. The report noted that Dubai made starting a business easier by introducing online portals and streamlining procedures for company registration and obtaining business licenses.
The Dubai Silicon Oasis Authority (DSOA) supports the growth of the technology sector in Dubai by providing state-of-the-art infrastructure, funding, and incubation programs. The DSOA also offers access to venture capital funding and angel investors for tech startups.
Disclaimer: The above-mentioned article is simply based on independent research carried out by Dr. Werner and Partners and cannot constitute any form of legal advice. If you would like to meet up with any of our representatives to seek further information, please contact us for an appointment.
