Dubai Business Formation @ Asia Business Set Up

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Dubai Business Formation

Despite its global reputation as a flourishing trading hub, Dubai business formation is nevertheless difficult. The primary reason is that the development and efficiency of infrastructure often fails to keep pace with rampant economic growth. Thus, when setting up a business in Dubai it is necessary to be aware of both the frustrations and opportunities of the process. The following is an overview of Dubai business formation and the economic background to it.

Dubai business formation is both challenging and pricey due to i) high government business set up fees ii) inconsistent and complex Dubai business law and iii) inefficient bureaucracy during Dubai business set up. According to the World Bank's Doing Business 2010 Survey, the UAE is poorly ranked as the world's 33rd easiest place to do business. The survey measures factors including Dubai business formation procedures, and the time, cost and minimum capital required to start a business. Furthermore, the UAE is negatively ranked as the world's 46th freest economy in the Heritage Organisation's 2010 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment and labour markets.

Dubai is an evolving international trading hub. Although Dubai is considered an offshore tax haven, a Dubai company retains a positive image, not least because the UAE (of which Dubai is part) is ranked as the world's 30th least corrupt country in the 2009 Corruption Perceptions Index by Transparency International. The UAE is the world's 23rd most competitive economy, according to the World Economic Forum's Global Competitiveness Report 2009-2010, providing a stimulating, healthy environment following Dubai business formation.

Due to favourable tax laws, Dubai business formation is legally tax-exempt if properly structured.

The majority of foreign entrepreneurs choose to set up a business in Dubai in one of the UAE's Free Zones. Common advantages of a Free Zone company include i) 100% foreign ownership ii) no limits on the number of foreign expatriate staff which can be employed and iii) good communications infrastructure. Other incentives to encourage Dubai business formation include low cost energy. A Dubai limited liability company (LLC) is another popular option, although it requires a UAE national to hold a 51% shareholding. Other business entities include a Dubai Branch Company - popular with international entrepreneurs wishing to create a local brand presence for their international company but which requires a UAE national sponsor - and a Dubai Offshore Company, a separate entity which has a Dubai business address but which, unlike other forms of Dubai business entity, is not required to rent a physical office or employ staff.

The governing bodies of Dubai are undertaking reforms to make the process of Dubai business formation an easier and more attractive proposition for entrepreneurs. One such change was the abolishment of the minimum capital requirement for incorporation within the UAE. Instead, capital requirements are based on what is required for company objectives.

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For more information on Dubai business formation, contact email@healyconsultants.com or call us in Singapore at +65 6735 0120.

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