Recently, this country has emerged as one of the premier destinations for setting up entrepreneurial businesses. The United Arab Emirates (UAE) offers multiple benefits to international company executives mainly due to its tax-friendly approach, location, and strong economy. Like any destination, it is, however, surrounded by myths that may dissuade or mislead potential investors with the process. This article on the topic ‘Myth-Busting: Common Misconceptions About Company Formation in the UAE‘ will dispel some of the most common myths regarding company formation in Dubai, and it will paint an even clearer picture of what the procedure precisely involves.
The UAE Is for Only Giant Businesses
There’s a common notion that, for one to operate after business setup in UAE, only an international conglomerate and big businesses with immense expenditure can do it. It is also believed that only well-funded companies with much power thrive in this sector. That is far from being accurate at all.
The UAE government has created many free zones specifically as a haven for small and medium-sized enterprises (SMEs). Contrary to what most people believe, these free zones require much lower startup capital and have relatively inexpensive setup packages; hence, it is relatively easy to form a company for a single owner.
Business setup in the UAE is a rather complicated and bureaucratic procedure.
A related misconception is that it takes time, effort, and lots of red tape to set up business in the UAE. There may be a well-known adage, “different strokes for different folks,” but the laws and regulations of each country differ. In the United Arab Emirates, the procedures have been streamlined to make company formation relatively easy.
Digital transformation can provide many of the steps needed to incorporate a business, obtain licenses, and maintain compliance with regulations. In addition, although not changing its rules, the government of the United Arab Emirates makes business formation easier in practice. Actually, it is already possible to register a company in some free zones at the smallest expense of paper, using the minimum number of documents and even in less than a week. Making the process that much easier have been the “one-stop-shops” for company services, both on and off line.
The UAE does not allow foreigners to own a company within its borders.
Popular myth has long had it that the United Arab Emirates doesn’t actually let foreigners own businesses in its entirety, but this is a myth perpetuated by outdated information on the 51/49 rule, under which foreign business owners had to have a sponsor of an Emirati nationality in order to hold 51% of their company.
All business arrangements are no longer held to this legislation, however. With these new reforms, it is now possible to have 100% foreign ownership in several regions-in fact, the UAE’s free zones-as a whole; depending on the sectors and kinds of business, changes could now be beneficial even for mainland firms. The two factors here are due to new regulations, making the UAE even more attractive as a location for foreign investors, as this places more authority in their hands over their business without having to consider a local partner.
The UAE is not Conducive to Women Entrepreneurs
This draws its basis from the incorrect classification that the UAE environment is not conducive for female entrepreneurs. This usually arises from the perception or negative impression that the country remains regressive and less sensitive to women. In fact, the United Arab Emirates has been very aggressive in ensuring support towards women empowerment and equality, especially within the economic realm.
There are calls for women in the United Arab Emirates to start entrepreneurial ventures, with such efforts supported by a series of government initiatives and institutions. Additionally, the number of successful women entrepreneurs in the country is growing. Such women conduct various forms of businesses: business those that involve technology, retailing, and services.
Starting a Business in the UAE needs Mastering in Arabic
Another common misconception is you have to speak the language at fluency levels to commence and operate a business in the United Arab Emirates. While it is advantageous always to speak the native language when conducting business abroad, English is now the language of preference in the United Arab Emirates.
Most contracts, legal documents, and other business procedures are easily found in English and both languages are often utilized to secure government services. The United Arab Emirates is very diversified in population as well, with many expats from the English-speaking nations. English has so taken over as the standard business language, at least in Dubai and Abu Dhabi. Thus, international company owners who are interested in establishing a presence in the region shouldn’t be discouraged by their inability to speak Arabic well.
Business Taxes in the UAE Are High
Quite probably, favorable tax environments will prove to be the single most important reason that may attract business owners to the UAE. However, many believe in heavily taxed operations within the United Arab Emirates, especially with the introduction of Value Added Tax last 2018.
In reality, however, the UAE remains on the list of countries with the world’s best company tax policies. Corporate income taxes are often absent, apart from overseas bank branches and energy businesses. The rate of VAT is also minimal at only 5% and applied only to certain goods and services. Free zone businesses are sometimes accorded extra tax concessions, including exemption from export VAT as well as customs taxes. As a result, the UAE is seen as an excellent destination for investors, especially businessmen looking to reduce their tax burdens without compromising a strong economy.
Business Laws of United Arab Emirates Exceedingly Restrictive
There has been a misconception that the UAE has ancient regulations that are restrictive to conducting business, especially by companies. This presumption most probably arises from the stiff legal system of the country, which sometimes gets misconstrued for the fact that the regulations are hard to comply with.
In fact, the legal framework of the United Arab Emirates is drafted to offer firms a stable and secure setting in which to carry out their business activities. Its laws have always been enacted to safeguard the interests of not only national investors but also those of foreigners, to achieve fair distribution, and against frauds. The United Arab Emirates business laws have adopted many international standards that include protection of commercial practices, contracts, and intellectual property. More recently, company laws have had changes that have made the laws more flexible especially concerning labor law, licensing, and foreign ownership.
Contrary to popular myths that persist around company incorporation in the UAE, the country really boasts of a business-friendly environment with diverse opportunities for small firms and giant firms alike.
