Challenges of Doing Business in the UAE

Setting up a Business in UAE

Business Setup in UAE is no easy feat and that too in the booming economy of the UAE. Many company formations in Dubai take place every year. Are you reading up on various business policies for your UAE Free Zone Company Formation? RadiantBiz provides solutions in regards to your company formation queries. We make your business setup in Dubai mainland dream come true. Let’s say you have done your research on the company licenses, banking policies, etc. but are still trying to find some insight on the challenges faced while doing business setup in UAE. Without further ado, let’s rundown some of the challenges faced while setting up a business in UAE.

Job Market

It’s pretty evident that in an economy like the UAE, the job market is quite competitive. This competitiveness results in versatility, which makes the market more convenient for various businesses. To survive in the UAE market you need the right footing. Understanding the ins and outs and you get an edge for your business/company.

Setting up a Company in UAE

For starting in a free zone company formation in Dubai, you must understand the regulations in regards to forming a company in the region, license formalities, banking prerequisites, visa, etc. The first step to set up your company would be to identify your business type and get an ownership license for that accordingly. Currently, the UAE offers licenses for three businesses namely, Free zone, Mainland zone, and Offshore zone. Each has its pros and cons. The general consensus seems to incline more on obtaining a mainland license renewal in Dubai since it provides much more flexible options such as tax rate, office space, doing business freely across the emirates, etc. But understand what your company needs and choose wisely.

Obtain and maintain the necessary documents and approvals. In the case of a local service agent for companies in the mainland zone, find a local sponsor who has a thorough knowledge of the market, tax rates, and various information that might otherwise not be available readily. You can always take assistance from consultants to make the whole process a lot smoother.

Visa and Permits

Every foreign company that decides to set up its base in the UAE needs to comply with the visa rules and regulations set forth by the General Directorate of Residency & Foreign Affairs and Ministry of Human Resource & Emiratisation. Companies employing foreign employees have to take care of the necessary visa norms diligently. Foreign workers not only require a working permit but a residential permit from the concerned authority in the UAE. This is why compliance to these jurisdictions must be followed through at all costs.

Tax Environment

Dubai is known for its tax-free economy but on the introduction of the Value Added Tax in 2018 by the Gulf Corporation Council (GCC) there has been a significant shift in how businesses have been conducted. The VAT is an indirect tax levied on consumer goods, such as food, healthcare, education, etc. at a 5% rate. Every region in the UAE and countries under the GCC are subject to this tax. Companies late on registration or not getting the VAT permit on time are fined duly for the tardiness. It is important that you understand these prerequisites, corporate and local tax may be very different. This is why you need to do your research and plan well ahead of time to avoid discrepancies.

Getting Known

You have established your life-long dream of business setup in Dubai and are feeling pretty good about it, rightfully so. But complying to all the prerequisites is not the only trouble you’ll have to go through. The legal portion is very important on its own. But making your brand stand out amongst a very lively economy is something you have to calculate quite well. Creating a name of your own in the industry is going to require a lot of engagement, collaboration, and effort. You have to play the odds for you not against. Understand the work and business culture around you and create quality relations with peers to be on the right foot.

Business Management

Managing your people and the work environment is at your hands. You steer this ship. Dubai has a diverse population with people from all over the world working, living, and, touring here. Focus your time on the work environment because a healthy work environment has an impact on productivity. Making the workplace culturally sensitive and aware allows employees to perform better. Apart from that, maintaining the workflow of your business is another crucial step. Wage Protection System (WPS) needs to be followed by employers rightfully and the payroll tax under the Ministry of Human Resource & Emiratisation.

Capital Management

Many companies in the UAE have to shill out for office supplies, space, administrative tasks, etc. this can put a damper on your capital. Capital management is without a doubt a definite challenge in any sector. Many startups fail every year due to poor capital management. Finding the right ingredient would be to find a local investor to manage company set up costs and requirements.


Working days are different in the UAE compared to other countries as weekends are observed on Fridays and Saturdays. While some companies do operate on Saturdays, that doesn’t mean there is time to waste. Manage meetings, deadlines, appointments accordingly. Opening banking accounts take significantly more time, so plan it out appropriately.

These are a few of the challenges faced while Setting up a Business in UAE. However, it goes without saying that the UAE is one of the best places to set up a company. It provides ample exposure in terms of talent, culture, business prospects, etc.

Tell us what you think about the UAE as a business destination and an overall company ambience.

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