Doing business in Dubai

Geographically and culturally, Dubai is ideally placed to reach consumers in the rapidly growing markets of the Middle East, Africa and Asia. And with a combination of ease of business set-up, minimal foreign ownership restrictions, first-class communication and transport infrastructure, and relaxed immigration formalities for expatriate workforces, operating a business in Dubai can be richly rewarding. However, Dubai is a unique place with its own systems and structures.

Dubai-based enterprises enjoy a benign tax environment. Most businesses, with a few exceptions, operate with no direct corporate tax, capital gains tax or withholding tax on dividends, interest or royalty flows. And as Dubai is part of the UAE, businesses will often benefit from the over forty international tax treaties currently in force. Subject to anti-money laundering regulations, there are no restrictions on the inward or outward remittance of funds in any major currency. Private equity restrictions have been removed entirely for entities established in the various Free Zones, and legislation on such restrictions elsewhere is reportedly under review.

The most common ways for foreign parties to conduct business in Dubai are:

• establishing a Dubai branch office;
• establishing a Dubai limited liability company;
• establishing a Free Zone vehicle;
• appointing an agent already licensed in Dubai; or
• entering into a secondment arrangement with an appropriately licensed Dubai party.

The choice of arrangement must be considered carefully, and will depend upon factors such as the activities, purpose and size of the intended operations.

Dubai has a number of Free Zones designated to encourage specific business sectors. Enterprises establishing themselves in one of the Free Zones do not require local sponsors but will need expert guidance through the procedures that must be followed before a business can be registered.

Elsewhere in Dubai, local sponsorship is required in order to commence a business, which effectively means that 51% must be owned by a local UAE national. We are ideally placed to advise you on the optimum means of establishing your business in the region and securing the benefits that Dubai can offer.

To be successful, a new business must be properly established. It is critical to appoint professional advisors who understand Dubai, its legal framework and its surrounding geographic and economic contexts.