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Exceptional infrastructure, strategic geographic location, and a highly skilled workforce are all available in the United Arab Emirates. Because of these advantages, the area is ideal for the establishment of any kind of business. Despite the fact that there are many advantages, investors must take into account both sides of the coin.

What are the advantages and disadvantages of establishing a business in the United Arab Emirates?

We’ve compiled a summary of the advantages and disadvantages of establishing a business in the United Arab Emirates so that you may get a better knowledge of the area.

Advantages of forming a business in the United Arab Emirates

The economy is strong and growing.

Foreign investors benefit from the UAE’s highly active and expanding economy, which is made possible by the country’s transparent and advantageous business processes, as well as its stable political environment. The nation has the second biggest economy in the Arab world, with a gross domestic product (GDP) of 414.18 billion US dollars in 2018. As a result, the United Arab Emirates is a favourable location for business establishment. A robust and expanding economy offers many possibilities for businesses of all sizes and in all sectors.

Infrastructure that is reliable

The rapid economic development of the United Arab Emirates has given a significant boost to the building of residential and commercial developments across the nation. Infrastructure developments in the nation nearly usually take use of the most up-to-date technologies available to them.

Import Duties Are Reasonably Low

The United Arab Emirates has an open trade policy with minimal import tariffs. The vast majority of products brought into the nation are subject to very low import taxes. As a result, it should come as no surprise that trade companies choose to establish themselves in the United Arab Emirates.

The disadvantages of forming a business in the United Arab Emirates

Trade Restrictions in the Free Zone

Free zones provide a number of advantages, including ease of registration, no income tax, and less stringent regulations. Entrepreneurs who choose to establish a company in one of the UAE’s free zones are not permitted to do business inside the jurisdiction. Companies based in free zones are not permitted to do business on the UAE’s mainland unless they have an arrangement with a distributor.

Business Activities That Are Prohibited

Some commercial activities are prohibited in the United Arab Emirates. It is important to do preliminary research to determine if a certain economic activity is allowed or prohibited in a particular area. Consult with a company setup expert in advance to ensure that you are aware of all of the options for your business activity as well as the laws involved.

Locate a Local Business Partner

Under UAE commercial legislation, international corporations are obliged to have a local UAE citizen as a partner who has at least a 51 percent interest in the business. It is natural for an expat to be wary of identifying oneself with an investor who is relatively unknown in their home country. Nonetheless, in order to guarantee security, investors should enter into side agreements with UAE-owned businesses and collaborate with them. In exchange for an annual fee, such 100 percent UAE-owned businesses provide a dependable local partnership to a foreign corporation.