UAE is undoubtedly one of the world’s best countries for all types of trades and businesses. It has done so by providing best facilities and incentives to entrepreneurs from all parts of world. Individual businesses and companies can be established in mainland areas as well as several free zones in the country. It is the reason that businesses are continuously setting up in different parts of UAE especially in the emirates of Dubai, Abu Dhabi and Sharjah.
Most of these businesses are gaining good profit by having their presence in UAE. But it is a reality that not all companies can get desired results in any international market including the business-friendly place like UAE. The reason behind failure of few businesses in UAE is that they can’t cope with the challenges that are offered by UAE.
Following are important challenges that are faced by startups and even already established businesses in UAE. It is important for businesses to know and make strategy to overcome these challenges in order to ensure their safe place in UAE.
Ownership of company:
Foreigners can own 100% of their business if they are incorporating in a free zone. But most of these free zones are exclusive to selective business type and many companies can only survive in mainland UAE where they can interact freely. But here, they face issue of ownership.
For any mainland business entity, 51% shares will be delivered to a UAE national who will act as sponsor of that business. This not only reduces company’s profits (these sponsors are paid annually according to their capabilities and function in the company) but it may prove risky in few circumstances. An experienced consultancy firm can assist you in overcoming this challenge.
New Taxes:
UAE long remained a tax haven for all types of businesses. But this freedom is unfortunately not available now. The government has implemented 5% VAT on most of the businesses in mainland areas as well as several free zones. Even several well established businesses are finding it difficult to manage their revenues according to this newly implemented tax. For this purpose, you need complete information about the ratio of tax on your type of business and manage your profits wisely. In this case also, a firm providing VAT consultancy services in Dubai and UAE can prove helpful for both startups and already established businesses.
Hiring employees:
Unless you are working as a professional in any of the free zones, you will be required to hire employees for your company. As company owner, you will be responsible to provide visas to your employees. Even after selection of your employees, they will not be allowed to work in the absence of work visa. There is a complete procedure for this purpose. Sometimes, it becomes difficult for startups to complete the procedure in time that impacts negatively on their newly established businesses. But once you get familiarity with the process, it becomes easier to hire new employees in future.
Tough competition:
UAE’s fame as a business hub is well known all over the world for decades. It is the reason that large and small companies from all over the region have their presence in some part of UAE. No matter the type of business you are going to start in UAE, there are extreme chances that you will find one or more competitors in your type of business in any area of UAE.
It means there are huge chances that you will face stiff competition in UAE after starting your business. It is a big challenge. The best way to face this challenge is by providing better product and services to consumers along with marketing in an aggressive but sensible way according to your financial potential.
These are few important challenges face by many new and established businesses in UAE. But facing such difficulties doesn’t mean at all that conditions are not favorable for businesses. In fact there are numerous advantages available in UAE as compared to most of other countries such as political and economic stability, no or low taxes, simple procedure to start business, reputation of UAE, complete assistance from government etc.
You can easily avail all these and numerous other advantages by overcoming few challenges that you face here. We at Riz & Mona advisory can assist you in handling all these issues appropriately. We have already assisted several large and small companies setting up and successfully running their business in all parts of UAE.
