There is no better time than now to write an article about setting up a business in Dubai as a foreigner. This is because the government just announced that the law allowing 100% foreign ownership in mainland firms will be effective from June 1, 2021. However, it’s only one among a series of great reforms announced by the government to boost the landscape of business setup in Dubai, UAE. And Business setup consultants in Dubai believe more positive reforms for foreign investors are in the offing.
As the environment of company formation is buzzing with new opportunities and positive developments, let’s dissect and discuss the prospects of setting up a business in Dubai as a foreigner. Read ahead if you are a foreign investor wishing to make the big leap into Dubai:
Formulate a Sound Business Plan
A robust business plan is key for establishing a successful business in Dubai. The plan should cover strategic aspects include business activity. While choosing a business activity in Dubai, you should think about the activities that are in demand. However, choosing an activity that may give good returns only for the short term should be avoided.
You can consider the Sunrise Sectors that rose to prominence during the COVID-19 situation while selecting the activity. Some of the Sunrise Sectors are E-commerce, Education Tech, IT, Fintech, Healthcare and Telemedicine, Food delivery, Digital Marketing and freelancing. Consult with business setup consultants in Dubai for robust advice on business activities.
Gather Information about the New Visas
Foreign investors can get long-term visas in Dubai by meeting the mandatory requirements. There are 5-year and 10-year visas that you can easily avail with the assistance of business setup consultants in Dubai. For the five-year visa, you need to prove your experience as an entrepreneur apart from being a shareholder in a startup or a member of its senior leadership. Also, you need to have a business idea for opening a company in the UAE.
The ten-year visa is termed the Golden Visa for which you may need to deposit at least AED 10 million in public investment. Setting up a company with at least AED10 million in capital or making an AED10 million investment in an existing company are alternative options for availing the ten-year visa in Dubai. The introduction of the five-year retirement visa that allows individuals above the age of 55 the eligibility to work and live in Dubai has also uplifted the emirate’s business appeal.
Understand Laws Regarding Foreign Ownership
Earlier, setting up a business in Dubai free zones was the only option for foreign investors to have 100% ownership in their companies. As per the Commercial Companies Law 2015, the Limited Liability Companies (LLCs) incorporated in the UAE mainland were required to appoint a UAE national as local sponsor. The local sponsor would hold at least 51% shares in the company and the foreign investors can own only 49% of the shares. With the exception of some sectors, the foreign investors can fully own their mainland companies in Dubai from June 1. The landscape of business setup in Dubai has become more flexible with the new amendments.
Get to Know Economic Substance Regulations
As a new investor in Dubai, you need to understand your obligation to ensure economic transparency while setting up businesses. With the introduction of Economic Substance Regulations (ESR), you can’t incorporate a company that only exists in paper with no substantial activities. If your activity falls under Relevant Activity, you need to demonstrate that the company has adequate economic substance in the UAE in relation to the activity.
The Relevant Activities are Banking, Insurance, Investment Fund Management, Headquarters Business, Shipping Business, Intellectual Property, Lease-Finance, Holding Company Business, and Distribution & Service Centre Business. New investors should think about the ESR factor right from the get-go, instead of struggling at a later stage to determine their ESR status.
For instance, the companies may require either a managing director or a senior management team member who is physically based in the UAE or running the company. Board meetings must be held in the UAE with written minutes signed by all the directors. Starting a company without ESR considerations will later lead to expenses such as changing a small office to a bigger one or amending a legal structure to meet the Economic Substance Test.
Knowing the Real Beneficial Owner is Mandatory
Secrecy is no longer associated with the process of business set up in Dubai as the entrepreneurs are now required to reveal the name of Ultimate Beneficial Owner (UBO) to the Regulatory Authority during registration and license renewal. The new regulations state that the companies should maintain a Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) and submit to the authorities. A Real beneficiary is an individual who owns or controls directly or indirectly, 25 per cent of the capital. Or has voting rights for at least 25 per cent of the shares, or who exercises ultimate control over a ‘legal person’. Failing to comply with UBO requirements will result in severe consequences to be decided by the UAE government.
How can Jitendra Business Consultants Help You?
As an established business hub for foreign investment, Dubai has never felt like a foreign land for investors. With its robust infrastructure and myriad business opportunities, Dubai has rewarded foreign investors with an efficient ecosystem to thrive. The only thing that the expatriates need to give due care while initiating the process of business set up in Dubai is the licensing requirements, labour laws and immigration laws. Let the business setup consultants in Dubai, such as Jitendra Business Consultants (JBC) handle that responsibility for you.
We have a team of highly qualified company formation specialist who will simplify the business setup process for you. JBC is dedicated to helping foreign investors achieve their aspirations in a global business hub like Dubai. The clients benefit from our bespoke services such as company formation (mainland, free zone & offshore), corporate bank account opening, obtaining visas etc. If you are an investor with an ambition to grow your business in Dubai, we provide you with the assistance of our efficient team to achieve your goals quickly without any hassle.