Reduce Initial Costs

Setting Up A Business In UAE | Tips To Reduce Your Initial Costs

Setting up a business in UAE: Free zone & Local company features and benefits, reduce setup costs via few visas & smaller offices

Setting up a business in UAE is complicated. There are 2,000+ activity licenses and 28+ jurisdictions to choose from. Many jurisdictions have bundled packages of visas, activity & office space.

Sharjah, Ras Al Khaimah, Fujairah, Ajman, Umm Al Quwain, Abu Dhabi and Dubai, in the United Arab Emirates [UAE], each has their own local registration jurisdiction plus multiple free zones.

Please invest 2 minutes of your time to watch the setting up a business in UAE video below. It spells out how you can benefit. Or if you prefer to read, then feel free to skip the video and go straight to the text below:

 

Setting up a business in UAE: Get a free quote by filling your details in the form on the right and get tips to reduce your initial costs

Setting up a business in UAE: Free zone features & benefits

  • You own 100% of your company for all activities. The activity you wish to do may be offered only in specific free zones or only for local company registrations. Your company registration agent will be able to advise you
  • Ease of formation of your company. Generally, the steps required for a free zone company are fewer than for a local company. The entire process signing a court registered agreement with a UAE national ‘Sponsor’ or ‘Service Agent’ is avoided
  • Custom duty exempt international trade, but payable within the Oman, Bahrain, Saudi Arabia, UAE, Qatar, and Kuwait. Gulf Cooperation Council [GCC] countries have a combined customs union with a uniform 5% tariff. So once the goods leave the free zone and are sold in one of the GCC countries, it is the same as a local sale
  • Physical products sold within the UAE only via locally registered agents. Invoice charges are there for clearance. So a cost-benefit needs to be done. You may prefer to ship items in bulk to a local agent
  • Service business transactions allowed within the UAE

Setting up a business in UAE: Get a free quote by filling your details in the form on the right and get tips to reduce your initial costs

Setting up a business in UAE: Local Jurisdiction features & benefits

  • Sell your products anywhere in the UAE or GCC. Unlike the free zones, a local company has no restrictions
  • To do business with government entities, a local jurisdiction may be essential. most government departments will insist that you sell products or services to them via a company registered in their Emirate, not just the UAE
  • Trading and Commercial activity licenses require you to have a UAE national as a ‘Sponsor’ who will own 51% of your company on paper. A court agreement will ensure that your business remains in your hands
  • Professional licenses require you to have a UAE national as a ‘Service Agent’. You can own 100% of the business
  • In both cases, a court agreement outlining your arrangement with the UAE national is required
  • You will only need to pay an annual fee, not a percentage of the profits
  • You can have your office anywhere the Emirate of registration
  • The United Arab Emirates [UAE] doesn’t have any Income or Corporate taxes
  • This means you must pay for all company related costs whether you have any profits or not!
Setting Up A Business In UAE | Why Waiting For Another Minute! Make More Money Now!

Varal Team Members

Setting up a business in UAE: Get a free quote by filling your details in the form on the right and get tips to reduce your initial costs

Setting up a business in UAE: Office space

  • Free zones have found an alternative. They rent out desk space in their own buildings and deem that enough to issue a license. And include it in bundled packages. This reduces your overall costs.
  • To get a license, it’s mandatory under the law to have an office space. Rent is the largest component of the company registration costs.
  • The other thing to remember is those offices don’t come in size multiples of the 10 sq meters required per eligible visa. So if you want 5 visas, there may not be any office available that is 50 sq meters. The closest may be 75 meters.
  • So ask yourself, do you really need 5 visas this year? Maybe you only need 3 to start with?

Setting up a business in UAE: Be prepared for company registration fees instead of taxes

Many of us who come from countries with corporate taxes automatically think in terms of taxes due only if there are profits.

But in the UAE, you must pay the flat company costs and office rent at the beginning of every year, even if you make a loss. The UAE government doesn’t wish to poke its nose in your business.

The Dubai Department of Economic Development has said that about 30% of companies registered with them don’t renew annually. So best to conserve cash where you can.

Setting up a business in UAE: Get a free quote by filling your details in the form on the right and get tips to reduce your initial costs

Setting up a business in UAE: Reduce initial costs with few visas

Generally, the number of visas you are eligible for depends on the package the free zone is offering or the size of your office. 10 sq meters per visa is a good rule of thumb.

Other clients have suggested that new entrepreneurs try to get an initial package with the least number of visas.

You can always increase the number of visas as your company prospers in the future. There are no specific restrictions on recruitment other than office space.

New companies need to conserve their cash, especially in the early years. Since all government related expenses are annual, it would be best to plan for 1 year, instead of for a 5 year period. Markets are fickle in the UAE.

Setting up a business in UAE: Get a free quote by filling your details in the form on the right and get tips to reduce your initial costs

Setting up a business in UAE: Registering a company only for visa purposes is possible

Are you registering your UAE company only because you want a visa for yourself and are not interested in doing any specific business?

This is perfectly acceptable. Let this be your main objective so that you can be advised on the least cost option for 1 visa. Free zones occasionally have specific bundled offerings.

  • Ask for the lowest cost Emirate will help you to reduce your initial setup costs
  • 1 visa packages are beneficial to those who are exploring the business climate for the UAE or the Middle East
  • Free zones with lower costs are in Ajman, Umm Al Quwain, Ras Al Khaimah and sometimes in Sharjah
  • A United Arab Emirates [UAE] Employment or Residence visa from any Emirate, permits you to live in Dubai or anywhere else in the UAE
  • It is quicker to form one visa companies with a package deal
  • If you want to increase the number of employees in the future, you will need to rent a larger office in the same free zone
  • You can change your jurisdiction in the future only by forming a new company in the different jurisdiction
Setting Up A Business In UAE | Why Waiting For Another Minute! Make More Money Now!

Varal Team Members

Setting up a business in UAE: Get a free quote by filling your details in the form on the right and get tips to reduce your initial costs

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Reduce Initial Costs was last modified: September 29th, 2019 by Manu Raj

Manu Raj

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