Due to the fact that it serves as the Middle East’s commercial centre, Dubai has long been the focus of business investment. The current market trends in Dubai offer numerous chances for foreign investors to capitalise on the resources the city has to offer, including the building industry, the increasing tourist industry, the import and export of commodities, and more. A Business Setup in Dubai implies you’ll have access to an almost limitless pool of potential clients and customers.
Dubai’s economy is flourishing, but a lot has changed in the entrepreneurial world there recently. Several obstacles related to infrastructure, finance, and people still exist despite the numerous endeavours to support the growth of new firms by boosting regionally focused activities and investment opportunities from international funders. These challenges must be resolved in order to help Dubai’s entrepreneurs reach their full potential and achieve success. The following are some of the challenges new business owners in Dubai confront.
STRINGENT LEGAL AND GOVERNMENTAL REGULATIONS
Many business owners struggle to comprehend legal and compliance frameworks, ownership arrangements, and governmental requirements. It costs a lot to register a firm and obtain a licence. Dubai’s tax and commercial rules are open to arbitrary changes.
FINDING A LOCAL PARTNER
You must partner with an Emirati native if you are a foreign company launching a business in Dubai even if you intend to collaborate with an already established local company or open a franchise or a representative office. You will need a local partner to establish an onshore corporation or LLC (limited liability company). Additionally, it is customary for a foreign organisation to control only 49% of the company, while the local partner owns 51%. Finding a trustworthy local partner might be quite difficult. When beginning a business in Dubai, it is the main challenge and maybe the biggest barrier.
ESTABLISHING YOUR PRESENCE
When we talk about establishing your presence, we’re mostly thinking about the fact that business in Dubai is all about forming relationships. In some respects, this might allude to the level of rivalry that your company is going to experience in a global market like Dubai. In contrast to many other markets, Dubai’s business culture places a strong emphasis on discovering one’s personal identity, the values one brings to the table, and the interpersonal connections one may create. That implies that your company’s initial steps will probably be difficult, unless, of course, you take the time to establish some of these crucial contacts beforehand. If you proactively connect with like-minded companies in ancillary industries and create a network you can rely on to streamline your shift, you’ll be ready to go right away.
LIMITED ACCESS TO FUNDING
The largest obstacle to starting a new firm in Dubai is a lack of finance. Access to capital and a lack of bank financial help are the main problems. The startup business model and the requirement for long-term investment are concepts that many banks and investors are unable to grasp. The needs of entrepreneurs are frequently not met by various funding sources, including venture capitalists, company accelerators, angel investment networks, and crowdfunding platforms. Even with funding approval, it takes a while for the money to really show up in the bank account.
MANAGING MONEY
There is no denying the high cost of living in Dubai, both for residents and for businesses. The costs that must be incurred can be quite a shock to firms that are new to the area. Therefore, it’s crucial that you manage your money carefully and err on the side of caution until you establish a consistent rhythm and cash flow, especially if you’re new to the area and there is still some degree of uncertainty. This is especially true for new enterprises; as cash flow issues account for the great majority of startup failures. Managing your money wisely might be essential to your success in Dubai.
GETTING WORK PERMITS AND VISA
To start a business in Dubai, a foreign entity will need both a work permit and a residence permit. The foreign firm must adhere to specific standards if it wants to send its staff abroad. Again, the amount of documentation involved makes this difficult.Dubai Investor Visa is also a good choice for investors
LANGUAGE BARRIER
Everything in Dubai is written in Arabic, making it challenging for international business owners who are not fluent in the language to start up their operations on their own.
HIRING WORKERS
You will need some local employees to manage your business operations if you are a foreign organisation and wish to open a firm in the Dubai area. Employing locals is still difficult because there are specific rules that you must abide by in the UAE. You will find navigating the UAE’s labour laws much easier if you are aware of these regulations and restrictions. Aside from that, you can discover that managing local staff members is more difficult and complicated than hiring them because of the variations in work cultures, language, and managerial strategies. You might wish to think about hiring a local management team to supervise the business.
VAT APPLICATION
Dubai was tax-free prior to 2018. Due to the low tax burden, numerous business owners from around the world started their operations in the area by utilising the tax incentives. However, since the country adopted the VAT system of the Gulf Cooperation Council in January 2018, it is no longer the case. One of the most difficult aspects of launching a business in Dubai is getting used to the new VAT requirements. Businesses that do not abide by Dubai’s tax laws are subject to severe penalties and fines.
UNDERSTANDING THE CULTURE
Understanding Dubai’s culture and business customs is the biggest challenge for a foreign firm beginning a business there. The UAE has strict and unique standards. Therefore, having a complete and accurate understanding of it is crucial. Before entering the market, you should also be aware of Islamic values and beliefs. A few social standards concern the employees, regional holidays, cultural customs, working days and hours, etc.