Skip links

A checklist for international investors in the UAE

The United Arab Emirates (UAE) are known as a popular travel destination for many international investors. The reasons are mainly the dynamic economy, the advantageous location and the welcoming and open culture of the UAE. If you are an international investor, there are a few aspects for you to take into account when investing in a business in the UAE. In the following article we will elaborate on the most important factors for you to keep in mind. 

Be aware of the different corporate structures

Depending on your goals, intentions and requirements of your business idea, you need to select a appropriate corporate structure. Each of the following entity types has different requirements when it comes to ownership, the scope of operations and the regulations that apply: 

  • Limited Liability Company (LLC)
  • Public Joint Stock Company (PJSC)
  • Free Zone entities
  • Branches of foreign companies
  • Partnerships; or
  • Sole establishment.

The government of the UAE has recently permitted that a 100% foreign ownership over a company located in the UAE is legally possible. This is specifically applicable for entities established within the free zones of the UAE as these provide extra advantages, for instance tax breaks and streamlined company formation procedures. Nonetheless, it is highly recommend for you as a foreign investor, to check and confirm that your business operations align with the approved industries for compete foreign ownership.

Furthermore, to operate in a lawful manner, investors need to secure the required licenses and permits, which depend on the type of business and the specific emirate; please take into consideration that free zones are subject to different regulations than the mainland. 

Workforce and Employment Regulations

It is essential for you as an investor to comprehend hiring practices, contracts, and employee rights under the current labor law. The UAE has laws pertaining to hiring foreign workers, such as sponsorship guidelines and visa requirements. Through the current Emiratization program, the UAE government promotes hiring UAE citizens. Employing local talent may be subject to particular quotas or incentives, depending on the industry.

Get to know the market

Before investing, you should carry out an in-depth market research to understand the demand of the UAE, its competition and the consumer preferences. Thus, you will be able to choose the best market entry plan and reach an advantageous position. Another recommendation is to work out a feasibility study, evaluating the business idea’s viability by taking into account elements like expenses, possible returns, risks and legal requirements. 

Tax system

The UAE offers a favorable tax regime, often including zero corporate and income taxes. However, the majority of products and services are subject to Value Added Tax (VAT) at a rate of 5%. Financial planning requires an understanding of the tax implications and compliance obligations, we at Lawbridge are here to support you in this regard. 

Choosing the Right Location

As an investor you have the choice between establishing a business in a free zone or the mainland. Benefits from free zones include simpler customs processes, exemptions from taxes, and complete foreign ownership. Operating on the mainland, may give you better access to the regional market. Overall, due to its advantageous location, the UAE serves as a gateway to Asia, Africa, and the Middle East. Selecting a site that offers easy access to important markets helps improve logistics and business operations.

Get to know culture and business practises

Engaging in solid connections and guaranteeing efficient operations require an understanding of and respect for the customs and business etiquette of the area. Although there is a great deal of diversity and multiculturalism in the UAE, traditional values and customs are still quite important. Success in the UAE mostly depends on developing a large network and  business relationships. Attending business council meetings, interacting with regional partners, and taking part in industry events can all yield insightful information and beneficial prospects.

Learn about risk management and resolution in the UAE

As a foreign investor, you should become familiar with the UAE’s available dispute resolution procedures. The legal system provides a number of options, such as municipal courts and arbitration facilities like the Abu Dhabi Commercial Conciliation and Arbitration Center (ADCCAC) and the Dubai International Arbitration Centre (DIAC).

How Lawbridge can support you

Although there are numerous investment opportunities in the UAE, it is crucial to plan ahead and understand the local business environment. Our team at Lawbridge has helped many foreign investors to make the step investing in a business in the UAE; Therefore, when it comes to the procedure of stepping into the UAE market and investing, we are your partner. We will assist you and carefully navigate you through each step of the process, the legal, financial and cultural aspects. Thus, we will enable you to effectively enter the UAE market and establish a solid foundation for a successful business. This is your sign, to reach out to us and get your free consultation here

Leave a comment