The past 10 years have witnessed incredible growth throughout all sectors of the Dubai economy. The emirate’s government is constantly working to improve its commercial transparency and introduce dynamic regulations that aid the formation of small and medium enterprises (SMEs) and have the ability to react to global financial challenges.
Dubai’s economy is no longer reliant on oil, but is more diversified, relying heavily on trade, services and finance sectors. Dubai has also implemented a strategy to make it the capital of the Islamic economy. The seven strategic directions of Dubai as a global leader in Islamic economy include: Islamic finance; halal food; family friendly tourism, Islamic digital economy; fashion, arts & design; economic education; and Islamic standards & certification. In addition, Dubai has already launched plans to be the global center for issuance of sukuk (Islamic corporate bonds) and the establishment of an Islamic Governance Centre and the Dubai Centre for Islamic Banking & Finance.
With its central geographic location between Asian and European markets, Dubai has worked hard to establish itself as an integral part of the global trade mechanism. Its central location has also allowed Dubai to become a popular and accessible tourist destination.
The Department of Economic Development has been exceptionally forward-thinking, and is moving towards a more streamlined electronic services system in which most aspects of the business set up process is conducted through the internet.
Dubai’s many free zones are another aspect of the city’s growing economy. Established as a way of attracting more foreign investment, free zones adhere to unique laws regarding ownership, taxation and labor. Unlike businesses in the rest of Dubai, which require at least 51% ownership by a UAE national, free zone businesses can have 100% foreign ownership. Legally, companies based in free zones are considered “offshore” so they are unable to trade within the city without an agent or distributor. Free zones also tend to assist new businesses in the set up process.
One of the most important steps in creating a viable business plan is understanding the initial costs of setting up a business. Dubai’s tax free nature is attractive to many entrepreneurs, but it’s important to keep in mind the fees involved in issuing a new trade license. The DED’s website offers a useful tool which allows potential business owners to estimate the fees involved in obtaining their trade licenses.
If you are planning to start a business in one of Dubai’s many free zones, keep in mind that each free zone has different start-up procedures and fees. Many free zones also require that the business owner have a minimum amount of capital if they are establishing the company or enterprise in the free zone as opposed to just opening a branch of an existing company. Another cost of running a business in Dubai or in a free zone is sponsoring your employees and providing them with the necessary visas and paperwork to allow them to reside in the country.
Trading companies should also consider the future costs of importing goods to the country. Dubai Customs has clear guidelines to the types of goods that can be brought in, as well as the costs of importing those goods. If the company will only be trading within the GCC, customs fees will be less expensive thanks to the newly established GCC common market, which promotes trade and employment among GCC nationals.