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Challenges of Doing Business in the United Arab Emirates

Challenges Of Doing Business In The United Arab Emirates

These days, businessmen who want to expand their business internationally find UAE the best-fit platform.

The country offers a variety of business perks to entrepreneurs, including safe governance, no personal or corporate income tax, and a lot more.

But new businesses face numerous obstacles in setting up a business in UAE.

In this post, we will examine the topmost challenges that international businessmen face in UAE and how Bizstart can assist in resolving these problems.

Let’s get started!

1.  Sharing ownership of the business is necessary

If the foreign entrepreneur wants to start a business in the UAE, he must share ownership of the company.

The foreign entity also needs a local partner to establish a Limited Liability Company in the UAE.

2. A significant amount of funds

Any foreign company that wants to establish a business in the UAE also requires enough money to keep things running properly.

Finding a local investor can be difficult, and the foreign company needs to have a clear plan to manage its funds to provide long-term services.

3. The VAT’s applicability

The Gulf Cooperation Council established the UAE’s value-added tax (VAT) system in January 2018.

All goods and services are subject to VAT, an indirect tax, exempting basic food necessities, educational materials, and healthcare products.

The tax, which is imposed at a rate of 5%, is considered to have simplified business taxation.

But becoming acclimated to VAT is one of the biggest obstacles to doing business in the UAE.

Additionally, businesses that disregard the tax code or postpone registration risk paying significant fines.

4. Real estate challenges

The UAE is well-known for its real estate, and a company’s registered address is also linked to its business license.

Due to this requirement, a company must have a physical office. Therefore, it is difficult for small businesses to get into the market.

The office’s location plays a vital role in the success of the business.

The UAE Free Zones provide affordable real estate possibilities for overseas businesses.

In addition, you should have local knowledge to decide where and how big the office space should be.

5. Finding a local partner is challenging

Having a local sponsor, partner, or advisor is essential when a foreign company wants to launch a venture in the UAE!

Finding the most suitable partner or sponsor who fits the needs of the business can be challenging.

The local partner must also be capable of managing local operations and has market and legal knowledge.

6. Cultural & social barriers

The market in the Middle East is vast and intricate. So, you should be familiar with the social norms of the UAE.

It comprises cultural norms, post-work hours, holidays in the area, and employee-related social conventions.

7. Language barrier

Arabic is the UAE’s official language, but English is typically used for commercial communications.

However, a foreign business must ensure that all employment contracts, records, and other paperwork are in Arabic before hiring local workers.

In order to do this, a business might need to hire a local translation or legal specialist to write them in both Arabic and English.

8. Finding local talent is difficult

A foreign company operating in the UAE must need locals to manage its operations.

You should follow specific rules set by the UAE government.

Hiring local workers might be difficult for small business owners who are unfamiliar with these rules and procedures.

9.  Calm observance of time

The UAE takes a more laid-back view of time than the West, Europe, and APAC countries do.

The UAE population is more understanding and tolerant of meeting cancellations and delays.

The UAE has a distinct working week from other nations. Therefore, any foreign corporation looking to open up a shop would have to scale back on its demands for timeliness and a lengthy workweek.

10. Management of employees

Managing the local staff effectively in accordance with regional regulations and compliances is another difficulty of doing business in the UAE.

Managing employees can be hard because there are so many differences in culture, language, and management style.

It may appear difficult to manage payroll and tax employees in accordance with UAE law.

11. Difficulty in obtaining work permits and visas

To live and work in the nation, a foreign worker must have a work or resident visa.

Visa rules are especially important for foreign companies that bring employees from other countries to the UAE.

The business must also abide by the rules established by the Ministry of Human Resources & Emiratization and the General Directorate of Residency and Foreigners Affairs.

Brush Off All the Challenges of Doing a Business in the UAE with Bizstart!

Bizstart, a professional business consulting company in UAE, offers ultimate solutions for all your business-related problems.

With our tailor-made business consulting services, you can establish and expand your business in the UAE.

Our experts can assist you with developing a strategy for entering the UAE market. Get in contact with us right now whether you want to streamline your existing business or start a new one in the UAE.

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