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UAE Business: Not Just Real Estate!

Aug 13, 2008
UAE business is simple after the first year of getting your 'Sponsorship Agreement', office space, your 'Trade License', 'Labor and Immigration computer cards', your own 'Investor visa' stamped in your passport, your 'Driving license' and your bank account.

In the years up to 2000, the government was eager to have small and medium size businesses from where ever they could get investors. Then, with real estate appearing as a lucrative opportunity, the focus shifted to bigger, branded, UAE business and the market changed forever - especially for the small and medium business owners.

Rules for incorporation have become simpler, but the hundreds of license categories continue to be bewildering. It is much easier to obtain a license to do business with the several Free Zones springing all across the UAE, but the visa costs have gone up 8 times as have the Trade License annual fees.

Free Zones - at last count almost 20, act as UAE business centers and make life easier for the foreign investor and provide excellent world class facilities. In addition, foreigners can own 100% of their companies in the Free Zones as opposed to only 49% when they incorporate a UAE business in the country. Many multinational companies have set up shop in the free zones and one would find every conceivable business being conducted in these centers.

To incorporate a uae business locally, you need a UAE national as your '51% local partner' on paper with side agreements to protect you. Depending on your requirements, the 'sponsor' would be paid either a fixed fee or as a percentage of sales or profits. Even though he hasn't put any money into the venture. The upside is that there are no corporate taxes - neither do you have to submit any audited accounts, as you may have to in the free zones.

It is important to note that to obtain a 'Trade License' to carry out business in the UAE, you need to rent or own office premises. You cannot operate from home or from a business center under the law. This increase the cost of a uae business and typically you end up paying about US$ 50,000 per year, just to stay in business - regardless of whether you are making a profit or loss!

So this is great for larger businesses! Only US$ 50,000 - US$ 100,000 per year, depending on office rents, despite making significant profits!

Some business centers will rent you desks or space, and while this sounds quite attractive, you may not be able to use this address as the location of your office for Trade License purposes.

Opportunities are growing very fast regarding real estate UAE and properties are being built here using almost one third of the building equipment of the world. There is continuous rapid growth in real estate uae. Almost US$ 800 bn is under construction.

UAE is focusing on becoming a regional hub for Health care via the Dubai Health Care City and Harvard Medical Center; Leisure via Dubailand and the entertainment parks in collaboration with Six Flags, Busch Gardens, Formula 1, Legoland, Universal Studios, Bollywood, Marvel, Sea World and Dreamworks Studios; Financial services via Dubai International Financial Center [DIFC] in collaboration with Nasdaq; Education via Academic City and the several universities from around the world; Software vis the Dubai Internet City and many more.

9/11 has a blessing in disguise to uae business. With the restrictions on travel and the intense scrutiny imposed by the US on Middle East money, Investors in the region have started investing a portion of their substantial oil portfolios, back into the region instead of into the West as in times past.

Not only that, many of the UAE nationals who are university educated graduates, have begun to take an active interest in managing their own investments - as opposed to the past, when they just gave it to Western money managers who deigned to give them a return in addition to moral advice and told them what was possible.

Now unburdened by what is 'possible' and what 'cannot' be done, they are moving rapidly forward much to the amazement of the rest of the world who keep waiting for uae business to stumble! Every day some one outside uae business asks: 'When will the bubble burst?'

Foreign investors are streaming into this country where architecture is getting a free reign with breathtaking designs being risked for all to see. The best architects of the world are working for the development of this country. Its tax-free environment is another attractive feature of real estate UAE. The demand for commercial properties has risen considerably with the entry of multinational corporates and this has increased both property rentals and property prices. All these factors have turned this country into a dream destination for real estate purposes.

As one long time resident of Dubai said: 'You can stand on the sidelines and criticize, question and wait for the bubble to burst, or you can get into the action and make money for yourself!'
About the Author
Ramapati Singhania specializes in creating and managing web businesses. His latest website http://www.incorporation-offshore-saves-wealth.com focuses on helping you to incorporate offshore companies in Seychelles, Mauritius and BVI. You can also visit his blog, http://www.ramapatisinghania.com
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