Top 10 Challenges of Doing Business in Abu Dhabi
The UAE has a great potential to set up or develop businesses,
but of course, before you begin your business, you need to do proper research
about the market. Abu Dhabi is one of the world's wealthiest and most rising
markets. Abu Dhabi is a viable place of choice for a business person who wants
to start a company in the Middle East. Corporate standards and business
procedures in the emirates are clear, and business setup
in Abu Dhabi takes just a few days.
The UAE is a cluster of seven emirates namely Dubai, Ajman, Abu
Dhabi, Umm Al Quwain, Sharjah, Fujairah and Ras Al-Khaimah. The seven UAE
emirates each have their laws and regulations, which can often be a challenge
to do business.
Challenges of business formation in Abu Dhabi
1. Knowledge
The first one is the Knowledge of all business ideas and
corporate regulations, licensing, visa regulations, markets, regional
specifics, etc. Improving your Knowledge would save you from potential problems
you may face if you do not make such research in advance. You need to put
together all the points which you need to know for starting a business in Abu
Dhabi and get them clarified whether by visiting various authorities and
checking this one by one of the consulting companies in the UAE.
2. Initial setup
Companies looking to operate in UAE are required to register a
legal entity. Every company active in the country needs a company license,
which is linked to the recorded activity of the entity. In general, there are
two choices when starting a business in the UAE.
?Free Trade Zone
Free zone companies are not required to have any UAE national
shareholder or split ownership, a foreign company or person that has 100 per
cent ownership of the corporation. Each emirate consists of at least two free
zones, with over 20 offered in Dubai. Each zone has its own laws. There are
also other Common Law Free Zone jurisdictions with their regulators and systems
of justice. Industries in the Free Zone are limited to business setup within
their Free Zone, in other Free Zones or globally, they are limited in what they
can do within the UAE mainland.
?Onshore
The onshore jurisdictions are subjected to federal regulations
and laws with regulatory and authority bodies in each emirate under the
Ministry of Economy. Representative office, Limited Liability Company and
branch office are the most common forms of companies under onshore
jurisdiction. An LLC needs a 51 percent owner in the local UAE. A
local service provider wants a branch or representative office to be their
point of contact with local authorities. Being onshore based enables you to do
business anywhere in the UAE.
3. Finding a Local Sponsor
The task for a financial specialist is to find a support that is
reliable concerning the more significant part of the lawful business, having
neighborhood support is an unquestionable requirement. Therefore, finding a
neighbourhood partner in the UAE that could claim the real stake in the
organization and give you the freedom to manage a business on your terms could
be an overwhelming challenge.
4. Language
Arabic is the national language in the UAE, but English is
commonly used for business meetings and transactions. However, all employment
records, including agreements, and other files, such as instructions to
employees, should be in Arabic. It is the dominant language in the event of
inconsistency in terms contained in English documents.
5. Hierarchy
Hierarchy remains a critical concept that you should consider
when doing business in the UAE.
It is essential to respect the titles and positions of people in
society. The UAE is modernizing rapidly, but traditional Muslim practices are
still at the heart of Emirati society. Organizations setting up a business in
Abu Dhabi must understand the balance between the new and the old. Participating
in a cross-cultural training program for business management will help you
develop strategies to operate effectively in the UAE, thus enhancing the
success of your organization.
6. Ramifications of VAT
In January 2018, the UAE presented 5% esteem included expense,
forced all through the Gulf Cooperation Council (GCC). This expense is
connected to practically all merchandise and ventures with the exception of
fundamental nourishment things, training, and medicinal services. Enrolling for
VAT and going further through the procedure can demonstrate to challenge
7. Work Permits and Visas
The UAE is a reasonably young country and has a diverse
population. All foreign employees are required to obtain a work permit or a
residence permit to work and live in the UAE. This means it is essential to pay
special attention to ensure you are compliant with all regulations set by the
General Directorate of Residency and Foreigners Affairs and Ministry of Human
Resources & Emiratisation.
8. Finding Office Space
An entity established in the UAE is always a combination of a
license, a legal entity, and a facility. The UAE is a real estate-driven
economy, and it is a law that a corporate license is always linked to a
physical space of an office. Most of the free zones offer flexible desk
solutions to provide companies with affordable office space options. The
conditions for minimum office space vary from jurisdiction to jurisdiction, and
the size of the office space will be linked to the company's visa quota.
9. Paying Employees
For an almost tax-free economy the payroll system, It is
not as easy as one would imagine. Diverse expatriate nationalities and ever-
local regulations make local payrolls a complicated process.An adequately
documented payroll system has become essential for all companies operating in
the UAE following the implementation of the Wage Protection System, mandated by
the Ministry of Human
Resources & Emiratisation. End of service gratuity payments
instead of pension schemes require specialized computation and cautious
processing.
10. Overseeing Revenue
Even though the UAE can give plenty of chances to broaden your
business in Abu Dhabi, it very well may be similarly unsafe. It was accounted
for by the Association of Chartered Certified Accountants that 82% of the new
companies bomb because of inadequate income the board. Consequently, the cost
of business setup and your underlying capital necessities should be overseen by
app development and after that connected.