What business is better to open in Dubai

United Arab Emirates (UAE) is a region of great opportunities for international business development and accessing the domestic market of the Gulf countries. Opening a business in Dubai is relatively simple, as registration procedures for foreign investors are streamlined, there are tax incentives, and the overall business climate is favorable. The focus on broad economic diversification makes any business potentially profitable, as long as it is not related to the oil and gas industry.

Region Specifics:

The business culture in the UAE is a blend of European business approaches and Arab mentality. For example, personal relationships and informal agreements are valued in the UAE business environment. However, everything must be formalized by an official contract, as failure to fulfill obligations is strictly punished by law.

Locals and expatriates who have embraced the local business culture maintain a work-life balance. Business dealings in the UAE are conducted at a leisurely pace. Locals may promise for a long time but may not take any action. This does not necessarily indicate a lack of interest in cooperation but is a characteristic of the local mentality.

Types of Companies in the UAE:

In Dubai, you can open a mainland company, a business in a free economic zone (free zone), or an offshore company. The choice of business type depends on the objectives.

On the mainland, you can conduct any business activity, including real estate brokerage, organizing tours in the UAE and Gulf countries. However, such activities are prohibited in free economic zones. It is easier for mainland businesses to open a bank deposit and hire staff. Other advantages include simplified visa procedures for employees and the ability to have any number of them. However, the company must have a permanent office and submit annual audit reports.

A company registered in a free economic zone is exempt from most taxes and can receive customs benefits. Other advantages include:

• Access to modern infrastructure
• Trouble-free repatriation of capital and profits
• The ability to combine multiple types of activities under one license
• Minimal physical presence requirements (shared office space or flexi-desk can be used)
• The possibility of obtaining UAE investor or partner visas for investors and their family members, as well as company employees

For free zones, there are restrictions on the number of employees, and for each additional employee, a flexi desk and visa fees must be paid, increasing the cost of the license in most cases. An office is required on the free zone premises, and opening a bank account can be more challenging.

An offshore company is the cheapest option if you need to open a business in the UAE, but you must have the same business in your country of residence. The main goal is to reduce the tax burden.

There are no restrictions on the types of activities for offshore companies, but there are geographical limitations – they can only operate outside the UAE. Since the company does not operate in the country, there is no need to obtain a license, there is no minimum capital requirement, and for some types of businesses, there are no audit requirements.

Benefits for offshore company owners in Dubai include:

• Quick business setup
• Complete confidentiality
• Absence of most taxes
• Free access to the international market
• Low cost of setup and maintenance
• No restrictions on capital withdrawal and currency transactions

However, owners of offshore companies may face difficulties in opening a bank account, as they undergo lengthy checks. Offshore companies cannot trade or provide services in the UAE, hire employees, or obtain visas for them.

Business Requirements:

All types of commercial activities in Dubai, except for offshore companies, are licensed. The type of license required depends on the type of business:

• Service (professional) license is suitable for companies providing legal, medical, consulting services.
• Industrial license is for enterprises involved in manufacturing, processing.
• Commercial license is for companies engaged in trading or commercial activities, including catering, publishing, media, rental services, real estate, etc.
• Tourism license is for hotel businesses, tour operators, event agencies.

Requirements for different types of companies vary. For example, to obtain an industrial license, strict compliance with labor and occupational safety standards, environmental norms, and confirmation of a larger share capital than for other companies is required.

Usually, the license is issued for one year. To renew it, you need to confirm compliance with requirements such as capital size, presence level, etc.

It is considered that taxes in the UAE are very low. However, businesses must renew their license annually, and the sale of goods and services is subject to VAT (5%). For local companies earning over 375,000 dirhams, a corporate tax of 9% has been introduced. There is also a tax on excise goods.

Most Profitable Niches:

The UAE is one of the most attractive countries for doing business. There is a wide range of directions - there are specialized free zones for different types of businesses and corresponding infrastructure. Beyond free zones, profitable business ideas can also be realized in Dubai, as the overall commercial climate is favorable:

• Many types of taxes and fees are absent.
• The economy is stable with growth prospects.
• Government initiatives for businesses are implemented.
• The society is multicultural, creating opportunities for finding employees with the necessary skills and global partners.

Typically, most entrepreneurs consider such activities as restaurant business, real estate agency, beauty industry. These are quite profitable areas, but they also have high competition. Most new companies in these industries operate for no more than a year.

Choosing a business direction, it is necessary to first study the market, assess the potential of the business idea, and research competitors. It is advisable to live in the country for at least two to three months. This is enough time to study potential customers, find suppliers and partners, and conduct marketing research.

Construction Sector:

In the UAE, companies engaged in the construction of various structures, repair, finishing, and design, production, and sale of construction and finishing materials are in demand. Services of construction consultants, leasing companies renting out construction equipment, specialized equipment, providing service, etc., are in demand.

Dubai has a high population density. Despite the large number of completed projects, the construction sector continues to grow. Possible growth points include the construction of budget housing, eco-certified real estate, completion of facilities to operational readiness - installation of ventilation and air conditioning systems, landscaping, electrical work, maintenance of engineering systems.

Logistics:

Trade is the most common sphere of activity chosen by novice entrepreneurs in Dubai. This is due to the UAE's dependence on imports, favorable conditions for foreign investors, and a favorable geographic location at the intersection of Europe, Asia, and Africa. The country has a well-developed logistics infrastructure, and no duty is required to open a warehouse (in special free zones).

Real Estate:

The real estate sector is undoubtedly one of the most potentially profitable business areas in Dubai for Russians. Increasing demand for real estate stimulates the development of the real estate market, the creation of special services that facilitate communication between property owners and tenants. Services of property management companies, maintenance, and cleaning are also in demand.

Tourism:

Dubai attracts nearly 15 million tourists annually. The development of the industry is supported by the geographical attractiveness of the region and the positioning of the UAE as a global leader in educational, medical, and business tourism.

Although the main tourism industry has developed, the sector continues to actively grow. For example, promising related industries include:

• event organization;
• restaurant and hotel business;
• transportation - passenger transportation, car sharing;
• trade, as Dubai is one of the world's shopping centers;
• renting out real estate on a short-term and long-term basis;
• tourism consulting - preparation of marketing justifications, project management in the tourism industry, intermediation.

Investments and Finance:

Business development options in the field of investments and finance in the UAE:

• insurance activities;
• investment consulting;
• acceptance and processing of payments;
• operations on stock markets;
• asset management;
• project management, attraction, and placement of funds;
• financial services using blockchain, AI, other innovative technologies.

Opening a business in the field of investments and finance is more challenging than in other areas because working with finances requires more coordination with relevant ministries.

Manufacturing:

One of the main goals of the UAE's food security strategy is the need to ensure the country's domestic market with all the necessary goods. This applies not only to food production but also to other industries. Active development of the industrial sector will protect the country from emerging global crises.

In-demand manufacturing directions include:

• household chemicals;
• fertilizers, pesticides;
• textiles, fabrics, and clothing;
• plastic products, polymers;
• building materials;
• sheet metal, metal components;
• agricultural and special equipment, heavy transport, spare parts;
• medical goods, equipment, drugs, and dietary supplements;
• electronic devices, communication means, measuring equipment;
• all types of food and beverages.

IT Industry:

The UAE boasts a high level of information technology development, and Dubai is the most technologically advanced city in the region. The UAE authorities have approved a transformation strategy: it is planned that in the next few years, interaction with government structures will be carried out using blockchain technology, a city-wide data laboratory will operate, a digital operating system will be launched - the basis of a smart city, digital identification, and digital signatures.

The government actively stimulates the development of the IT industry. Companies that provide cybersecurity, implement digital technologies in various spheres of life, including education, energy, healthcare, construction, receive support from the state:

• faster registration and licensing options;
• discounts on license fees for the first three years;
• mass issuance of visas to IT specialists.

IT businesses can be opened in free zones specializing in information technology, such as IFZA or DIC. For technology startups, there are many accelerators, incubators, additional funding opportunities from investors and the government.

Food & Beverage:

The restaurant business faces very high competition, and the market itself is very advanced - newcomers without an established brand will find it difficult to find their place. Therefore, attention should be paid to related areas: production of various types of food and food packaging, the food delivery market, and catering. Fast formats such as street food and kiosks may be in demand in the catering industry.

Understanding the intricacies of doing business in the UAE is quite challenging, especially if you have never worked abroad or are opening your first company. The experts at The Level Consulting keep abreast of all changes in UAE legislation, are aware of the specifics of working in different free zones, and share their expertise with clients. Contact us for consultation - we have the necessary information and experience to help you register your business quickly and easily.