Setting up a business

zoom

In addition, the branches of foreign companies must be registered at Federal UAE level with the Ministry of Economy - a process that can take up to two or three months to complete.

In order to be able to employ staff and apply for visas, companies must register with the Ministry of the Interior and the Ministry of Labour and Social Affairs Department.

This process, according to Adams, can take around two to three weeks to complete.

Companies must renew their trade licence annually. The DED will not renew the licence of a company that it believes has not fulfilled the terms of its licence, as Adams explains.

"It will not be renewed for instance, if you have been using that licence as a smokescreen to carry on some illegal or unapproved activity."

The bureaucracy involved in setting up a business in Dubai is a daunting prospective to budding entrepreneurs.

And those that get it wrong could face frustrating delays and unexpected expenses.For this reason experts recommend those starting up a business to employ the services of a well-established law firm, which can take on the task of registering and applying for a trade licence for your company on your behalf using the power of attorney.

Alternatively companies specialising in company formation such as Links in Dubai can provide guidance, support and a network of contacts to start up companies.

Step 02 - Setting up in a free zone

Dubai's free zones were set up to attract foreign investment to the emirate - and all have their own unique laws regarding ownership, taxation, and recruitment of labour.

Most significantly they allow for 100% foreign ownership of companies as they are treated as being offshore so do not require UAE sponsorship.

Companies operating within the free zones are also tax exempt and are entitled to 100% repatriation of their profit and capital.

The types of companies that can set up in a free zone include: a free zone establishment or a company that is incorporated in and regulated by a free zone; a branch of a foreign company; or a branch of a UAE company.

Companies established within a free zone are 100% foreign owned, similar in structure to an LLC, with a single shareholder, minimum capital requirements and with liability limited to the amount of its paid capital.

One of the biggest advantages of setting up in a free zone is that the free zone authorities provide assistance to companies setting up there and incorporating their businesses.

There are five main free zones in Dubai - Jebel Ali Free Zone (JAFZA); Dubai Airport Free Zone (DAFZA); Dubai Internet City (DIC); Dubai Media City (DMC); and Dubai International Financial Centre (DIFC).

The authorities in each free zone provide a ‘one stop shop' facility for businesses hoping to set up there and in return for an administrative charge will assist the business with all the necessary government procedures and bureaucracy involved including obtaining visas and work permits.

This can make the process much quicker and easier for companies setting up. Each of the different free zones has different licensing requirements for the companies that operate within them as well as different setting up procedures and charges. DIFC in particular has its own comprehensive legal and court system.

Step 03 - Office space

Government legislation requires all companies registering for a trade licence in Dubai to have first secured a lease for office space.

But sky-high rents and a chronic shortage of supply versus demand means this is no easy task for newcomers to the emirate.

According to figures published last month by the property consultancy firm Asteco, rental rates in Dubai have tripled since 2005 - rising from an average of AED100 per square foot two years ago to AED280 per square foot today.

These soaring prices have, according to Asteco, been driven by demand from multinational companies wanting to set up in Dubai - and from existing businesses wanting to expand their operations.

The situation means companies hoping to find office space in the UAE have to act fast when space does become available - or they could face a long wait.

Niraj Masand is director of the commercial advisory department at Better Homes.

"Demand for office space in Dubai absolutely outstrips supply," he says.

"At this time the vacancy rate in the commercial property market is at around 1%. All the office space has been absorbed and every new project that comes into the market is being picked up within a couple of days.

"In fact most of the leasing starts well before a project is completed," he warns.

"It can start anything between three and 15 months before a project is completed."

Demand is highest for space within the various free zones, according to Masand.

There companies can wait for up to two years to secure office space.

"Whether you go directly to the free zone authorities or to the developers it's extremely challenging to get commercial office space within the free zones," says Masand.

"It's extremely difficult to get space directly through the free zone authorities because they have very long waiting lists.

"We hear stories that there are around 1000 companies waiting to get into DMC and DIC but I can't confirm those figures."

Experts predict that the heavy demand for office space in Dubai will ease in 2009 when more commercial property projects are completed.

John Allen, director of research valuation and consultation at Asteco, says: "We expect commercial office rents to remain high throughout 2007 and 2008 mainly due to construction delays.

"By 2009, a significant amount of new supply will reach the market which will address this strong demand and ease rental increases going forward."

However, until then businesses can expect to pay through the nose - with rents having gone up 55% on average across the emirate in the last year alone.

The most expensive areas in which to rent office space are obviously the ones where there is highest demand.

Asteco's research reveals that companies can expected to pay the highest rents in Sheikh Zayed Road where rents have jumped from AED240 per square foot in 2006 to AED375 per square foot in 2007.

Other areas commanding high commercial rental rates according to Asteco's study include Bur Dubai and Karama which charge AED280 and AED265 per square foot. A 24% and a 51% increase over the 2006 third quarter rents, respectively.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM