Common Challenges Faced By Entrepreneurs In UAE
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Common Challenges Faced By Entrepreneurs In UAE

Are you thinking to set up a business in the UAE? As we know UAE is a business hub, but there are some common challenges faced by entrepreneurs In UAE. Although setting up a business in the UAE is very easy as compared to other western countries. It only needs some practical understanding and knowledge about the business norms and culture of the UAE. Some processes are easy, and some are complex to set up a business in the UAE.

The United Arab Emirates (UAE) is well-known for having a business-friendly ambiance, a favorable tax structure, and a simple legal framework. Although, the UAE, like any other country, also goes through a set of problems which potentially results in some challenges when investing in the country. But if you are a career-driven, devoted person who is enthusiastic about the wider scope and outreach this country has to provide then ensure you build yourself up for these common challenges that come to your path when setting up a company in United Arab Emirates (UAE).

Here Are The Challenges Faced By Entrepreneurs In UAE

1. Ownership Of The Company 

The overseas entity requires to share its business ownership if it wants to set up its operations in the United Arab Emirates (UAE). If an individual wants to start an onshore or LLC (Limited Liability Company) in the United Arab Emirates (UAE) they’d compulsory need a local sponsor. This enforces a person to have a UAE national as a partner who shall own 51% of the ownership. When some businessmen agree on this criterion, it can be monotonous for others to develop trust and reliability.

2. Finding A Local Sponsor 

The Challenge for an investor is to find an honest sponsor. When an overseas company plans to set up a business in the United Arab Emirates (UAE), a local sponsor or partner is a must. Finding the best sponsor or partner relevant to the company and is suitable can be a tough task. Also, the local partner must have the market knowledge, understanding of the law, and manage the local operations.

3. Funds To Run Operations In The UAE

Any overseas entity that needs to set up a business in the United Arab Emirates (UAE) also requires adequate funds to run its operations easily. Finding a local trader can be challenging and the overseas company must have its detailed funds’ management plan set down for its long-term services.

4. Applicability Of VAT

The United Arab Emirates (UAE) follows the value-added tax (VAT) system, implemented by the Gulf Cooperation Council in January 2018. VAT is an implied tax relevant to all virtues and services with basic food education, essentials, and healthcare items as exemptions. The tax is applicable at a 5% rate and is also said to have simplified the taxation for businesses. Although, one of the biggest challenges of doing business in the United Arab Emirates (UAE) to get customary VAT.

5. Revenue Management

Revenue management is vital in United Arab Emirates (UAE). Not only in UAE but in business, because along with the plenty of chances comes along several risk factors too. As per to the Association of Chartered Certified Accountants of Dubai, over 82 % of the new enterprise fail because of poor cash flow and funds management. When setting up your business in United Arab Emirates (UAE), you can avail yourself the possibility to get a loan from several financial institutions and banks, however, ensure that your initial capital needs and business setup are expertly handled and executed.

6. Challenges Associated With Real Estate

The United Arab Emirates (UAE) is renowned for its real estate, and the business license of a company is also related to its registered address. This rule makes it important for an entity to operate from a physical office, frequently making it tough for small businesses to enter the market. Also, the place of the office is core to its seamless performances. The UAE Free Zones provide overseas companies with reasonable real estate choices. Although, local expertise is a must to finalize the location and size of the office space according to the visa.

7. Challenges In Getting Work Visas And Permits

Oversea employee requirements to get a work or residence permit to live and work in the country. The oversea entity serving its oversea employees to the United Arab Emirates (UAE) particularly requirements to follow the visa criteria. The company is also required to comply with the laws set down by the General Directorate of Residency and Foreigners Affairs and the Ministry of Human Resources and Emiratisation.

8. Cultural And Communication Difficulties

The challenge regarding the culture and communication that is needed to be addressed considering Islamic values. Business communication is needed to be particularly different for men and women and the formal directness and approach are also limited. The Emirati culture caters as the heart and soul of business and daily life in UAE and hence intercultural diversity sometimes hinders. Otherwise, Emirati people are very welcoming and companionable.

If you are scared by any of the above-mentioned common challenges faced by entrepreneurs in UAE, then talk to the experts to start your business in the United Arab Emirates (UAE).

Also Read, Common Mistakes Made While Start Any Business In UAE

Vandana Joshi

Business community in the UAE and advises large multinationals as well as startups on how to best establish a commercial presence in the UAE.

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