Faced with all these potential mistakes, the last and perhaps the most costly is to believe you can navigate this labyrinth without a guide.
Administrative complexity behind the window of simplicity
Dubai's marketing is selling a showcase of absolute simplicity to attract investors. The reality on the ground reveals an administration with its own rigid codes, where Arabic is still often required for official documents. This is a immediate culture shock.
Each emirate and free zone has its own digital portals and distinct procedures. What is valid in Dubai is not necessarily valid in Abu Dhabi, creating a confusing fragmentation.
A simple error on a form can lead to weeks of delays and frustrating return journeys with the administration.
Expert support: an investment, not an expense
Think of expert support not as an additional cost, but as your best insurance. It's your only protection against fatal errors, administrative delays and unforeseen costs.
A good adviser saves time and money by securing your back. It anticipates banking problems, knows the key contacts and ensures that the project is viable and optimised from the outset.
It's the difference between a successful project and a financial headache, which is why it's so important to choose the right solution. comprehensive support for setting up a business in Dubai.
How to choose the right partner for your project
Beware of «dream salesmen» who promise effortless installation. A real partner asks the tough questions, challenges your business model and talks about the real difficulties, not just tax benefits.
Look for an established company with verifiable physical offices in the UAE and a competent in-house legal team. Avoid opaque intermediaries with no real local roots.
Transparency on prices and services included is a sign of absolute reliability. To make sure you get the best deal, ask for a detailed quotation. contact an expert.
Setting up successfully in the Emirates can't be improvised. By avoiding these strategic mistakes, you'll be laying the foundations for your success. solid foundations for a sustainable business. Taxation, the choice of structure and the opening of a bank account remain key issues. decisive steps. Let the experts help you secure your investment and focus on the essentials: your growth.
7 mistakes to avoid when setting up a company in the United Arab Emirates
Do you dread the hidden costs and administrative pitfalls that often turn the project of setting up a company in the United Arab Emirates into a financial nightmare? Far from promises of ease, this article analyses the common technical pitfalls, from choosing the wrong jurisdiction to ignoring the new local tax obligations. Learn how to avoid these seven costly mistakes to ensure the compliance and immediate profitability of your future business in Dubai.
Mistake No. 1: Choosing your location blindly
Mainland or Freezone: the choice that defines your business
Choosing between a Mainland company and a Freezone company is not a trivial decision. This unique choice conditions your entire structure your target customers, your shareholder base and your tax situation.
The Mainland opens up the local market, which is vital for a physical business. The Freezone targets the international market with 100% of ownership, but restricts local activity. Changing course afterwards is financially onerous.
Not all Freezones are interchangeable
Not all Freezones are created equal. Dubai has more than 40, each with its own rules and specialities. For example, Dubai Media City is unsuitable for trading, an area reserved for the DMCC.
An error of jurisdiction may block your licence or restrict your future growth.
Consequences of the wrong choice: blocking and unnecessary costs
The consequences can be serious: you may not be able to invoice your customers, or you may have to restructure your business at great cost. Worse still, you risk operating illegally and incurring fines.
This choice is the foundation to create a company in the United Arab Emirates. Don't overlook it.
Validate your model with the experts. Find out how to set up a Mainland company (LLC) in Dubai and options for set up your company in Freezone.
Mistakes 2 & 3: Botching the licence and underestimating the budget
Once you've chosen an area, don't think the hard part is over. There are two other pitfalls for entrepreneurs activity licence and actual budget.
An ill-defined activity, a licence refused
Your licence is the legal engine of your business. It strictly limits what you are allowed to do. Be surgical in your definition, because vagueness is unforgiving.
Forget vague titles like «business consultancy». The authorities require an understanding of the exact activity in order to check whether it requires specific regulations or particular qualifications.
Each profession corresponds to a specific code. A misdirection here, and it's the guaranteed blocking at the critical moment of opening your bank account.
The mirage of low-cost, all-inclusive offers
Beware of adverts promising a company for €2,000. This is often an illusion (Loss Aversion). These prices conceal compulsory costs that arise after you have signed. The final bill often doubles.
The price shown generally only covers the initial registration. It does not include visas, the Emirates ID or essential administration fees..
«Fast» in Dubai does not mean «instant».»
Dubai is not instantaneous. While reserving a name is quick, the whole procedure requires patience. Count on several weeks to get up and running, not 24 hours.
It's a sequential race: licence, Establishment Card, visa, biometrics, then the bank. Impossible to skip stages, because each document unlocks the next.
A poorly prepared dossier can turn a three-week sprint into a one-off. a three-month administrative ordeal.
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Mistake no. 4: Ignoring the Emirates' new fiscal reality
Are you on a budget and have you got your licence? Be careful. The following error concerns a subject that many people still believe to be stuck in the past: taxation.
Corporation tax at 9 %: the end of the 0 % myth
Forget the myths: the 0 % tax for all companies in Dubai is over. Since June 2023, the situation in the Emirates has changed radically.
From now on, a corporation tax of 9 % applies on net profits in excess of AED 375,000 a year (around €95,000). Below that, it remains at 0 %.
This applies to both Mainland and Freezone companies, with some exceptions. I invite you to visit the complete guide to corporate tax in Dubai to understand the details of this law.
Who is really affected by this tax?
Let's clarify one point: not all companies will pay 9 %. The AED 375,000 profit threshold is the key. Many freelancers or small structures will not reach it.
There is also Small Business Relief. This scheme allows small businesses to stay at 0 % even if their sales are higher, subject to certain strict conditions.
But beware of management. Without rigorous accounting, it will be impossible to justify your profits and apply the rate correctly.
Anticipating VAT and other obligations
In addition to corporation tax, there is the VAT. It is 5 % and is compulsory if your turnover exceeds AED 375,000.
VAT registration is as soon as this threshold is reached. Failure to do so exposes your company to heavy penalties. This is a classic mistake to avoid.
In short, taxation in the UAE has become increasingly complex. A good upstream tax planning is essential to avoid unpleasant surprises.
Mistakes 5 & 6: Thinking that banking and tax residence are mere formalities
Your structure has been set up, your taxation planned. You might think you've won. But it's not, two of the biggest obstacles still lie ahead the bank and your own residency status.
Opening a business bank account: the real obstacle course
Opening a bank account in Dubai is often the most difficult stage. Banks have become extremely cautious because of international regulations (AML/KYC). This is a a real administrative lock.
A licence does not guarantee a bank account. The bank does its own risk analysis, and it often refuses without giving a reason.
Your company exists, but you are not (yet) a tax resident
Let's clarify a major confusion: obtaining a residence visa does not automatically make you a UAE tax resident. You must prove that the centre of your vital interests is in the UAE. Don't confuse a visa with taxation.
Without a clear tax residence in the UAE, your country of origin can continue to tax you on your worldwide income. France, for example, remains very vigilant on this point.
This is the principle of double taxation. Setting up a company in Dubai without actually moving is a tax time bomb. You risk a costly turnaround.
Prove your economic substance to convince
This is where the concept of «economic substance» comes in. Banks and tax authorities want to see that your company is not just a «letter box». They want to see something concrete.
You have to prove actual on-site activity. This means employees, a physical office and local expenses. For some activities, a simple flex-desk will not suffice.
Mistake no. 7: Going it alone, without local expertise
Faced with all these potential mistakes, the last and perhaps the most costly is to believe you can navigate this labyrinth without a guide.
Administrative complexity behind the window of simplicity
Dubai's marketing is selling a showcase of absolute simplicity to attract investors. The reality on the ground reveals an administration with its own rigid codes, where Arabic is still often required for official documents. This is a immediate culture shock.
Each emirate and free zone has its own digital portals and distinct procedures. What is valid in Dubai is not necessarily valid in Abu Dhabi, creating a confusing fragmentation.
A simple error on a form can lead to weeks of delays and frustrating return journeys with the administration.
Expert support: an investment, not an expense
Think of expert support not as an additional cost, but as your best insurance. It's your only protection against fatal errors, administrative delays and unforeseen costs.
A good adviser saves time and money by securing your back. It anticipates banking problems, knows the key contacts and ensures that the project is viable and optimised from the outset.
It's the difference between a successful project and a financial headache, which is why it's so important to choose the right solution. comprehensive support for setting up a business in Dubai.
How to choose the right partner for your project
Beware of «dream salesmen» who promise effortless installation. A real partner asks the tough questions, challenges your business model and talks about the real difficulties, not just tax benefits.
Look for an established company with verifiable physical offices in the UAE and a competent in-house legal team. Avoid opaque intermediaries with no real local roots.
Transparency on prices and services included is a sign of absolute reliability. To make sure you get the best deal, ask for a detailed quotation. contact an expert.
Setting up successfully in the Emirates can't be improvised. By avoiding these strategic mistakes, you'll be laying the foundations for your success. solid foundations for a sustainable business. Taxation, the choice of structure and the opening of a bank account remain key issues. decisive steps. Let the experts help you secure your investment and focus on the essentials: your growth.
Frequently asked questions :
How much does it really cost to set up a company in Dubai?
The real cost often exceeds the simple licence price advertised. While there are introductory offers of around €2,000 for registration, a a realistic budget for a viable structure (visa, Emirates ID, settlement card, medical insurance) is generally between AED 15,000 and AED 25,000 (around €4,000 to €6,500) for the first year, depending on the zone chosen (Freezone or Mainland). It is vital to anticipate these costs so that you don't get stuck halfway through your stay.
How does corporation tax work in Dubai today?
The myth of absolute «zero tax» has been a thing of the past since June 2023. From now on, a federal tax of 9 % applies to net profits in excess of AED 375,000 (approximately €95,000). Below this threshold, the rate remains 0 %. There is also a Small Business Relief scheme for companies with a turnover of less than AED 3 million, but this requires rigorous bookkeeping and compulsory registration with the tax authorities.
What are the real tax advantages in the Emirates?
Despite the introduction of corporation tax, Dubai remains extremely competitive. There is generally no personal income tax, no payroll taxes, and VAT is set at just 5 %. The tax environment therefore remains very favourable for entrepreneurs seeking to optimise their income, provided they comply with the rules on economic substance and tax residence.
Why is setting up a company in Dubai still relevant?
Beyond the tax advantages, Dubai offers a dynamic entrepreneurial ecosystem, a strategic geographical position between Europe, Asia and Africa, and an excellent quality of life. The possibility of owning 100 % of your company's capital (in the Freezone as well as in the Mainland for most activities) and the ease of obtaining residence visas for the entrepreneur and his family make Dubai a very attractive location. the destination of choice for developing an international business.
Legal structure, licence, real budget, visa, bank account and pitfalls to avoid. Download the complete guide to setting up your company in Dubai with peace of mind.
Do you have any questions about setting up a company in Dubai?
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