How to Do Business in the UAE
The United Arab Emirates (UAE) is a federation of seven emirates - Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain - located along the eastern side of the Arabian Peninsula. Once reliant on pearl diving and fishing before the oil boom in the 1970s and 1980s, it has exploded into an economic powerhouse this century. Today it is the seventh richest country on the planet based on GDP per capita and the Arab world’s second-largest economy. You need look no further than the supersized opulence of Dubai with its man-made palm-shaped island overlooked by a forest of shiny skyscrapers for proof of its success.
From its economic strength to its favourable taxation laws, its strategic location to its low import duties, the reasons to do business there are compelling. If you want to make the most of these opportunities and overcome any potential hurdles, this guide will provide you with some useful tips on doing business in the UAE.
Business Culture in the UAE
Personal relationships and trust provide the foundation for any successful business relationship in the UAE. So invest time in getting to know potential trading partners and form a bond before embarking on negotiations.
The UAE working week has traditionally run from Sunday to Thursday. From January 2022, all UAE federal government entities adopted a four-and-a-half-day working week, from Monday to Friday lunchtime. The exception is Sharjah, which has moved to a 4-day working week from Monday to Thursday.
As a Muslim country, the UAE observes Ramadan, during which the working day is compressed by two to three hours, with most work conducted early in the morning or after sunset.
Benefits of Doing Business in the UAE
The UAE has established itself as the commercial capital for the Middle East, North Africa and beyond. This reputation has been built on the benefits of doing business there.
Prime trading position
The UAE’s strategic geographical location - next to the southern lines of the Strait of Hormuz – makes it a bridge to other Gulf economies, as well as a robust market for re-export across the world. Consequently, it is the UK’s largest civil export market in the Middle East and its third-largest market outside Europe.
Favourable tax regime
The UAE imposes no tax on personal income. Some nominal taxes are paid on goods and services, but most of your salary is yours to spend. Barring Bahrain, the UAE has the lowest corporate income tax rate within the Gulf Cooperation Council (GCC) region at a standard rate of 9%.
Ease of doing business in the UAE
In the World Bank Group’s last Doing Business report in 2020 - a measure of the ease of doing business - the UAE ranked 16th in the world. This made it the strongest performer in the GCC region. According to the report: “The United Arab Emirates made trading across borders easier by reducing the time to export by fully digitising certificates of origin and the cost to import by issuing certificates of conformity that cover multiple shipments.”
Free trade zones
There are over 40 free trade zones across the UAE. These zones were established to attract foreign investment and entrepreneurs into the country. Controlled by the state bodies responsible for licensing entrepreneurial activity in their territory, these administrative units enhance international business opportunities. Benefits include clear rights for foreign business owners, exemption from corporate tax, and exemption from customs duties and fees.
Challenges of Doing Business in the UAE
There are several risks to doing business in the UAE that must be considered before entering the market.
The UAE adheres to the value-added tax (VAT) system, which the GCC implemented in 2018. Although the tax, which is levied at 5%, is said to have simplified taxation in the UAE, it has also complicated the process of doing business there. You must take the time to become acquainted with VAT or risk failing to comply and being hit with significant fines.
Each of the seven emirates is responsible for the control of their individual regulatory powers, including commercial activities such as issuing trade licences. The combination of federal laws, emirate laws and free zone laws can be confusing.
It’s wise to work with a currency specialist to identify whether your business should agree contract terms in pounds, dollars or dirhams. Clear Currency can provide information on the products and tools available to help mitigate your exposure to currency risk, such as forward contracts.
If you have not fixed your exchange rate you have not fixed your price when trading internationally, leaving it vulnerable to currency market risk.
The UAE’s geographical location and status as a major trading hub expose it to significant trade in counterfeit goods, particularly fast-moving consumer goods, and other intellectual property (IP) rights infringements which cover a wide range of products and industries.
The UAE has established itself as a major hub for trade, commerce and business. With so many opportunities on offer there, the world’s seventh richest country has become a major draw for ambitious businesses from across the globe. If you decide to join them, you can easily overcome the inherent challenges by planning ahead - for example, by working with a currency specialist to mitigate the impact of currency risk on the cost of your international payments.
Make International Payments with Clear Currency
Clear Currency is a currency specialist with a wealth of market knowledge and experience. When you sign up for an account with us, we will assign you a dedicated account manager who will keep you informed on the progress of your payments each step of the way. Open an account with Clear Currency today for quick, secure and cost-effective international currency transfers.
Clear Currency, a trading name of Clear Treasury (UK Trading) Ltd, is authorised and regulated by the Financial Conduct Authority.
How to Mitigate Foreign Exchange Risk
Currency risk can have a significant effect on the efficiency and profitability of any international business. Each exchange rate movement affects how much you receive from sales and what you pay to suppliers.
Private Client Dealer
We are looking for an experienced and ambitious individual to join our private client team, helping us to grow the team with plenty of opportunities for career progression.
Moving to Dubai from the UK: Checklist
You’re ready for a new life overseas and have decided you’re moving to Dubai. Now it’s time to consider the various costs involved, from your visa and accommodation, to health insurance, shipping your belongings and bringing your beloved pets along too.