As we know UAE is the hub of business for people all around the world, people can do direct or indirect business in UAE, either they themselves directly establish the business in UAE or they hire the Citizens of UAE for the development and progress of their business indirectly.
Indirect business establishment in UAE:
If a foreign company starts an indirect business In the United Arab Emirates they must hire UAE official Citizens for carrying out all the functions, they cannot choose officials of their own will as directed by the legal system of UAE which creates a lot more legal issues related to business in UAE.
- The commercial agents have defined territorial boundaries and you cannot operate your commercial agent outside that defined boundary which restricts the business heavily and is a great problem for the foreign investor.
- These commercial agents have their own profit via commission when they sell products which decreases the profit ratio of the investor.
- The business cannot import its products to UAE if the commercial agent is not a consignee.
Direct business establishment in UAE:
A foreign entity can start a business in UAE directly as well, but for the establishment of the business, the foreign company may get a permanent license to start its operation. The primary alternatives for foreign companies to establish direct business operations in the UAE are:
- registration of a branch or representative office;
- Incorporation of a limited liability company; or
- Registration of a free zone operation. By establishing a direct business presence in the UAE under one of these or other methods, a foreign entity is permitted to engage in activities as licensed by the relevant UAE authorities.
There are some major legal issues that foreign business establishers face in UAE.
Taxes:
- There is a special purpose of income tax laws or regulations, corporate or individual, issued at the Federal UAE level. If there are no defined laws related to taxes in a state, definitely it is of great loss for a foreign company because they cannot deny the tax demands.
Limited liability companies:
- UAE limited liability companies (“LLCs”) must have a minimum of two and a maximum of 50 members, and a minimum of 51% UAE national equity ownership. With just 50 members in a company, a foreign establishment cannot progress at its best no matter how hard its efforts are, because a number of men always matter especially in a foreign business.
The US and Other Regulatory Issues:
- In addition to the Federal and Emirate laws and regulations of the UAE, companies, and individuals doing business in the UAE should be aware of the laws and regulations of other countries that may impose prohibitions or restrictions on them in connection with their business relating to the UAE. US concerns, include various export control and sanctions laws and regulations, laws and regulations aimed at preventing corruption, and US ant boycott laws and regulations. In addition, certain other US legislation may have extraterritorial applications, including certain employment discrimination legislation.