Starting Challenges Faced by Businesses Setting Up in the UAE in 2017

Starting a business is never an easy task, especially if you are going to do it in a foreign land. UAE was once considered as a business haven for foreign investors, but things have changed now. Starting or shifting your business to the UAE has become very difficult in this day and age due to several underlying reasons.

Fall in oil prices

A fall in oil prices has affected the economies worldwide and the UAE is no different. The UAE government has become cautious in the wake of this oil prices conundrum. They are now more watchful of their development approach, which means they are cutting and rescheduling the subsidies that have proven to be great for incubation of new businesses. Therefore, if you are going in with a preconceived notion that you will be facilitated with various business benefits that the UAE is famous in terms of foreign investments, then rethink your strategy because the tables have turned.

 

Introduction of VAT

Value Added Taxes (VAT) are going to be implemented from the start of next year in the UAE and the rest of the GCC countries. The introduction of VAT East has even made established companies and businesses nervous because they are not sure of the implications of this new tax. Apart from that, companies are facing the challenge of adapting their business model in the new environment of tax compliance. It is given that businesses will be having increased administration and managements costs in the future.

In these fragile times, where whole systems are going through major amendments and adjustments, it won’t be wise to set up your business in the UAE.

If you don’t have external investments: Don’t go to the UAE

Starting a business is a time and money consuming task. If you are just going with your own investment to run a business in the desert, then it can turn out to be a suicidal move from the business point of view. UAE, especially Dubai, is an expensive place to operate and live in.

If you are going to start a new business then it is quite natural to have many months in the beginning without any profitable returns. In these circumstances, you will need a constant monetary lifeline. Doing it on your own will dry up your accounts and result into the rolling back of your business without getting anything in return.

You can a face hostile environment

Even though it is subject to everyone’s individual experience but it has been observed, and consequently reported, that hostility towards foreigners specifically US citizens has increased in recent times. Trump’s succession as the president of the United States has worsened the situation.

Trump’s unambiguous stance on Islamic extremism has unsettled many governments and citizens of the Muslim world including the UAE. Even though there are no formal cuts and rollbacks in diplomatic relations between the two countries, The United State’s nationalistic policies are not being digested by many people around the world. This reflects by the unreceptive environment for US citizens in the gulf state.

You will have to manage diverse human resources

Apart from sand, diversity is one other thing that you will find in abundance in the UAE. It is not a new challenge because businesses have been constantly facing it since a very long time. The country is hosting a too many businesses with respect to its native population, and therefore, needs human resource from other countries. If you are going to hire people for your business, then be ready to receive cover letters from people with different cultural and national backgrounds.

You have to be very careful of the country’s cultural and religious values

Many people are aware of this fact that despite of having a pretentious liberal outlook, UAE is still under the heavy underpinning of religion. Everything from their legal system to working life is heavily influenced by Islamic values. You can’t consume alcohol publically. You can’t even eat and drink publically for a whole month i.e. during the month of Ramadan. Violating these rules is considered a criminal offense and you will be tried even if you don’t share the same religious views.

In the ever-increasing state of polarization of the region and saturation of economical growth, it has become difficult for existing business to operate and impossible for new business to start-up in the UAE.