Expanding your business to the United Arab Emirates (UAE) offers exciting opportunities and unique challenges. Here’s a comprehensive guide on what to consider and how Emirates Employer of Record can help you. Using an Employer of Record (EOR) service in the UAE will be beneficial due to the local expertise in regulations in the country.

1. The difficulties and cost

Establishing a new business entity in the UAE can be complex and costly. The process involves obtaining necessary permits and licences, registering with local authorities, and ensuring compliance with local regulations. These steps are essential for gaining legal status in hiring employees and conducting business operations. However, the administrative workload and legal expenses can be significant, particularly for small and medium-sized businesses. Partnering with local experts, such as an Employer of Record (EOR), can provide valuable insights and support, simplifying the process and reducing costs.

2. The cultural differences

There are a few cultural differences which need to be taken into account. Discover the most important distinctions here.

Clothing guidelines

Understanding the dress code in the Emirates can be challenging for visitors. Locals often wear traditional attire, such as the hijab or abaya, especially in mosques. While tourists usually wear casual clothing, it’s important to avoid revealing attire, which can be discouraged and illegal.

Ensure your clothing covers at least your knees and shoulders in public places. These guidelines also apply to malls, though the dress code is more relaxed at resorts, hotels, and beaches. Swimwear is acceptable at beaches and pools, but topless sunbathing is strictly forbidden.

In mosques, dressing according to local customs is mandatory—covering ankles, wearing long sleeves, and a headscarf for women. Shoes must also be removed. Many mosques offer rental attire if needed.

Public behaviour and cultural sensitivities 

When expanding your business to the Emirates, it’s crucial to understand and respect local laws and cultural norms, especially regarding LGBTQ+ issues and public displays of affection. Homosexuality is illegal in the Emirates, with severe penalties, so it’s important to be aware of this when considering employee relocation or business operations in the region. Additionally, public displays of affection, including kissing, hand-holding, and hugging, are strictly prohibited and can lead to legal consequences.

Ramadan in the Emirates

Ramadan plays a significant role in daily life across the Emirates and impacts business operations. Ramadan is a month dedicated to piety, charity, and blessings. During this sacred time, Muslims who are able are obligated to fast from dawn until sunset, refraining from eating and drinking. This practice of fasting is one of the five pillars of Islam. During this period, most eateries and bars are closed during the day, and eating, drinking, or smoking in public is forbidden. This can affect business meetings and client interactions, as well as employee welfare, particularly for non-Muslim staff.

Deciding whether to launch or expand operations during Ramadan requires careful consideration. While business may be slower, the cost of operations might also be lower. However, if the restrictions pose challenges, planning key activities outside Ramadan may be more strategic.

Entrepreneurs can face cultural differences when starting in the UAE. Overcoming these differences requires understanding local culture and business practices. Conduct thorough research, attend cultural orientation programs, and network with local business owners. Hiring local talent with a deep understanding of the culture can also bridge the gap between you and local practices.

3. The economic and political stability

The UAE boasts a stable and business-friendly environment. The UAE government is committed to creating a supportive atmosphere for businesses, with policies focused on economic growth and innovation. This stability provides a secure foundation for long-term investments and operations.

The United Arab Emirates (UAE) is known for its relatively high political stability, a key factor contributing to its favourable business environment. As of 2022, the UAE’s Political Stability Index stood at 0.7 points, significantly higher than the world average of -0.07 points. The UAE ranks second in political stability, just behind Qatar, indicating a robust governance structure that mitigates risks related to political unrest, violence, and terrorism.

This stable political environment, combined with strong economic indicators such as high government effectiveness and control of corruption, makes the UAE an attractive destination for businesses looking to expand in the region. The government’s commitment to maintaining a stable and secure environment is critical for long-term investment and economic growth, offering businesses a solid operational foundation.

4. The financial risks

One of the most significant advantages for entrepreneurs expanding to the UAE is the potential tax benefits and business regulations. The UAE offers a business-friendly tax environment, including no personal income taxes and no taxes related to real estate or equity investments. Corporate tax rates are favourable, with zero tax for taxable income up to AED 375,000 and a 9% rate for income exceeding that amount. These benefits can help entrepreneurs maximise profits and reinvest them to scale up faster.

Free zones for foreign investors offer additional incentives, including 100% foreign ownership, exemption from import and export taxes, and the ability to repatriate capital and profits. These zones provide dedicated support services and streamlined procedures, allowing entrepreneurs to focus on core business operations. An Employer of Record service will provide you with all the necessary local details to navigate the financial aspects smoothly.

5. The challenges of establishing

Establishing a new legal entity, even for a small team, presents an exciting opportunity to solidify your business presence in a new market. The process, which includes selecting a company name, registering with authorities, and preparing essential documents, allows you to build a strong foundation for your operations. By maintaining up-to-date company details, filing annual accounts, and registering for taxes, you ensure compliance and demonstrate your commitment to the local business environment. Though detailed, these steps ultimately contribute to your business’s long-term success and credibility.

Why Emirates Employer of Record?

This is where Emirates Employer of Record can be highly beneficial. An EOR with local knowledge can help you avoid many problems and risks. They act as an intermediary, employing individuals on your behalf and taking responsibility for payroll, taxes, and insurance while you maintain your normal working relationship with your employees.

Our deep understanding of UAE laws and local systems allows us to simplify your processes, making your expansion smooth and efficient. We offer a variety of services, including team relocation. Learn how we can assist with your business expansion in the UAE, letting us handle the complexities while you focus on growing your business. Contact us today!