While the UAE’s pleasant weather, high standard of living, and favourable business climate has been attracting expats in large numbers, not every overseas investor decides to relocate to the country.
Many entrepreneurs who start businesses in the UAE run them from their home countries. In fact, the ease with which you can operate a company set up in Dubai from afar, is one of the attractive benefits offered to business owners, who can capitalise on the locally-available financial incentives without having to uproot their lives.
Here are the major steps to take if you’ve decided to open a company in Dubai and operate it from abroad:
Appoint a power of attorney
While non-resident entrepreneurs are able to remotely draft plans and make decisions for their business, it is highly advisable to appoint a power of attorney, to manage their affairs on ground in Dubai.
As long as the appointed person is competent and trustworthy, they can ensure that the business runs smoothly, with the actual business owner’s physical presence being required minimally.
A person with power of attorney can handle financial and business transactions, settle claims and disputes and make hiring decisions. It is also possible to amend power of attorney rights, awarding or curtailing specific privileges, such as selling a property or collecting debts.
Often times, business owners give power of attorney to their local sponsor, if they have one. In the past, partnering with a local sponsor was a mandatory requirement for starting a business in the UAE, particularly if it was located in the Dubai mainland. While it is no longer obligatory for many business types, expats continue to seek sponsors to ease the process of registering a business in Dubai.
Obtain a visa that suits your travel intentions
Non-resident entrepreneurs are not legally obligated to travel to the UAE, but may need to do so frequently when they first open their company in Dubai.
Unless the business owner belongs to a GCC country or a country with visa-on-arrival privileges, it is necessary to apply for a visa that allows the non-resident entrepreneur to remain in the UAE for as long as their business activities require it. After calculating the desired length of stay, the business owner can apply for the relevant visa.
Understand your local tax laws
Tax considerations are an important factor during business planning. While UAE does not levy income tax, and corporate taxes are limited to a few types of companies, a non-resident entrepreneur will have to check the laws of their country of origin to see if they have to pay taxes on their corporate or personal income generated in the UAE.
The UAE has double tax agreements (DTA) with approximately 100 nations that help business owners avoid paying tax to both countries. The policy’s ‘tiebreaker provisions’ help determine which country is owed income tax. If an entrepreneur is considered a tax resident in UAE, they pay 0% income tax.
However, it is important to note that DTAs do not apply to residents of some countries such as the USA or Australia, so it is necessary for a non-resident entrepreneur to find a trusted business setup advisor in the UAE to accurately determine which tax laws apply to them. Failure to do so can result in hefty penalties or even a criminal conviction.