Stay Away from these pitfalls that could ruin your Business in Dubai


Once you have successfully navigated the process of business setup in Dubai, it’s time to ensure that you are not wasting your efforts by violating certain mandatory requirements and regulations. If set up incorrectly, your company is at a higher risk of losing thousands of Dirhams and valuable time to rectify the errors. Ensure that the advice you receive is from business setup consultants in Dubai rather than a sales pitch from some dubious agencies.

Getting the right advice matters because falling prey to certain common pitfalls will also see your company miss out on lucrative contracts. Just make sure you stay on top of your legal responsibilities. We have gathered here some red flags that may ruin your business. Avoid such pitfalls and do your business confidently. Read on.

Errors on company trade licenses

Having errors on your company trade license can cost you dearly. Whether you are incorporated in a free zone or mainland, you have to spend a lot of money to correct the errors in your trade license. The errors may arise due to a variety of reasons including setting up the company incorrectly, not keeping current on changing regulations or not fully understanding the operations and requirements of your business. Check your activities and other requirements with the help of business setup experts in Dubai before applying for a license.

Operating with the incorrect license

While setting up a business in Dubai, you need to ensure you are having the right license that matches your activity. For instance, there is great confusion between an e-commerce license and a DED e-trader license. An e-commerce license is meant for taking orders of products through a dedicated website and delivering it to the customers’ location. It requires a physical office space or a co-working space in a business centre.

An e-trader license is a home-based business that is granted to individuals to sell goods through social media platforms only. Many people get an e-trader license from DED and conduct e-commerce business. The DED will impose penalties on your company for operating on a wrong license. Setting up a company through business setup consultants in Dubai can save you from committing such mistakes.

Not Performing Annual Audits

Not getting your books of accounts audited will land you in trouble if you are operating in any of the Dubai free zones. You need to maintain the books of accounts for at least five years and get them audited by audit firms approved by the relevant free zone authorities. The free zone authority will refuse to renew your trade license if you fail to submit the audit report on time.

Not Complying with Regulations

The UAE government has introduced a host of transparency reforms that the investors are required to comply with. Economic Substance Regulations (ESR), Ultimate Beneficial Ownership (UBO), and Anti-money Laundering (AML) are some of the mandatory regulations that were introduced in recent years.

In the case of ESR, the investors need to submit an annual notification, report and demonstrate economic substance if they conduct any of the Relevant Activities.

In the case of UBO, the companies need to identify the ultimate beneficial owner and should maintain a Real Beneficiary Register (RBR) in their office. Failing to comply with ESR and UBO regulations attract hefty penalties and other serious consequences. The best business setup consultants in Dubai will assist you in filing ESR notification, ESR Reports, AML training and maintenance of RBR.

Operating on an Expired Trade License

In Dubai, every business must renew its trade license before it expires. The licensing authority will impose a penalty for every day the trade license is not renewed. Failure to renew your trade license in Dubai will result in a freezing of all of the business activities undertaken by the entity.

Flouting Tax Requirements

The UAE is a low-tax jurisdiction but not a no-tax region. Foreign investors often fail to distinguish between these two distinctions. Indeed, the UAE doesn’t have an income tax or corporate tax but the country imposes Value Added Tax (VAT) on entities at a standard rate of 5%. You need to register your company under VAT if its taxable supplies and imports exceed the threshold of AED 375,000. VAT registration is optional for those businesses whose taxable supplies exceed AED 187, 500 per annum. Entities that fail to register for VAT despite being eligible are liable to pay hefty penalties imposed by the Federal Tax Authority (FTA).

Set your Business the Right Way with Jitendra Business Consultants

Dubai will reward you with profits and recognition if you have a sound business idea. However, all your efforts will go to waste if you knowingly or unknowingly defy certain regulations and requirements associated with the process of business setup in Dubai. Entrepreneurs who form a company in Dubai without much research are likely to fall prey to certain pitfalls that may damage their business eventually. They could avoid such mistakes by consulting with business setup consultants in Dubai such as Jitendra Business Consultants (JBC).

JBC has helped thousands of clients to set up a business in Dubai in compliance with the laws and regulations. Our core strength is a team of highly qualified business set up consultants who are well-versed in the local laws and regulations. We can assist individual entrepreneurs, SMEs or big corporations to establish a company in Dubai without any hassle. JBC can help you in complying with requirements such as trade license renewal, audit, ESR, VAT, UBO and AML Regulations. Save your business with the help of JBC’s expert guidance.

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