Onshore Vs Offshore
“Should I register my business in a free trade zone or in the mainland?” is the age old question I am asked by people setting up a business in the UAE.
To much surprise, if you ever ask someone the same thing, you shouldn’t get an answer, you should get more questions in reply. If you are serious about establishing a long term business in the UAE, you need to do your homework first, and without a doubt, you need to obtain professional advice (preferably legal) before you take any steps forward.
Unlike some countries around the world, the UAE does not provide a ‘one size fits all’ company registration. Even as one country, the UAE is a federation of seven Emirates, for which every single Emirate has their own variety of free trade zones.
In essence, if you wanted to trade in every square foot of the UAE (mainland and free zone) you will need to hold over fifty (50) company registrations (trade licences). All of a sudden, registering your business becomes a million dollar affair with a truck load (several) of red tape and company structures to build and follow.
Just like when we learn to walk, take one step at a time, and for the first few, take them slow and measured. Setting up a company in the UAE does not need to be an expensive and arduous affair. The what and where for licensing your business can only be determined by your own business plan of what you are looking to do and where you are looking to execute it.
All too often businesses are established in the UAE based on a fix it later mindset. The ‘lets do something simple now and fix it up later’ approach is quite commonly the biggest mistake a business makes in the UAE for a multitude of reasons. Licenses cannot be transferred, business longevity makes a big difference to valuations and when looking at raising a variety of finance.
If you are thinking of moving to or establishing a new business in the UAE, take it from someone who has seen almost every conceivable approach many times over, and can give you the statistics. The time and money you think you save by taking the easiest possible approach at the beginning will cost you 2-3 times as much money and time (and even worse, opportunity) when you need to change it later on.