Rise of SMEs in Dubai in This Digital Age

Rise Of SMEs In Dubai In This Digital Age

Fulfilling the dream of SMEs in Dubai, Dubai has carved its own niche in entrepreneurship, leadership and success. Here is what future entrepreneurs who need to establish their business in Dubai need to know:

Dubai has high business conditions and a high standard of living that attract companies from around the world. The local SMEs in Dubai are very different from the usual, but this does not deter other entrepreneurs and investors.

Read this post to know how much it costs to open SMEs in Dubai and what else you need to know to do business there

SMEs In Dubai – The Ultimate Rise Following Digitalization

The UAE has become one of the most attractive jurisdictions for business. The emirate issued 72,152 new business licenses in 2021, according to the Department of Economy and Tourism.  

It has always been a popular place for micro small medium enterprises. Several factors contributed to this: a relatively stable political system, high business competition, presence of specialists of many sectors, stable exchange rate of the local currency – dirham, reliable banking system, and minimal tax burden on business.

At the moment there is no federal taxation in the country. Each emirate has issued its own decree on corporate taxes, which in theory should apply to all Dubai SME as well. However, in practice, such decrees are still not applicable, with the exception of oil companies and foreign banks. This enables the rest of the business to be carry on without significant tax losses. 

There are expectations that in the coming years the list of companies subject to federal taxation will be expanded, but this will not affect those registered in free economic zones.

For example, companies registered in the UAE do not actually pay taxes, capital gains and wages, and the same VAT “within” the country is only 5% instead of the usual 20%. At the same time, a reduced rate of 0% is provided for VAT for export operations. 

The government in the UAE has high interests in attracting foreign capital to the region and encourages it in every possible way. It is for this reason that free zones are organized in some emirates, which offer tax and business benefits for a guaranteed period, the possibility of 100% foreign ownership, the absence of customs duties within the zone, and a “single window” for administrative services.

Recommended: Living In UAE – Things Expats in UAE Should Know

Things SMEs In Dubai Should Consider Before Setting Up


Following are some of the points SMEs should keep in mind before ebginnign their journey in Dubai. 

#1. Finding a local sponsor for a localized business start-up

Getting to know a local sponsor is the most important step to starting new SMEs in Dubai. The rules confirm the fact that the UAE citizen will have a preferred share of 51%. In addition, an annual fee must be paid as compensation for any legal issues related to the assistance of a local sponsor.

#2. Finding a free zone to run their business

Applicants who wish to start their SMEs in Dubai without the help of a local sponsor can have their own businesses in free zones. But, free zones are not suitable for B2C business models. They have a number of advantages, such as having a completely independent business, minimal time to open an office, and duty-free customs. Just what else to expect from an entrepreneur!

#3. Finding a location that promotes business operation relevance, simplicity, and cost-effectiveness

The ideal business location should always match customer/customer accessibility. The same is true for a business established in Dubai. For companies in the Free Zone, factors such as cost, distance, product, business model and its requirements predominate. For SMEs in Dubai, the most basic needs, such as storage, technology, and telecommunications should resemble basic responsibilities.

#4. VISA eligibility confirmation


The most important document for starting SMEs in Dubai is the VISA. Responsibility for applying for a Visa includes office size, scope of business, investor information, etc. For a business set up with a local sponsor, the latter must assist in fulfilling the authority approval. Even without a local sponsor, any other sponsor investing in the business must play a dominant role in order to fulfil the requirements of this stage. Once approved by the Visa Company, the same must be processed for employees working for the company.

#5. Linking with a registration based consulting company to facilitate the process of opening a business

The use of business consultants can be invariably helpful in legalizing business transactions. Whether it’s opening a bank account, renewing accounting, arranging an auditor, or even nominee services, their experience and connections with local governments and free zones can help you invest effectively in a startup of SMEs in Dubai. 

In most cases, these companies use rigorous service scheduling practices that enable them to consistently complete business approval steps in a shorter time frame at a reasonable cost.

Also Read: Home Based Business Ideas in UAE – The Ultimate Guide

Final words

Thanks to impeccable leadership, elite quality infrastructure, friendly environment, zero tax on corporate and personal income and, low import duties, Dubai has grown rapidly in attracting numerous foreign investors to its country. Like a dream come true for aspiring entrepreneurs, the country today, Gulf remains an unrivalled business center!

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2 thoughts on “Rise of SMEs in Dubai in This Digital Age

  1. Very good article. I definitely appreciate this website. Continue the good work!

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