UAE market entry challenges in 2023: Complete Guide

The following are issues of entry into the UAE market entry challenges that foreigners must face when expanding their presence in the UAE:

Sharing of Ownership

One of the major problems facing markets within the UAE market entry challenges is sharing ownership with local representatives. If a foreign company wants to get into the UAE market, whether it’s through franchising, partnership regional distribution, or even setting up a representative office within the UAE. 

Furthermore, the foreign company planning to set up an LLC in the UAE is required to collaborate and have a representative from the local market and give a stake in the ownership of the company. This is true for all business sectors, except for some, and is now one of the main opponents of getting into the UAE market entry challenges.

Locating a trustworthy and reliable partner or sponsor

Since every foreign company is legally bound to form a partnership and have ownership shares with a local partner or sponsor The companies are required to choose one. The challenge at this point is finding a reliable partner or sponsor who is aware of the law in the local area and is capable of managing locally-based operations for the business efficiently.

The foreign company also needs sufficient funds to ensure that it can run its operation without a hitch. This will require a competent investor who can fund the day-to-day operations of the company. Finding an individual who can do this isn’t easy. So, it is recommended that the foreign entity be able to have a thorough budget for fund management prepared for long-term service or

Introduction of GCC VAT

Recently, to diversify their economic base and diversify their economy, value Added Tax (VAT) is a tax that was implemented in the Gulf Cooperation Council during the year 2018 and introduced the value-added tax the amount of 5% for all goods and services that are not food-related such as healthcare, education, and healthcare. 

While the tax applicable to VAT can be as low as 5 percent, the main pain issue for companies is to incorporate VAT into their business plan and become familiar with it if they fail to do so, they and be subject to severe fines from the government.

The challenges arising from cultural and social differences

One of the main barriers to entry into the market for entrepreneurs in the UAE market entry challenges is the difference between cultures and societies. Any foreign company should be aware that UAE remains a Muslim country and, as such, it is important to take into consideration Islamic customs and norms when introducing their products and services into the UAE. 

There are also differences regarding the local holiday calendar and cultural norms, work timings, holidays, etc. Businesses must also be aware of the UAE’s social context for executing business operations within the UAE market entry challenges successfully.

Locating the perfect location for the Office

To obtain a business license in the UAE to obtain a business license, the company must possess a registered address and an office in the physical location. This can make it challenging for small businesses to gain access to the UAE market entry challenges.

Additionally, the place of the Office is crucial in the smooth operation of the business. Although free zones offer cheap real estate alternatives, however, the location and the dimensions of an Office determine the key to the overall success of the company. This presents a serious problem for entry into the market in UAE.

Linguistic difficulties

Foreign companies should be aware of the linguistic issues that are faced within the UAE market entry challenges. Although English is the preferred language for communication, however, the official language remains Arabic and all documents, contracts, and trading manuals that are written in English should translate into Arabic. 

To facilitate translation, companies have to hire an interpreter to transform documents between English and Arabic. Additionally, the majority of inhabitants of the UAE aren’t very proficient in English as well as Arabic and are primarily able to comprehend Hindi. So, businesses need to know Hindi to manage this kind of population.

Problems with the requirements for visas and work permits

The foreign entity that brings employees to the UAE market entry challenges is required to adhere to Visa regulations and adhere to regulations of the General Directorate of Residency and Foreigners Affairs regulations as well as regulations of the Ministry of Human Resources and Emiratization. 

Additionally, foreign workers must also obtain working permits in the UAE. Additionally, the UAE does not offer citizenship to non-Emiratis.