Doing business in Dubai? Here are 5 things savvy UK entrepreneurs must understand about the legal system first

Dubai's ambition is limitless...Our goal is to sustain success and establish a culture of excellence and leadership across all sectors in the emirate."

That was the assertion from the Crown Prince of Dubai last summer, reflecting on the recent economic growth which has seen the emirate become a major player on the world stage, as well as being the UK's largest export partner in the Middle East.

With the rest of the globe closely watching Dubai's rise to success, it is little surprise that more British entrepreneurs are looking to the emirate as the ideal location for expanding their business overseas. Zero personal and minimal business taxes are a natural incentive, but there are other costs business leaders should carefully assess before deciding upon a move –namely Dubai's complex legal system, influenced by Islamic Sharia, civil, and common law.

The good news is that the laws and legislations in Dubai are largely geared towards supporting businesses to thrive, but it is still highly recommended to seek and follow expert advice to ensure compliance with regulations while also maximising business success.

Choosing a location
Location is always a crucial consideration when establishing a new branch or company, and this is even more pertinent in Dubai, which is divided into various regions, including 'free zones'.

Every free zone focuses on a different business area such as financial services, commodities or media, and each is individually regulated. With different rules in each zone, the choice of where to set up should be guided by your business' unique requirements. This is why it is wise to consult a knowledgeable legal expert before narrowing down your search for a base when expanding into Dubai.

The need for a UAE-based national agent, partner or shareholder has largely been eradicated, and businesses situated in a free zone can be 100 per cent foreign-owned, but all businesses must adhere to both federal and emirate law.

Federal law applies right across the UAE and includes matters surrounding immigration and labour. While emirate laws differ across the seven states, there are some matters, such as company registration, which are governed by both federal and emirate law.

British entrepreneurs will likely have no issues conducting their day-to-day business, as much of this takes place in English, but most laws are enacted in Arabic with no English translation – aside from within the Dubai International Financial Centre, which has its own legal system and English-speaking courts.

Sector-specific rules
Certain industries are subject to additional regulations within Dubai, including banking, insurance and investment. Therefore, in addition to obtaining a licence from federal and/or emirate authorities, your company may need other licencing from a regulatory body – some of which also require foreign-owned companies to have sponsorship from a UAE national.

Depending on the nature of your business, it may be necessary to have Emirati shareholders. For example, security companies, money exchanges and telecommunications businesses (among others) are not permitted to have 100 per cent of their shares owned by foreign nationals.

Cultural considerations
While there have been considerable moves away from the once very conservative ways of living and doing business in Dubai, those used to the UK way of life may find significant differences when living and working there.

Dubai is home to people originating from more than 200 different countries, alongside Emirates who make up around 11 per cent of the population, meaning there are a wide variety of religions, languages and cultures. When doing business with or employing Islamic colleagues, considerations such as praying five times a day or fasting during Ramadan must be observed.

Multiple national holidays take place throughout the year in Dubai, and in the public sector there is a four-day week in operation – meaning most do not work on Fridays. While they may not be enshrined in law, cultural sensitivities such as never showing the soles of the feet and using the right hand instead of the left should also be observed.

Available funding
There are currently no specific funds set up for non-Emiratis in Dubai. However, foreign investors can benefit from certain incentives such as reduced utility rates and Government grants in specific sectors, as well as benefits within the free zones including reduced rent, administrative support, and discounts for a limited period on registration and licence fees for new entities. Of course, these financial advantages must be weighed up alongside the other costs associated with setting up and running a business in the country.

For SMEs and start-ups, platforms such as e-Empower share useful information on innovation, marketing, finance and project management. Additionally, there are incentives including tax exemptions and long-term residence visas (from five to 10 years) for investors.

New and changing laws
As Dubai is relatively newly established, and with its prowess as an economic power being even more recent, the legal system is ever evolving to progress the aim of supporting businesses and investment.

Among the more recent mandates are commercial transaction laws. Intended to maintain the UAE's position as a leading market for Islamic finance which supports business and stimulates investment, the Commercial Agency and Auditors Law provide flexibility for foreign investors, while new labour laws are designed to protect employees.

Given these frequent changes, and the differences between the UK and Dubai's business laws – not to mention the differences within various areas of the emirate – it isn't as simple as replicating an existing UK business in Dubai.

Without professional guidance, entrepreneurs could easily find themselves located in an unsuitable area, falling foul of laws written in Arabic, or failing to make use of the incentives they are legally entitled to. Ultimately, this means success might not be as 'limitless' as Dubai's ambition.