MISTAKE # 1 - WRONG CHOICE OF JURISDICTION IN THE UAE

Choosing the wrong jurisdiction is one of the most common mistakes when entering the local Arab market. The mistake in choosing a free economic zone in the UAE entails problems with the implementation of the business. In the Emirates, there are more than 50 relatively independent jurisdictions, each of which has a specific feature set directed to particular businesses. The inconsistency of jurisdictions with the requirements for running your business may result in the company being used not being able to carry out your wishes, you will not be able to implement the previously planned commercial activities. The price of such an error is the total cost of registration and formation of this company, ranges between 11,000 - 30,000 US dollars.

MISTAKE # 2 - WRONG BUSINESS ACTIVITY

Choosing a business activity that does not synch with your business license is the second most common mistake many investors make. There are more than 2,000 types of business activities in the UAE, each of which you need to obtain a corresponding license. Therefore, if you initially chose the wrong license, you will have to make a change. The price of such an error varies on the basis of which free economic zone a company is registered in, and will be approximately $ 1,000.

MISTAKE # 3 - INCORRECTLY  PREPARED DOCUMENTS FOR BANK ACCOUNT OPENING 

This is considered one of the most important mistakes that can cost the most.

Let's start with the timing. The registration of a company in the UAE is done fairly quickly and usually only takes a couple of business days. Consideration of an application for opening a bank account in Dubai and the UAE takes quite a long time for a business. It usually takes about 30 business days. Therefore, if you prepare incorrectly and do not collect the required package of documents, you can lose this time, which can significantly complicate and slow down the processes of your business.

In comparison to the requirements for registering a company in the UAE and opening a bank account in the UAE, the list of documents varies greatly because banks approach in more detail the documents provided.

The list of documents for registering a company in the UAE and the list of documents for opening a bank account in the UAE are quite different. This is because the banks approach the two documents in different manners, and some require different attributes.

DOCUMENTS FOR OPENING BANK ACCOUNT IN DUBAI AND IN THE UAE

• Passport copy in the absence of an Emirates ID
• Bank Statement (issued within last 6 months)
• Current Tenancy Contract copy showing local address or a title deed 
• A salary certificate.

Note that the information that you indicate in the documents will be carefully reviewed by the bank, so you need to pay special attention to the facts you list, and all the chronological events that you provide. Also, the professional experience that you tell the bank about must coincide or overlap with the line of business of the company for which you open a bank account in the UAE.

COMPANY PROFILE FOR OPENING A BANK ACCOUNT 

Be careful when creating the profile of the company which you plan to open a corporate bank account with. The company profile is e carefully checked by banks and is probably an even more important component when opening a bank account in the United Arab Emirates.

The company profile should reflect the following information:

• Planned activities in the UAE,
• The structure of the company,
• Owners and managers of the company,
• Suppliers,
• Customers,
• Expected cash and non-cash transactions.

If there are citizens of the CIS and Ukraine in your company, then be prepared that the banks in the UAE will be especially careful to check the documents, because these countries and their citizens are on the high-risk list.

When signing an application for opening a bank account in the UAE, I always recommend that my clients submit applications to several banks at once in order to reduce the risks of failure and loss of time. Apply at least in 2-3 banks in the UAE, this significantly increases the likelihood of opening an account, because the internal requirements of the banks are different.

If a bank in the United Arab Emirates refuses to open a bank account, they will most likely not provide you with the reason for the refusal, because in practice local banks do not disclose the reasons for refusal. This is due to the internal prohibition of banks advising clients on the format and content of the information provided.

If a bank account is not opened to your already registered company in the UAE, then you risk losing all the money and time invested in this company, because without a bank account the company cannot function either in Dubai or in the UAE, in fact, it cannot function anywhere in the world. As a result, you will lose all the money you invested when you register your company. Do not forget to add to the cost of accommodation, travel, visa fees, and other mandatory payments. The price of an unopened account for a company in the UAE will cost at least $ 20,000.

FOR A SUCCESSFUL START IN THE UAE, THE FOLLOWING IS NECESSARY:

• choose the best jurisdiction for your business from 50+ available in the United Arab Emirates
• select the correct and accurate type of business activity from 2,000+ available in the UAE
• carefully prepare documents for filing an application for opening a bank account in the United Arab Emirates

If you have any questions and want to get more detailed information, please contact me, I will be glad to answer your calls and messages.

MARSEL SHADMANOV

Head of Corporate Services of Garant Business Consultancy