- July 15, 2024
- Posted by: admin
- Category: Blog
Being a great place for starting businesses, companies all around the world are setting up their businesses in the UAE. This process can be tricky because of strict rules and requirements. These requirements lead them to face challenges when trying to open a local business bank account. It becomes tricky because of the complications in rules and regulations. In these situations, entrepreneurs often wish they were aware of these issues in advance. In this blog, there will be all the information about the challenges of opening up a business account in the UAE so that entrepreneurs can avoid these challenges again and again.
List of Major Challenges of Opening Up a Business Account In the UAE
The List of Major Challenges of Opening Up a Business Account In the UAE
1. Absence of a Local Office
To open up a bank account for your business in the UAE, it is important to have a local office. In the UAE, it is a basic requirement of banks to have a real physical address for your business, as a part of their account opening process. To make sure your company isa actually operating from that address, banks might send someone to check it out. To handle this verification process, banks use a third party called contact point verification (CPV). On the basis of the Field Visit Report (FVR) provided by the third party, banks decide whether to open up your account or not.
2. Physical Presence
Opening a business bank account in the UAE requires a personal visit to the bank. It can not be done remotely. Some banks offer online options to open up a personal account but to open up a business account, you need to go to the bank personally. The process can be complicated and might take weeks or even months. So if you are setting up a business in the UAE and need a bank account, prepare for a long stay beforehand. This is one of the key challenges of opening up a business account in the UAE.
3. Profiles of the Shareholder’s
To make a bank approve your request for a business account, you need to prove that you are trustworthy and have a deep knowledge regarding your business. Before continuing with your request, the bank will look at your past business experience to make sure you are capable of handling and running your business smoothly. So the banks check the profiles of the business shareholders. The bank will also check your income to check your capability of running a business in the UAE.
4. Insufficient Information
Having a strong business strategy is important to start a business in the UAE. Banks in the UAE require detailed information about the financial stability of your business. Not having a strong business plan with all the financial details mentioned in it might create an obstacle in your business bank opening process. If this happens, opening up a bank account can take a longer time than necessary. So be prepared with a detailed business plan with sufficient information to avoid such challenges of opening up a business account.
5. The Residency of the UAE
Most of the banks in the UAE require residential visas from entrepreneurs as a part of their bank account opening process requirements. Some banks may ask for proof that the shareholders of your business have current residency permits. This requirement depends on the regulations of different Emirates. So it is a good idea to check if it is required in the Emirate where you have your business.
6. The Importance of Nationality
Among the challenges of opening up a business account in Dubai, nationality is going to be another one. Citizens of high-risk nations can face challenges during opening up a business account. Governments can place restrictions on individuals from these nations to avoid issues like human rights violations, drug trafficking, terrorism, and other illegal activities.
7. Challenges for SMEs
Opening a business bank account in the UAE will make you realize that local banks mainly focus on big companies with lots of capital and frequent transactions. They often don’t show interest in small or medium-sized businesses and usually don’t offer packages to businesses who are looking for capital-friendly startups and affordable ways to make international payments.
8. Minimum Balance Requirement
In the UAE, it is important to have a certain capital in bank accounts. Banks can charge penalties or even close the account if the balance drops below this certain amount. This amount can be $100,000 or more than that, it depends on the bank and their business packages. This requirement makes it difficult for startups and small businesses to open up a business account in local banks
These are the top challenges of opening up a business account in the UAE. Despite these challenges, it is not totally impossible to open an account. Making sure to choose the right bank and also having all the important documents ready is important. Getting help from a business consultancy firm can make your business account opening process easier.
Also read: First-Time Home Buyer’s Guide for Getting a Home Loan in Dubai