The UAE is one of the most dynamic business environments in the world — and every year, thousands of entrepreneurs are drawn here by its tax-friendly policies, strategic location, and world-class infrastructure.
But at Vista Accounting and Tax Consultancy, we’ve seen too many promising ventures stall (or become unnecessarily expensive) because of mistakes made at the setup stage.
Here are the three most common — and costly — missteps founders make when setting up a company in the UAE… and what to do instead.
The Illusion of “Easy Setup”
Company formation in the UAE is marketed as fast and straightforward. And yes — technically, you can register a business in a few days. But what most don’t realize is that rushing into setup without understanding the full picture can lead to long-term consequences.
Why this matters:
- Choosing the wrong structure can affect your ability to open a corporate bank account
- Certain licenses restrict your business activities or the ability to sponsor visas
- Setup decisions affect tax obligations (especially under the new UAE Corporate Tax regime)
A decision made too quickly — or based on incomplete advice — can cost you time, money, and opportunities down the line.
Vista Tip: Don’t fall for one-size-fits-all packages. Understand how your setup choice impacts your long-term operations, especially with the UAE’s 9% corporate tax now in effect.
Mistake #1: Choosing the Wrong Jurisdiction
Mainland. Free Zone. Offshore.
At first glance, they might all seem like valid options — but each jurisdiction comes with specific rules, limitations, and hidden costs.
A few common pitfalls we’ve seen:
- Setting up in a Free Zone that doesn’t permit your actual business activity
- Choosing an Offshore company to reduce costs — then discovering it can’t sponsor employees or lease office space
- Opening in a Free Zone with limited banking credibility, only to be rejected by local banks
One client we assisted had unknowingly registered in a Free Zone that didn’t support VAT registration — even though their industry legally required it. They ended up paying penalties and restructuring within six months.
Vista Tip: Always choose a jurisdiction based on your real-world operational needs, not just what sounds cheapest or fastest. Verify it supports your banking, tax, and visa goals.
Mistake #2: Relying on Verbal Advice Instead of Verified Facts
In 2025, misinformation still spreads faster than ever — especially on WhatsApp groups, LinkedIn threads, and informal “advisors.”
It’s common to hear:
“You don’t need to register for corporate tax if you’re a Free Zone company.”
“VAT is optional if your income is under AED 1 million.”
“This license will let you do anything you want — no questions asked.”
Unfortunately, these are half-truths or outright myths. The UAE’s Federal Tax Authority (FTA) has introduced clear compliance frameworks for:
- Corporate Tax (9%) — with strict conditions for Free Zone exemptions
- Economic Substance Regulations (ESR)
- Ultimate Beneficial Ownership (UBO) reporting
- Mandatory bookkeeping and audited financials for certain companies
Vista Tip: Always request written documentation from the relevant authority or a licensed advisor. At Vista, we verify every regulatory claim through official channels before recommending any structure to our clients.
Final Thoughts: How to Get It Right
The key to a smooth, successful setup in the UAE is making informed decisions from day one.
- Choose the right jurisdiction based on your actual business needs
- Avoid shortcuts or hearsay — they often lead to expensive corrections
- Work with advisors who prioritize compliance, transparency, and accuracy
At Vista Accounting and Tax Consultancy, we’re here to help you set up — and scale — the right way. From license selection to corporate tax planning, we provide end-to-end support grounded in verified facts and up-to-date regulations.
Need tailored advice?
Let’s start with a conversation. Reach out to our team today to ensure your business is built on the right foundation.