When you choose a company to set up in Dubai, opportunities are sure to come flooding in. But what does it actually take to establish one? Of course, setting up a business requires capital and hard work.
Company Setup in Dubai Hidden Costs
While opportunities are vast and benefits are enticing, it does not change the fact that a company setup in Dubai costs a fortune. Joy Ajlouny, the co-founder of Dubai-based delivery app Fetchr, said “The biggest difficulty is money. It’s extremely expensive. Starting a company in the UAE is the same whether you’re IBM, Amazon or a startup. Comparing this to the US where you can get a trademark online for $200. Thus, this capital can start a business from your mum's garage.”
The UAE ranks 25th globally for starting a business according to the World Bank’s Ease of Doing Business. A minimum of Dh34,340 ($9350) is required to setup an onshore business in Dubai. Aside from this, companies are also required to pay myriad fees. These include a general trading licence for Dh15,000. Plus fees of Dh10,000 to Dubai Municipality, Dh3,000 to the Ministry of Economy. Not to mention Dh1,200 to the Dubai Chamber of Commerce.
Other expenses include renting office spaces which is a prerequisite for all free-zone trading licences. Overall, these are relatively cheaper than offshore licences. There are also visa fees to hiring staff.
A Google-commissioned report co-written by Wamda and OC&C Strategy Consultants in 2019 stated, “Some young companies need as much as $25,000. The operating costs for business setup for tech startups are some of the highest globally, although the low tax nature of the ecosystem means that ongoing costs are lower than in other places.”
Company Setup in Dubai Experience – PointCheckout
PointCheckout is the first gateway dedicated to becoming an online payment provider for loyalty and reward points. This allows members to participate in reward programs to pay online within the PointCheckout merchant network using their points.
Founded in 2018 by Bashar Saleh and Tarek Ghobar, the company raised $600,000 and currently has more than a thousand registered merchants.
Despite the positive turnout, Ghobar shared his experience, “Even though I’m very familiar with the process of setting up a company, it’s still very frustrating. The difficulty comes from the complexity of the requirements, coupled with the application process and the fees you have to pay. The rules and steps are clear, but the process is still overwhelming.”
Company Setup in Dubai Experience – Digital of Things
Another inconvenience is the rule on office space renting. The minimum office space a company must rent depends on the number of its employees. This is regardless of whether the employees will be based in the office. The rent fee must also be paid one year in advance.
Sudipt Shah, the co-founder of Dubai’s Digital of Things, said, “We were fortunate in that we have already secured funding before we formed the company. But say you’re starting an e-commerce business from scratch and don’t necessarily need or have outside investors, these startup costs are significant.
A Missed Opportunity
If I’m a new graduate in the UAE and I want to set up a business, the costs would be prohibitive. Although a lot is being done and many initiatives are being discussed, the rules as they are today are deterring young entrepreneurs – it’s a missed opportunity.”
Shah also gave a remark, “There’s a process you have to follow, and each step is dependent on another. So, you may get your provisional trade licence, but it’s not finalized until you rent your office space.”
It took six months from wanting to launch the business to starting operations for Digital of Things, so Shah continued to work full-time until his company was ready.