Hidden Startup costs in the UAE
High set-up costs imperil fledging UAE-based startups and deter many would-be entrepreneurs from launching businesses in the country.
While there are many benefits to running a business from the UAE such as zero income tax, world-class broadband and a multilingual workforce, these attractions count for little if a prospective company cannot afford to get started.
“The biggest difficulty is money. It’s extremely expensive. To start a company in the UAE is the same whether you’re IBM, Amazon or a startup. Compare that to the US where you can get a trademark online for $200 and you can start a business from your mum's garage,” says Joy Ajlouny, co-founder of Dubai-based delivery app Fetchr, which has raised $52 million in funding according to Crunchbase.
The World Bank’s Ease of Doing Business rankings place the UAE 25th globally for starting a business. To set up an onshore business in Dubai costs a minimum Dh34,340 ($9350), the rankings note, and requires payment of myriad fees. These include Dh15,000 for a general trading license, plus fees of Dh10,000 to Dubai Municipality, Dh3,000 to the Ministry of Economy and Dh1,200 to Dubai Chamber of Commerce.
There are other expenses such as renting office space – a prerequisite for all free-zone trading licences, which are overall cheaper than offshore licences – and visa fees to hire staff.
“Some young companies need as much as $25,000,” states a 2019 Google-commissioned report co-written by Wamda and OC&C Strategy Consultants. “Business setup and first-year operating costs 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.”
HAIBU Space provides beautifully designed, affordable private office work space, business center and serviced office space, and coworking spaces in Abu Dhabi, Dubai and the MENA region.
