Vitaliy Chiryassov on Prospects and Potential Pitfalls of Doing Business in Dubai

In today’s interview, we discuss the prospects and challenges of opening a business in the UAE with Vitaliy Chiryassov, the CEO of the international consulting company UPPERCASE and CEO of UPPERSETUP, an innovative technological project in the consulting industry that helps with swift business registration and management in the UAE.

1. UPPERCASE has been helping businesses set up and grow in the UAE for a number of years. Have there been more people willing to open a business in the UAE recently, or is the interest in the country at the same level?

The interest is definitely rising. There are statistics that show that the number of newly registered companies in Dubai is increasing by roughly 40% each year. In 2022, Dubai registered 21,000 companies in the first half of the year; in 2023, over 30,000 in the same period. And that’s just for Dubai. This number excludes other popular locations: Abu Dhabi, Sharjah, Ras Al Khaimah, Ajman. 

Our experience confirms this. The popularity of the UAE as a business location continues to grow. Few countries can compete with the UAE in terms of government support, taxation and ease of registration. In 2022, for example, the government simplified registration for digital companies. Entrepreneurs are being offered incentives to rent office space, and visas are being issued quicker. In general, the UAE government’s aim is to reduce the country’s dependence on oil and gas. Attracting business and investment from abroad is central to this strategy. I don’t see this trend reversing any time soon.

2. What do you think are the most sought-after business ideas in the UAE right now and why?

The country offers opportunities across a wide range of industries — the list would be too long if I tried to cover them all. Among the most popular are e-commerce, real estate, and innovation projects.

The UAE has an extremely well-developed e-commerce market. It is expected to reach $17 billion by 2025, one of the largest markets in the entire MENA region.

In real estate, even though property prices are on the rise, transaction numbers are also increasing. Dubai is an incredibly desirable place to live — a wonderfully modern city that people are flocking to. That’s why the non-commercial residential segment makes up such a huge $0.41 trillion slice of the projected $0.71 trillion real estate market by year’s end.

On the innovation front, the UAE’s free zones provide an ideal ecosystem for startups. In addition to a swift company setup and low tax rate of 9%, in case the company generates an annual profit of more than $ 100,000, they offer a complete development environment. Some have integrated startup hubs like In5 at Dubai Internet City. Hubs provide access to investment, co-working spaces for the community to gather, and a professional network in your specific industry or niche. It’s the perfect launchpad for growing an IT business.

3. Which industries are the most expensive to start a business in the UAE? 

Real estate development is probably the most expensive business idea, because in addition to a license costing around AED 43,000, you need to own a plot of land. You will also need to get a permit from the regulator responsible for real estate in a specific emirate, which requires proof of land ownership — plot prices in UAE range between AED 1,500,000 and AED 950,000,000.

Luxury transportation is another expensive one. It involves getting approval from related governing authorities such as RTA (Roads and Transport Authority). The applicant must own at least 10 luxury cars less than 5 years old, which requires a big investment, and the license costs around AED 25,000, plus AED 120,000 for regulator requirements.

Starting a higher education business is expensive due to strict standards. You have two options for registration here: establishing a branch of a foreign university with a license at the emirate level or registering a new university with a license at the federal level. The former is a much simpler, faster, and more cost-effective process.

While on the other hand, the second option is longer and more expensive which is establishing a new university at federal level. Licensing costs between AED 20,000 and 50,000 depending on issuing authority and it requires a special license from the KHDA (Knowledge and Human Development Authority), which costs AED 175,000 for higher education permit.

Opening a medical clinic, while not expensive across the UAE, is costly in Dubai. That’s because, compared to other emirates where permits are obtained from the Ministry of Health, approval that is obtained from Dubai’s DHA regulator is slightly more expensive and complex. Licensing, approval permits and inspections will cost roughly from 80,000 in Dubai, and much lower in other emirates.

Finally, the DIFC Category 4 license for financial activities is quite expensive at AED 113,670. And it comes with a minimum capital requirement of AED 36,700.

4. Which industries are cheaper? 

Overall, there are several industries in the United Arab Emirates in which you can start a business at a relatively low cost. A characteristic feature of the UAE business environment is the standardization of licensing costs for different areas of activity. Prices for starting a business in many sectors are comparable.

For example, a license to trade goods costs the same as a license to provide services. Many free economic zones and business centers offer competitive prices and special offers for starting a business.

One of the most accessible industries for doing business in the UAE is the media sector, especially in free zones such as SHAMS and Creative City. Here you can register a company and obtain a license for media activities without having to rent office space. The cost of a license in Creative City is 5525 AED and in SHAMS — 5760 AED. But remember — this is just the price of the license. These zones are particularly attractive to aspiring entrepreneurs in the media and IT, innovation, tech-enabled and startup sectors.

The Dubai International Financial Centre (DIFC) Innovation Hub License is perfect for innovative companies at all stages of growth. This license has a subsidized fee structure and it’s specifically designed for companies focused on developing or testing new products or IT services. The cost is AED 8625. You could say that this is a bargain price, because DIFC is one of the most prestigious — and normally most expensive — free zones in the UAE. 

5. Do you think now is the right time to enter the UAE market? How loyal is the business community to new companies? Is there active government support?

The UAE is supportive of new businesses, among the best in the world in this regard. Just look at the level of investment in foreign companies — around 40% of foreign direct investment in the West Asia region comes from the Emirates alone. The government runs some excellent programs for expat entrepreneurs, like the Entrepreneurial Nation programme, National Programme for SMEs, the Innovation Committee, and provides direct support for startups through initiatives like Digital Dubai.

The free zones I mentioned earlier have cultivated a loyal and open business community. Businesses are thriving, entrepreneurs support each other, there are excellent networking opportunities. The same welcoming attitude extends to local businessmen. They’re friendly towards foreign partners — as long as you respect the culture, you’ll receive a warm welcome in the Emirates.

Overall, there’s never been a better time to enter this market. Company registration is becoming increasingly digitized; some free zones allow you to register a company directly online from your computer, with only a physical presence required for residency and opening a corporate bank account. Dubai is sometimes compared to Singapore or New York, but when it comes to ease of doing business, Dubai leaves most financial centers in the dust. I can’t think of many places in the world more conducive to starting and running a business than Dubai.

6. What are the main difficulties companies face when setting up a business in the UAE?

It is mainly a matter of regional peculiarities. For example, let’s consider free zones. The UAE government has created a unique system of free zones for foreign companies. Each zone is like a nation state, it can have its own regulatory bodies, its own legislation. In total, there are almost 50 of these zones. Which one is right for you? What specific requirements do you need to meet to set up there? Or when should you look beyond the free zones and consider registering on the mainland? 

The same goes for the banking system. There are banks that work with companies in certain sectors, Islamic banks, branches of foreign banks, like OCBC. The banking system is quite unique and it’s very much geared towards working with residents, which means your first priority has to be to get residency. 

The difficulties with banks don’t end there. Opening a corporate account in the UAE is a complicated process. You need to prepare a large set of documents — a bank statement, the founders’ CVs, a detailed business plan, and any additional documents the bank might request during the KYC process. Everything has to be meticulously prepared, and if English isn’t your primary working language, translated. Getting licenses is no walk in the park either — the documentation requirements can be extensive, depending on your line of business. All, it can be a bit much and that is when entrepreneurs look for help from someone with experience.

7. How important is the support of business consultants at the stage of starting a business? What problems do they help solve?

When you enter a new market, you are unfamiliar with it. You don’t know the procedures for opening a business, the local legal intricacies — you have to find answers to all these questions yourself. Entrepreneurs often turn to forums and online resources for help. However, they face misinformation; even some government websites may have outdated info after legislative changes. I would say professional help is very important here, as it saves you time, effort and money.

A consultant will guide you in choosing the right type of company registration, prepare documents and translate them into Arabic if needed. They’ll advise on which long-term visa option is best for you and help ensure your application, as well as any employee visas, get approved on the first attempt. They know which jurisdiction offers the best tax benefits based on your business activities. A consultant will help you navigate the banking landscape to open the right personal and corporate accounts. They will help you draft correct applications to innovation hubs, like DIFC, which have strict vetting processes. Draft contracts, introduce you to regulatory bodies and help establish good relations, accompany you in negotiations with partners, which in the UAE requires you to know a lot about regional specifics.

Overall, their services cover a wide range of assistance beyond just company formation — including strategic and legal advisory, accounting.

8. Is it easy to break into the UAE market? Are there many cases when companies fail?

It’s never easy to break into a new market, and the UAE isn’t an exception to this rule. Still, many companies manage to navigate the process successfully. They plan carefully, realizing that entering a new market is a complex process, work with the consultants, and then they’re able to get everything in order and find success in the UAE. But there are also cases where companies struggle. It usually happens when founders under prepare for the registration process, underestimate how competitive some of the UAE markets are, or miscalculate the capital they need to get a foothold.

9. What do you think are the main reasons why companies fail? Does it depend on preparation, starting capital or industry?

I already alluded to it earlier. First of all, proper preparation is crucial. In the UAE, ensuring the right company location and registration type aligns with your intended business activities is vitally important. When registering, you must select from over 2,000 listed commercial activities. What you specify needs to comprehensively and accurately cover your full range of operations. Otherwise, you risk losing your trade license or hefty fines. The registration type itself also matters immensely. For instance, if registered in a free zone, operating outside that zone without the requisite permits is considered a serious violation that can get your license revoked.

Underestimating the initial capital requirements is another common pitfall that leads to company closures. The UAE market is highly competitive — tourism, real estate and retail are saturated with strong foreign and local players. A new business absolutely has great chances of success, but realistically may face hurdles in immediately finding its target audience in this new market. It’s prudent to prepare enough runway capital upfront to push through any initial turbulence. 

10. What are your predictions? Will the number of companies that want to set up business in the UAE grow?

I believe that the number of foreign companies in the UAE will only continue growing. Entrepreneurs recognize the opportunities the Emirates presents to make serious money. At the same time, the UAE is an extremely desirable place to live, it features world-class infrastructure. This powerful combination of commercial prospects and high living standards is a major draw attracting companies from around the globe.

11. What advice can you give to companies considering setting up in the UAE?

For companies considering setting up in the UAE, my advice would be to thoroughly research and prepare well in advance. Understand the local laws, regulations, and business culture. Research the market, how big is it, how competitive is it, who are the main players?

Be realistic about your capital requirements to sustain operations during the initial growth phase. Most importantly, if you feel you don’t have in-house experience or, indeed, time to go through the process on your own — don’t go at it alone, reach out to business consultants. They will provide the support you need and help you prepare the necessary infrastructure for launch. With proper planning and the right support, you’ll be well positioned to take advantage of the opportunities in the UAE.