How NOT to set up your company in Dubai.
Tips from a recent founder who made an oops when setting up a mainland tech company in Dubai. Read, but don't repeat!
Tamas Maksa is an experienced engineer and manager who recently established his company in Dubai.
Tamas is a friend and ex-colleague of mine, and when we met over a cup of coffee, he shared his struggles throughout this process. We agreed that this could be a really useful story for anyone who's thinking about setting up a company in Dubai. So here it is! Tamas, thank you for being open and sharing your experience!
(Note: This article isn't saying all agencies providing company and visa setup in Dubai are bad; some of them can be useful in case you have complex requirements. However, if you're looking for a regular company setup, you should be able to do it on your own with just a bit of research and at a fraction of the price. It's up to you to decide what's best in your case.)
So let's go and enjoy!
Why did you decide to establish a company in Dubai in the first place?
I have been an engineering leader for the past 8 years and have an IT background for almost 20 years. I have worked for several companies in 4 different countries, but I was always an employee during this incredible journey.
My professional career granted me a golden visa with 10 years of UAE residency at the beginning of this year. Shortly after, I received a contract-based opportunity from Europe. I evaluated a lot of possibilities, and finally, I decided the best option for me is to establish a Dubai Mainland company.
There were multiple reasons behind this decision. First, I see the Dubai Tech industry is booming, and having a company here means I am somehow connected to this scene. I am hoping I can benefit from this boom in the future. Second, the administrative hassle is minimal, and almost everything can be solved online. The economic environment is supportive for businesses and very predictable.
And I don't want to deny that the taxation is very friendly here.
Why did you choose Mainland over Freezone?
I had an opportunity to do business with another Dubai company just a few months before establishing my company. This opportunity has not become a reality yet, but when in the process, I wanted to be legally able to do business with other Dubai companies too. Later I learned that Freezone companies can do business with UAE companies too, but I didn't have that information before, so I better stuck to mainland.
And there was another factor for me. I heard from different sources that Dubai Freezone companies are often mixed up together with offshore companies, and the reputation is not always the best. I wanted to set up a more credible company as my plan is to do business with companies in different countries.
What was the decision making behind choosing a company to help you with the set up?
When I made the decision to go with a Dubai-based company, I was in the middle of a huge initiative in my previous workplace. Also, I wanted to focus on the professional challenges for the upcoming opportunity. On top of that, I had personal tasks to sort out with my family.
And also, I was biased. It is really hard to establish a new business in my home country, and it requires legal help in most cases.
So, my thought process was to outsource the administrative things around the company establishment.
The company I asked for help came through a referral. An advisor referred them, who helped me before, and we had a good relationship.
After the first conversation, they promised me a lot of help and assured me that they have a lot of relationships in the UAE. Their price was higher than an average agency I found through my initial research, but I felt okay to pay a bit extra and get premium support.
What was the process, how it went wrong?
After our initial conversation, they shared a description of a business activity with me and said, "This will be the right activity for you to set up the business." When I checked, it seemed okay-ish, but I was not convinced 100%. I also asked for activities for a few more things. They provided 3 more activity names without descriptions and said, "This will cover everything."
Also, they asked for 3 variants for the name of the company.
I paid them, and within a few days, they informed me that my company is ready and shared the Business license and the Memorandum with me.
I realized they did not pick a name from my list but chose their own variant. Also, they added their own details for the company email and phone number. Plus, when I saw the activity list, it became more suspicious that these are not the right activities for me.
I raised this with them and also asked several questions about the memorandum.
They said, "It is okay, you do not need to worry. But if you want to change the activities, you need to pay extra. And if you have more questions about the memorandum, you need to pay our legal consultancy hourly fees."
This was the moment I got upset and decided to take control over my company establishment.
Also they promised to help me open a bank account, I asked them to start that process. They replied they would do it and then disappeared for a week.
How did you solve it?
So, when I realized I was scammed, I asked my former workmate and friend who had been through the same company establishment process, and I got a few lifesaving pieces of advice.
First things first, I went to DED Cafe to clarify my company's situation and fix the messed-up things.
DED Cafe is a place established by the Dubai Economic Department, and they are there to help you next to a cup of coffee. They were very helpful, fixed the phone and email issues, and also helped me figure out what the right activity for my company is. They answered all of my questions. It took me approximately an hour, and I am almost sure that opening a new Mainland company with them takes the same amount of time.
When I felt the company was okay, I opened a bank account with WIO. It is a certified UAE digital bank specialized for small businesses. They do everything through their app. The process is fast and convenient. I uploaded all my documents on Friday, and they opened my account by Sunday evening. My bank card and chequebook arrived on Tuesday by Aramex.
As a last thing, I called the Tax authority and figured out that I need to register my company on their website for corporate tax. It took approximately one hour. I am now waiting for their registration process, which takes up to 20 working days.
What would you recommend to people thinking about setting up a company in Dubai?
My main recommendation is to skip agents and any advisor companies. Go directly to DED Cafe (if setting up a Mainland company) or to the information center of the Department of Economy and Tourism in Dubai. They are helpful, the process is fast, and it's cheaper compared to the agents' fees.
I also recommend taking a look at WIO as a bank partner option. Their services are sufficient for most small businesses, and they are fast and hassle-free too.
And finally, do a little bit of research and try to solve the challenge alone. Establishing a company in Dubai is overly mystified. It is significantly easier than most people think here.
Any useful resources or tips?
DED Cafe - all in one place for mainland business registration
WIO - digital bank for small and medium businesses
Federal tax authority - mandatory online tax registration for all businesses
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Have a nice summer!
Kristina