As Dubai gains precedence as a hub for tech start-ups, IT is fast becoming one of the most significant growth sectors in the Middle East. Spearheaded by the governments’ focus on innovation, the Dubai tech market is expected to reach AED22 billion by 2019, according to the Dubai Chamber of Commerce.

This thriving economy has led to significant attention from investors and world leaders within the digital industry; no better example of which is Amazon’s recent acquisition of Souq.com (a UAE-grown online retail platform), in a deal which is estimated to be worth around $650 million. Combine this with an increase in tech-related business hubs, incubators, and accelerators, and it is clear that there is a huge opportunity for IT businesses in the UAE.

In this article, James Swallow discusses the key stages involved in setting up an IT Consultancy in Dubai and the wider UAE.

Company Set Up

Setting up any business in Dubai will typically follow the same key stages as outlined below:

  • Step 1: Determine the legal form and activities of the business
  • Step 2: Register a trade name
  • Step 3: Apply for a trade license
  • Step 4: Open business bank account
  • Step 5: Arrange an office lease
  • Step 6: Apply for employee visas

You can read our blog “Business Set-Up Information: UAE”  to understand these steps in more detail. It is important to consider though that there are specific requirements to think about with each individual business set up. As a very diverse sector, there are a number of key points to bear in mind when establishing an IT consultancy.

Incubators & Hubs

As part of the UAE governments strategy to diversify the economy away from oil, there has been a huge increase in SME initiatives across the region, particularly within the technology sector. A range of funding platforms, accelerators, and incubators have been established throughout the UAE, and are undoubtedly facilitating an environment in which new businesses can thrive. In5 Innovation Centre, i360accelerator, and Silicon Oasis are just a few of the tech-specific initiatives available in Dubai.

In tandem with the British Centres for Business (BCB), PRO Partner Group can also offer an incubation platform, within which firms looking to expand into Dubai and Abu Dhabi can enjoy up to 24 months under the guidance of PPG and BCB. With close support for early stage companies, the Incubator provides a unique, cost-effective, and straightforward set up and licensing option for UK (and International) companies entering the region. Incorporating within the Incubator enables businesses to set up an on-shore Foreign Branch or Rep Office office and thus gaining an Abu Dhabi Department of Economic Development (DED) trade license. PRO Partner Group simply manages and confers the mandatory elements of registered office space and local Service Agent as required by all Foreign Branches.

Free Zone vs On Shore

There are two ways in which to establish an IT consultancy business in Dubai: as an on-shore business or within one of the emirates’ free zones.

The main complexity for foreign investors to establish a business on-shore in the UAE is the necessity that at least one Emirati partner must be a shareholder in the business, with ownership of at least 51%. As a company formation specialist, not only will PRO Partner Group guide you through the task of setting up your business in the UAE, but they can act as the secure corporate local partner to the foreign investor, and therefore remove the requirement to source an induvial Emirati stakeholder.

There are many free zones within Dubai that welcome business within the IT sector- Dubai Silicon Oasis (DSOA), Dubai Knowledge Park (DKP), and Dubai Internet City (DIC) to name a few. Whilst each one will offer its own particular advantages, the same benefits are typically true for each of the UAE’s free zones including 100% ownership, 100% repatriation of capital and profits, 0% corporation and personal tax, import and export tax exemption, and no currency restrictions. There is, however, one significant limitation to this form of business set-up, in that a free zone company is not permitted to trade outside of that free zone, and must appoint a local distributor in order to provide products or services on-shore.

On the surface, Free Zones appear to be a cost-effective solution to e-commerce company set-up in the UAE. In the long-run however, establishing a business on-shore with a local or corporate partner is likely to be a much more favourable option.

Business Activities

The core business activity will determine the kind of license you require when setting up a company in the UAE. Within the Department of Economic Development (DED) in Dubai, there are over 2,100 activities available to choose from, though currently the principal activity for an IT Consultancy company is as follows:

Technology & Telecom7210-03Information Technology ConsultantsIncludes providing technical services and consultancies with respect to information technology and applications like internet, internet and data warehousing to enhance the administrative and technical performance in different corporations. In addition to offering consultancies, to involve proposing the adequate software and handling the surveys and studies to determine the appropriate technology consistent with the nature of the firm, these firms are not entitled to market or produce any of the software or products related to said technology.

Share Capital

Another factor that makes setting up an IT consultancy in Dubai attractive to investors is that whether you establish your business within a free zone or on shore, there is no requirement to provide any upfront share capital.

Office Space

If you plan to trade solely online, leasing an office might not have even crossed your mind, however it is not possible to register a business without it. Wherever you choose to establish your business it is important to check the minimum office space requirements. For instance, in Abu Dhabi this is 14spm, and in Dubai, the minimum requirement for office space is 200 sqft.

If you choose to establish your business in a Free Zone, there may be virtual or flexi-desk rental options. Though these often appear to be a cheaper alternative at first, it is imperative to consider that the size of your office directly dictates the number of visas obtainable under your license, therefore potentially limiting your number of employees.

World Expo2020

The World Expo has historically paved the way for strong economic growth within its host country. For the UAE, World Expo2020’s theme ‘Connecting Minds, Creating the Future’ lends itself to huge opportunities within technology and innovation. So much so that the tech industry is expected to grow by 2% before the event as Dubai businesses invest huge sums into technology infrastructure to engage with the 25 million additional visitors the event is predicted to bring.

James Swallow is Commercial Director of PRO Partner Group and specialises in the formation of companies in the UAE, including regulations and government liaison matters. For further information please contact James on james@propartnergroup.com or call a member of the team on:

+971 (0)4 456 1761 (Dubai)
+971 (0)2 448 5120 (Abu Dhabi)
www.propartnergroup.com