Cost of Doing Business In The Middle East
So, you’re considering starting a business in Qatar or the UAE? And now, you’re looking to find answers to what is usually the most important question: how much will it cost to get started?
Let us take you through the cost of doing business in Qatar and the UAE.
What is the cost of starting a business in the Middle East?
It’s easy to see why foreign investors want to set up shop in Qatar. Its economy has seen considerable growth over recent years, as has its population. And with its substantial oil and gas reserves, Qatar now enjoys the top spot, as the wealthiest country in the world per capita.
On top of that, Qatar has an excellent infrastructure system, a sophisticated banking environment, and policies that encourage foreign investment and business start-ups. With the right skills, contacts, and know-how, starting a business in Qatar can be extremely profitable.
While the situation may be slightly different in the UAE, where different rules and restrictions apply, there is still plenty of potential for success.
One of the questions we are asked most often is, what is the cost of starting a business in the Middle East? While this is a perfectly understandable query, it’s worthwhile remembering that with each and every company setup there are different circumstances, and so, different costs.
If you want to find out more about the kind of costs you could expect when starting a business in Qatar or the UAE, it’s best to contact us, so we can provide you with the most appropriate information for your situation.
But, if you’re looking for a rough idea of what you can expect to cover, let’s get into it.
What initial costs should you take into account?
When it comes to initial costs for company setup in Qatar, the cost will vary according to the type of structure you choose for your business. That could be a Branch office, a Representative Trade Office or most commonly, a Limited Liability Company (LLC).
While 100% foreign ownership is permitted within some sectors, such as agriculture, manufacturing, health, education and tourism, these business setups need to be approved by the Ministry of Economy & Commerce.
In most cases, foreign investors choosing to set up an LLC will require a Qatari partner. The foreign investor may own up to 49% of the company, with at least 51% being Qatar-owned. However, it should be noted that the percentage owned by the Qatari partner need not reflect its shareholdings.
Now, if you choose to set up an LLC, there are various costs that you should factor into your business plan. There are management service fees, government fees, legal fees and auditor fees. There is also share capital to consider.
Previously, the Commercial Companies Law stated that the minimum share capital of an LLC was QAR 200,000. The Ministry of Economy and Commerce could also request a larger sum if it decided that sum was insufficient due to the activities to be undertaken by the company.
However, a new Commercial Companies Law came into effect in August 2015 which removed the requirement that a Qatar LLC had to have a minimum paid-up share capital of QAR 200,000 on incorporation. Now, no minimum capital is specified.
Nevertheless, the share capital sum should be deposited in a Qatari bank account before the Commercial Registration Certificate is issued. After the deposit has been made, the bank issues a confirmation letter. Once the company has been incorporated, the amount can be withdrawn.
In any case, successful company setup is no simple task, no matter where you are in the world. If you want to succeed in Qatar, and ensure that you are abiding by the correct rules and regulations, you’ll need to employ the right advice from the outset.
What fees can you expect to pay?
On to the fees. While not comprehensive, here are some of the fees you can expect to pay when starting a business in Qatar.
Auditor Fees: As a legal requirement, setting up a business in Qatar means selecting an auditor. The business must employ the services of an external auditing company, registered in the state of Qatar. That, of course, means auditor fees. To find out more about selecting an auditor, read our Requirements for Auditors in Qatar blog post.
Legal Fees: Setting up a company correctly means staying on the right side of the law, this means employing the services of two lawyers both in Qatar and in your home country. But, it should provide you peace of mind that your new business abides by the law, while preventing potential legal hassles later down the line.
Government Fees: When setting up business in Qatar, it can feel like endless amounts of paperwork needs to be filled out and stamped by the correct government department. Often, that paperwork comes with fees. Expect to cover the costs for the initial license, additional approvals, attestation costs, translation costs, courier costs and more.
Visa Fees: If you choose to work and live in Qatar permanently, you must obtain a work visa and Residency Permit (also known as a Qatar ID or QID). If you are bringing your family with you, they will also require residency permits. If you choose to employ foreign workers, again, they will need the correct visa. To apply for each type of visa, you can expect to pay a fee.
Management Service Fees: Part of our job as your partner is to ensure your business has all the correct documentation completed and filed with the correct department, whether that’s managing ongoing licence renewals or obtaining relevant visas. For our role in this, there are management service fees.
But, no matter which path you take, whether that’s with us or with an individual sponsor, these costs are unavoidable. So, with that in mind, it’s best to choose a reliable partner that will give you value for money, that ensures your business is set up correctly.
As you progress through the steps of starting a business in Qatar , various pieces of information will need to be provided, along with the correct documentation and fees.
Before starting, you will need to carry out a name search to ensure the name for your new business is unique and is not already registered as a trademark at the Ministry of Economy & Commerce.
You will also have to obtain approval for the Articles of Association, you will require a commercial registration, you will need to register for membership at the Qatar Chamber of Commerce and Industry, and you will need to apply for a Trade Licence.
Each of these tasks requires a fee, but the cost varies according to the business and its expected capital and activity.
What other costs may need to be covered?
Starting a business means thinking about all eventualities – and all costs that may need to be covered. In Qatar, one thing you will need to think about is office space.
According to Qatari law, all companies must have a minimum 12-month lease on office space in order to obtain their Trade Licence. The requirements regarding the size and specifications of the office space required will differ depending on the approved activities of the company. But, without proof that these requirements have been met, no Trade Licence will be issued.
Due to the high price of office space in Doha, this can be one of the largest costs for companies looking to set up in Qatar.
It’s also worth bearing in mind that foreigners cannot own land in Qatar. Foreign firms can, however, rent land on a long-term basis, with land leases extending up to 50 years in some cases.
As for any other costs your business may face, this will usually depend on the specific requirements that relate to your company and the activities it undertakes. This is something we can walk you through, so you can make the correct calculations for your budget.
What overall cost should you budget for?
If you’re looking for a quick answer – even if it’s just a “ball park” figure – on how much you can expect to pay to start a business in Qatar, we’re afraid you won’t find one simply searching through local websites or asking your personal network.
Each business setup has its own unique costs, just as each industry has its own unique requirements. For example, if you were to set up an advertising business, the costs would be substantially less than if you were to set up an engineering business.
Your company is as unique as the set of circumstances in which you set up for business. Which means, the costs are similarly unique.
Cost Comparison: Qatar vs. UAE
If you’re weighing up the pros and cons of starting a business in either Qatar or the UAE, the cost of that setup will probably play a big factor. Or perhaps you have already set up a business in Qatar and are now looking to expand to the UAE? Again, the cost of setup is important.
To make the right choice, you need to be informed. You need to find out more about the cost of starting a business in Qatar, and compare it to the cost of starting a business in the UAE.
You need to think about which option is more cost-effective, while also taking into account the opportunity to succeed and make a profit in each location.
For example, while we may know that office space in Doha is costly, and that office space in the UAE is cheaper, you need to consider the fact that other aspects of business in the UAE may be more expensive, such as government fees.
The overall cost relies on so many variables, which differ according to your own individual situation. There is no right or wrong answer overall, it all comes down to working out what’s right for your business. Luckily though, it’s in this area, that Fusion Middle East excels.
To find out more about the costs you may face when setting up your business in Qatar or the UAE, contact us today, for a free, no obligation consultation. We’re here to help you!