Choosing a region, registering a company and opening an account — how an entrepreneur transported a business to Dubai

Sergey Bazhenov, CEO of Cleverence, shared his experience of opening a legal entity in Dubai and talked about how to be in the first days of moving, how to complete the necessary documents, as well as about the peculiarities of life in the UAE.

I arrived in the Middle East at the beginning of March 2022 to open a legal entity for my company. I have never been to Dubai or the Middle East before. "Well, is it hot there?" — every caller asked me. No, what are you, it's hot on the phone, it turns off, but I have no time.

Select region

The Middle East in English is called the Middle East ("Middle East"), because this region is located in the middle of the "Eastern" parts of the hemisphere: with Europe, Africa and Asia — the opposite of "Midwest" on the reverse side of the planet with two Americas.

The company, which I founded in 2004 with partners, makes software products for business automation using mobile devices — mainly for warehouse and store employees, so that they do not confuse goods and work with barcodes.

Middle East — the intersection of trade routes, and Dubai — the main port of the region, where there are a lot of goods and cargo that need to be scanned by barcodes, — I thought and flew to Dubai.

Not really. I have always been advised to go to countries like Turkey, Egypt and South Africa by experts in my Auto ID industry based on population, GDP per capita and level of automation.

I was wondering how to spend less money until traction is visible. So I flew to Egypt and spent a whole month there, trying to understand how much expansion would cost me, why Egypt was predicted to grow rapidly, and what was happening here. But this is a separate issue.

In short, opening a company in Egypt or Turkey and accepting revenue in dollars for it turned out to be not the best idea. And in Dubai, as it turned out, all the countries of the region (except Turkey) are purchased. And in Dubai, you "will open a company within six days, and a bank account within a month", yeah.

Dubai

The only thing I knew about Dubai was that Dzhigan, Will Smith and Khabib were vacationing there, together and separately. A great place to climb the Burj Khalifa, skydive into the bay or fly the eFoil. I visited Dubai — put on the avatar, something like this.

But will business take off here? My business — this is a hard B2B about the efficiency of trade and warehouse, not a fashionable way to burn money. I had to check it out. So I just picked up and went.

I didn’t have foreign bank cards, Mastercard and Visa didn’t work anymore, so I bought tickets from Egypt to Dubai and a hotel for accommodation through a Russian service. It was necessary to choose and pay for the ticket and the hotel in advance and in full, so as not to spend later the invaluable foreign currency, which we managed to exchange back in Moscow at the airport, and then finish it in Egypt before March 10.

I built a route to Dubai from Cairo via Jeddah with a late evening arrival. On the spot, I already had a downloaded Uber, through which a super-expensive taxi is easily called, which is then hardly found among 100,500 lanes of underground parking.

Then I was told that in Dubai I need to install Careem, a budget taxi from a Pakistani startup, and the trip will cost half as much.

I rented a hotel in a remote area of the city, opposite the airport. Because 150 AED per day for 4 stars with breakfast paid in rubles through Ostrovok and an additional resort fee of AED 10 per day, which had to be paid in cash. By Moscow standards, an hour's drive is very close, but the taxi driver was very surprised why I rented a hotel so far from the "center".

By the way, "center" Dubai, which is issued by the search "Dubai City Center", which is signed on the map as "Dubai" and which is near the airport — this is not at all the center in which you would like to be. In fact, there is no one center in Dubai, it all depends on your preferences.

If you multiply Moscow City twice in depth and make both sides of Leninsky Prospekt (14 km long) and then do the same with Dmitrovskoye Highway to Khimki (another 15.5 km), then this is what you get Dubai. It's hard to believe until you see it for yourself. There are even birch trees in Dubai, only they stand in tubs in the lobby of high-rise buildings, plastic.

With so many skyscrapers, it's no surprise that Dubai has a reputation for being shockingly expensive. Metro without drivers. Every fifth car — ostentatious. All taxis — Mercedez, Lexus and other Toyota.

Want to see luxury — come to the hotel Adress Beach Resort on the Marina. Do you want to see whose hands all this is built, fed and cleaned — go to Al Quoz.

All this is hard to see from the window of the car, but it is perfectly visible from the car of the red subway line when it rides at a height of 10-15 meters. It looks very strange when the skyscrapers are abruptly replaced by views of Kapotnya and back. From the window of the apartment and up to the sea you can see a couple of kilometers of selected sand-colored warehouses. Ochakovo and Kapotnya — our most delicious clients.

About the high cost. If you count at the rate of 140 rubles. per dollar, at which I changed in March at Vnukovo, or at the rate of 250 rubles. for a dollar in a local exchange office, it turns out really a little expensive. And if you take at the rate of 60 rubles. per dollar for the summer of 2022, it comes out no more expensive than Moscow. There are places where you can live like in Egypt on $500 a month.

Separate topic — rental housing. Housing is mostly rented immediately for a year, with large amounts paid in advance.

It will be especially expensive if scammers from the "police" call you and you give them a one-time password from an SMS. One-time passwords (OTP) actually come from police websites in several emirates.

My day was organized like this:

• wake up at seven,
• leaving at eight,
• meeting everyone you can meet before 7pm
• back to 20,
• mail parsing, video calls,
• sleep at 22 o'clock.

At eight it already gets hot, by 13 in the open sun the phone, flooded with pò volume from your cheek, stops working. At about four o'clock it becomes like at eight, and at 19 it is already cold (we are talking about March).

It's only hot outside, but it's cold in taxis, subways, buildings and long sleeves of air-conditioned passages. I dressed like a local, in trousers and a shirt, plus I carried a hoodie with me.

Dubai's economy is built on port logistics, real estate sales, retail space leasing and trading with various Trade Licenses.

Oil is needed to operate the city's infrastructure and fuel the ships and planes that fuel global trade, transporting goods and people between China and the rest of the world through the ports of Dubai (it is rumored that oil in Dubai has long since run out and remains only in Abu Dhabi ).

Thus, money, goods and people move through Dubai in huge quantities, and some of them settle in this city at the crossroads of trade routes.

There is also production in Dubai: from cement and perfumery to packing oil and cereals in retail packaging. Right now I have tea "made in Dubai" on the table. — these are also our potential clients.

Company registration

On my first trip, I wanted to open a legal entity and take a closer look at the emirate itself. You can often hear that there are no taxes in the UAE, but this is not true.

For all businesses, there is a fixed payment system at the beginning of the year, similar to a patent in the Russian Federation, called Trade License. It must be purchased and renewed. With an increase in income, you will have to pay 5% VAT, and from June 2023 also a corporate tax of 9% on accounting net income from activities within the UAE.

Options for opening a legal entity in Dubai (if you do not take into account freelancing) are as follows:

• "Naked" legal entity in the so-called free zone — about 10 thousand AED, the cheapest option.

It allows you to trade anything with any country and conduct almost any business that is not related to the sale of physical goods within Dubai itself, but then you cannot get an Emirates ID and legalize yourself in Dubai.

• Legal entity in the free zone with one or more "visas"; — same but with Emirates ID for director and/or employees — about 20 thousand AED.
• Legal entity on Mainland — from 320 thousand AED, including "capital", which will need to be deposited into the account for a short time.

For offline business with physical goods inside Dubai, outlets and banking. There used to be a requirement that 51% must belong to the "local", but this is no longer the case.

After the well-known events, "naked" it was very difficult for a legal entity in the free zone with a Russian passport to open an account in the bank — so I chose a legal entity with one visa.

It was possible, like Tinkov, to fill out all the forms on the Internet (which no sane lawyer would approve of) — it's bold and budget friendly. But I went through the search for professionals and never regretted it.

We managed to find the most budgetary and good opening option through an old friend from India.

In "kit" were included:

• all papers
• visa
• passing mandatory medical tests,
• medical insurance,
• a chauffeur from the Philippines, who then not only drove to all instances, but also guided them by the hand.

In terms of terms, it will take from two weeks to a month, depending on the queue for biometrics. For example, I ended up on Eid al-Fitr, because of which the preparation of documents took three weeks instead of one, but the queue for my biometrics was one day, so within a month I became the proud owner of MOA & AOA, COF, ULA and Emirates ID.

Opening an account

Easier said than done. We are talking about an account for a company (business account), and not for an individual. It must be remembered that this happened in March 2022. It only got worse in the summer, what will happen next, I don’t know.

In the movie "Cops in Deep Reserve" there is a wonderful scene at the school with a lecture by the police about different dangers. “A couple of tips to keep you guys out of jail. The first advice — try your best not to be born black or Hispanic, — about the same is now being advised to companies from Russia.

There are rumors that companies on the mainland have no problems for $100,000, for $5 million they will give you a UAE passport, and for $10 million they will turn a blind eye to the sanctions list. Every second Hindu offers you to open any account for only 5 thousand US dollars or buy a house in Dubai. But if you decide to open a company account in an official way, without spending a lot of money, only trouble awaits you for the summer of 2022.

And what are these troubles?… Are they waiting for me? These troubles? Then I went!

I walked around 11 banks with legs to find one that agreed to accept documents. Even the Pakistani UBL bank refused me. Yes, lawyers helped me. Yes, I have contacts of managers. No, banks don't open, everything stops at the "KYC department".

To open an account, you need at least:

1. all papers for the company (originals);
2. a six-month statement from a personal and business account in a Russian non-sanctioned bank, in English or a printout of a Google translation of the document;
3. statement from a local bank (I opened a personal account in an online bank and gave a statement from it);
4. certificate of local salary issued by the free zone in which you opened a company;
5. receipt of payment for a Russian apartment;
6. local registration (ejari) and a receipt for payment of a local communal apartment;
7. Printing out a presentation about your company, what it does.

Very often, banks require Ejari: an officially registered real estate lease agreement. But if you do not already have an open personal account and a checkbook for it, you can rent a house and get Ejari only by paying one hundred percent of the annual rent, because when signing the contract you will need to write out and give to the owner all checks for paying rent for the year in advance, and you don't have checks because you don't have a checkbook, because nobody wants to open an account for you without Ejari already.

Rent year in Dubai — that's a lot of money. Therefore, you may have to first live not in Dubai, but in Ajman, where rent is an order of magnitude lower.

A few more tips:

• Try to have accounts in the Russian Federation with movements and statements, in non-sanctioned banks;
• Open a personal account in the UAE with a debit card and legitimate spending on it as soon as possible. It is best to replenish such a card with SWIFT transfers from your accounts;
• If there is no money to rent a house with Ejari in Dubai, choose Ajman;
• Don't be fooled by the "investment visa" when buying a property, then no one will open an account for you. Open a company through local lawyers and get yourself a work visa as an employee or General Manager.

Currently, I have a company account in AED in an online bank (without the ability to make international transfers through it) and an almost open normal account in an Islamic bank, about which I received SMS about opening and statements. I was already happy, but it turned out to be a mistake (just another person indicated my number or the clerk made a mistake in dialing).

A little more, and I will become the owner of a real business account, inshallah.

How's business?

Business slowly but surely acquires formal partners and potential customers. Still, summer — a period of calm in the UAE, everyone goes home to India, to Europe, to Russia, to celebrate.

I joined the IIDF GoGlobal acceleration, got a couple of very good tips, contractors, some contacts and a very good tuning fork that sets the pace.

We have launched lead generation on LinkedIn and other channels, gathering the audience in pixels, translating and making cases. There is an acute shortage of inexpensive specialists with C1-C2 English.

While you are doing paperwork and upholstering doorsteps, you have to travel a lot. It is as if I have returned 17 years ago and open the first account of the company in the Bank of Moscow, persuading the first buyer.

The white face on the avatar opens the doors of communication (but not to banks). Hello sir, thank you sir, very nice sir. Not very pleasant, but good for business.

Thanks to our Russian partner, a pilot use case in Saudi Arabia is ready for an unusual task of working with pilgrims. Found real companies with a resource that can make us software integration with international ERP/CRM/WMS.

At first, only paranoia drove me forward, that I had missed everything, I was two steps behind, drowning. Now I am driven forward by paranoia, that I am missing everything, lagging one step behind.

Recommendations if you are going to go to the Middle East

• Come and see for yourself.
• Prepare yourself that working with banks and partners will not be fast.
• Prepare as many legitimate documents (statements) from banks as possible for yourself and your other legal entities, including legalization in Dubai with work and Ejari, in order to successfully open a bank account.
• Make as much contact as possible with locals (they are open and willing to help) and try to get them to give you contacts and recommendations.
• Feel free to call, whatsapp and meet in person — this will save weeks and months of waiting.