If you’re planning on starting a business in a foreign country, choosing the right location will be crucial for its success. Both Turkey and the United Arab Emirates (UAE) have emerged as popular options in this regard. This is due to the fact that both countries have growing economies and successful business environments.
When it comes down to choosing between these two destinations, there are a couple of factors that you will need to take into consideration. Things such as language, their currency used and taxes can have a significant impact on your business.
Are Turkey And The UAE Conducive To Startups?
Both countries are an attractive choice for businesses, especially startups. Turkey is known for its tech-savvy population and has seen steady growth in its startup economy in recent years. The technology and e-commerce sectors, along with renewable energy, have seen the most startup success. Its complex regulations and currency unpredictability are the two main challenges that you may encounter when setting up your business here.
The UAE is one of the leading destinations for startups, and offer access to venture capital with tax exemptions to help businesses to get on their feet. Widely known for its innovation, the country is already advanced in the tech, fintech and sustainability sectors.
Language Spoken
Turkey: The official language of Turkey is Turkish. The majority of business transactions and government interactions will be in Turkish. In some areas such as Istanbul, English is becoming more commonly spoken but being able to speak their native language is highly beneficial.
UAE: Arabic is the official language of the UAE, but English has been widely adopted in most business cases. You will find that even the road signs and restaurant menus are all translated into English, and the same goes for any business documentation so this is helpful for international entrepreneurs.
Taxes
Turkey: The current corporate income tax is 20% while Value Added Tax (VAT) can range between 1 – 8%. This will depend on which products or services you are offering. Some sectors, such as tech and manufacturing, have tax incentives to encourage growth in those industries.
UAE: The 9% corporate tax rate was introduced in 2023 which is considerably lower compared to other countries. This has also played a role in its startup growth, and is only applicable to businesses whose annual profits exceed AED 375,000. Their VAT is currently at 5%, which is also one of the lowest in the world.
The Cost Of Living
Turkey: When compared to the UAE, Turkey’s cost of living is relatively low. Foreigners are usually drawn to cities such as Istanbul and Ankara which are more affordable when it comes to housing, public transport and day-to-day expenses. It comes down to which region you choose, and coastal areas tend to be more budget-friendly.
UAE: The UAE is known for its high living expenses, especially in emirates like Dubai and Abu Dhabi. Schooling, healthcare and rent can be particularly costly. If you choose to live in some of the other regions, these costs may come down slightly.
Currency
Turkey: The official currency used is the Turkish Lira (TRY). The exchange rate is known to fluctuate quite often, which can affect your business costs if your products are imported.
UAE: The Dirham (AED) is the official currency of the UAE, and is relatively stable. This predictability is a drawcard for companies who plan to operate on a global scale. It has become a major advantage over the years, with more entrepreneurs flocking to the UAE.
The Process Of Setting Up A Business
The procedure for starting your business is relatively simple in both Turkey and the UAE, although the UAE’s is slightly smoother.
Turkey: Firstly, you will need to register your business with the Turkish Trade Registry Office to be able to receive your tax number and open your Turkish bank accounts. In free zones, 100% foreign ownership is allowed. However, if you fall outside of these zones, it is mandatory for foreign investors to parter with local ones. The process will typically take between 7-10 days depending on your location and industry.
UAE: The timeframe for setting up your business here is 3-10 days, depending on which emirate you are in and your industry. If you are located in a free zone, you are allowed to have 100% foreign ownership. You can also enjoy the exemption of custom duties if you are importing products.
Where Should You Set Up Your Business?
Both countries offer unique advantages for entrepreneurs and starting their businesses. However, if you plan on targeting European and Middle Eastern markets, Turkey would be better-suited to your startup. It is also more cost-effective to live and run your business from there, and the rich cultural heritage is an added benefit.
On the other hand, the UAE offers a tax-friendly business environment with connections to a global market. This will have to be weighed up against the costly price of living.
When it comes to choosing between the two, you should consider who and where your target market is, along with your desired industry and make your decision from there.
