The Middle East is becoming one of the fastest-growing economies for startups – with the UAE and Saudi Arabia leading the charge.
Both countries have spent years investing in their infrastructure and implementing policies to attract investors and entrepreneurs. If you are thinking about setting up shop in one of these economies you might be wondering: Which one?
To work it out, it’s worth having a look at them side by side.
How Easy Is It To Set Up A Business in UAE vs. Saudi Arabia?
Before deciding where to set up a business, it’s worth looking into exactly what you need to do.
Here’s a comparison of both:
UAE: The UAE has a number of options for people looking to establish businesses there. Entrepreneurs, if they have the capital, could opt for their Golden Visa, which requires investing in the country. Alternatively, they do have visas for business people, provided the idea will positively contribute to the economy.
Saudi Arabia: Saudi’s recent Vision 2030 commitment includes making the economy more appealing for foreign entrepreneurs and investors. Whilst setting up a business in Saudi Arabia is certainly possible, at the moment it’s not as easy as the UAE.
Taxes in UAE vs. Saudi Arabia
Taxes can have a huge impact on your bottom line.
UAE: The UAE is one of the most tax-friendly countries in the world, with no personal income tax and 9% corporate tax on business with profits higher than AED 375,000. Whilst 9% is higher than it was, it’s still one of the lowest of the Gulf Countries.
Saudi Arabia: Corporate tax is set at 20%, which is much higher than the UAE. Companies also have to pay a Zakat (religious tax) at 2.5% of their net worth. Like in the UAE, there is no personal income tax.
Domestic Markets: Which Is Better?
If your business is planning to operate from one of these countries, but serve markets internationally, then this might not be a consideration. However, if you plan to trade within the country, listen up:
UAE: With a smaller population of around 9.5 million, the UAE is a hub for international trade. It’s a great market for any business looking to trade globally. Trading locally however might not provide as much opportunity as elsewhere.
Saudi Arabia: With a population of over 36 million, over 3x more than that UAE, Saudi Arabia has a much bigger domestic trade appeal. As the population continues to modernise in Saudi, there will be more demand for tech, construction and other elements, making it an exciting opportunity for many businesses.
Cost Of Living: UAE vs. Saudi Arabia
The cost of living doesn’t just affect your quality of life, but also has an impact on how much you will need to pay employees.
UAE: The UAE is known for being one of the most expensive countries in the Gulf, particularly in Dubai and Abu Dhabi. According to Property Finder, for a one-bedroom apartment, you can expect to pay around AED 5,365 per month (£1150). This not only applies to homes, but rented office space too. Whilst the quality of living is definitely high, it’s something you pay for.
Saudi Arabia: Saudi has lower costs for rent and office spaces, and quite a bit more variation in choice. Especially in cities outside of Riyadh, this can be a much more cost effective option.
Cultural Differences
Both countries have very different cultures to the UK, and it’s important to bare this in mind before moving. Whilst they are both Muslim countries, they do vary in levels of observance.
UAE: Known for being more liberal and business-friendly, it’s a good mix between tradition and progression.
Saudi Arabia: Home to the holiest Islamic site in the world, Saudi Arabia is definitely more conservative. Whilst they are slightly reforming in some areas, there are still a lot of laws that residents will have to follow, in accordance with Sharia law.
Geographic Location
Whilst both countries are positioned very near each other, there are some differences:
UAE: The UAE has become a big trade nation, with ports to service imports and exports. The UAE’s national airline is Emirates, which connects directly to countries across Europe, Asia and the Americas.
Saudi Arabia: Still growing but not yet as much of an established global hub, Saudi is investing a lot of money into its trade – meaning it could be a good one to tap into early.
The Final Verdict: UAE vs. Saudi Arabia
When it comes to the right decision, the truth is – it’s different for everyone! For some, Saudi’s developing economy and big population present tons of opportunities that will grow in the coming years.
For others, the UAE’s established business environment and its more liberal culture might be a better fit.
Either way, the right choice depends on what you’re looking for from a location to start your business – and both options certainly have their benefits!
