25 Jun 2018
If the world is getting smaller and smaller thanks to fast communications, the territory of EMEA (Europe, Middle East, and Africa) is still a pretty big place! There are many new opportunities in this region just waiting for a savvy entrepreneur setting up a second career with a sales company in this region. But where are the best places?
Setting up a new company is fairly easy in most countries, but there are many factors you will want to consider before deciding on the right place to hang your shingle. Choosing the right market is all about knowing who your customers will be, where they live, how they prefer to do business, and how easy is it to get yourself up and running. On top of that, you need to think about things like the taxes you will be paying, regulations affecting your industry, licenses you might need to apply for, and whether or not you are even allowed to own a company. Some places, like the Philippines just for example, only allow foreigners to hold 40% of a company!
In order to avoid some of these surprises, we have had a closer look at the EMEA in terms where it easiest and most efficient to open your sales company. Ultimately, your choice will not be just a matter of looking at the available facts. You will need to know if you are willing (for instance) to trade lower taxes for more costly building permits. Do you need to be near a port? Are you overseeing the whole EMEA from your new office or just a part of it? Many companies choose Dubai or Abu Dhabi as an EMEA headquarters due to tax benefits – but it is also the most expensive in terms of everyday life. What tradeoffs would you be willing to make?
You might be surprised by the results!
The top three European countries in terms of doing business, according to World Bank data for 2018, are Denmark, the United Kingdom, and Norway. These countries are ranked among the highest in the world for ease of doing business, but there are other factors to consider as well.
Denmark is ranked third in the world for ease of doing business, but in terms of starting a business, it drops to 34th. Denmark has easy international connections to the rest of Europe and the world through Copenhagen’s Kastrup airport. Infrastructure is reliable and proven, and the communications networks are among the highest performing in the world. From the perspective of reaching your customers, physically or electronically, Denmark is a great place to set up shop.
This is very easy if you are an EU or Nordic Alliance citizen, but if not then you will need to apply for a work and residence permit. This is set up to discourage entrepreneurs from the US, Asia, and elsewhere outside Europe and permits are not easily obtained.
It is also important to note that the cost of living in Denmark is high, even by European standards. Copenhagen is one of the most expensive cities in the world and was ranked 24th out of 209 cities in the Mercer 2016 Cost of Living Survey.
The United Kingdom
The UK is an international hub of business and commerce, attracting companies from all over the world to open. While ranked 7th by the World Bank’s ease of doing business in the world, a private limited company (PLC) can be opened online and in only a few days. As an English-speaking country (or rather as THE English-speaking country!), it makes transactions all the easier as English is lingua franca in business today.
The country is connected by direct flights to almost any destination in the world, and the infrastructure in the UK is the envy of many countries. Moreover, a London address adds an element of prestige to your new company. You can set a business as a foreign national with little or no trouble, even without having a residence or working visa (although as an employee of your own company you will need them). Certain major banks, such as Barclay’s, will open accounts for you as well. The upsides of doing business in the UK are very attractive indeed!
On the downside, however, for rent, food, and daily living, the UK and especially London is extremely expensive. If you decide to set up a new EMEA sales company in London, therefore, you should know in advance that it carries a heavy cost. Whether or not it offsets the prestige and halo effect of London's name-value will be up to you to decide!
Similar to Denmark, Norway is a very easy place to set up shop. It is right after the UK on the doing business index, at number 8. Norway's capital Oslo is quite well connected for international travel, but you may find yourself changing planes from time to time. Many people speak English as a second language and you will have no trouble making sure your connection to the Internet and online communications is 24/7.
Corporate tax in Norway is 21% (compared to Denmark’s 22% and the UK’s mere 19%) making it about average for Europe, but your total tax and contributions in Norway can reach as much as 38% of your profit – and that is a big bite! Getting work permits in Norway is somewhat easier for non-Europeans than elsewhere. Officially, expats applying for a work permit must already have found a job, and that can include your new company if you can show that it is operating.
With a very high standard of living, daily life in Norway is also rather expensive. Renting and buying property in Norway is very expensive, and this can eat up a huge part of your budget if the company cannot cover housing costs.
OUR TAKE: While these three countries score high on the ease of doing business, you might want to look further down the list to find places that may be more affordable, somewhat less prestigious, but quite feasible in terms of doing business. Such places could include Serbia, Hungary (whose company tax is only 9%!), or Romania.
In the end, if you have your heart set on Europe, you must remember that the best places are also in great demand, and you may have to reconsider your options.
The Middle East, and especially the Gulf States, is developing rapidly, making this region a hotbed for potential new customers and clients. Many countries are spending a lot of money to attract investors and businesses to set up in the region. If you are deciding what is the best place to set up a sales business for a second career in IT sales, there is a lot to be said for this region. But there are always things to look out for.
Many countries in the Middle East make it difficult for women, for example, to set up a business, notably countries like Saudi Arabia and the UAE. The Middle East is also located on the eastern side of the EMEA, making doing business with Europe and Africa just a little further afield.
United Arab Emirates (UAE)
The UAE is made up of seven sovereign states: Abu Dhabi (the capital), Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain. Of these, both Dubai and Abu Dhabi are working hard to make themselves highly attractive as business hubs for international corporations and companies. According to data from the World Bank, the UAE ranks 21st in global rankings for ease of doing business and first in the region of the Middle East and North Africa. Because the UAE wants to make things easy for big companies, starting a business, getting building permits, and getting access to power and utilities is very easy.
The UAE, however, favors bigger companies, granting more concessions and tax breaks depending on the level of investment you bring with you. A smaller business such as a sales company dealing with EMEA may find the costs prohibitive in the region. However, recent trends show a slowdown in UAE spending in this area, linked to fluctuations in the oil market, meaning that it may start becoming slightly less expensive to set up there. The Emirates are in a good position geographically if your sales will be mostly in the Middle East and Africa. But if you have the idea of starting your business here, the cost of living and traveling are a major factor to take into account.
The cradle of civilization, Egypt has had mixed fortunes over the years. As a place to set up a sales organization, however, it is more liberal than many of its Arab neighbors. By size, Cairo is currently the largest city in Egypt, Africa, and the whole Arab world and its cultural significance is immeasurable to both past and contemporary civilization. It is also the economic center of Egypt. Because of its economic significance and cultural renown, Cairo is one of the best places to do business in the Middle East.
There are, however, a few downsides to opening an enterprise in Cairo. The most apparent one is, as with the UAE and Qatar, non-nationals cannot hold majority ownership of a company in Egypt and foreign ownership can only reach 49%. This means that your sales company will never be more than a kind of base of operations or rep office. But for doing business with Africa and the Middle East, it is a more affordable country than the Gulf States and more developed than most African nations.
Jordan is not a place that attracts a lot of headlines. In the Middle East, however, this is a distinct advantage! Setting up in the Jordanian capital, Amman, has a lot of benefits for doing business in the region. The government is fairly stable, and the tax regime is very reasonable, with a 20% corporate tax rate and no capital gains taxes.
From Amman, moreover, you have easy access to Iraq, Israel, Lebanon, Palestine, Saudi Arabia, and Syria and (mostly) friendly relations with Jordan make travel that much easier. Jordan also is fast becoming a tech hub in the Middle East. Since the country is not an oil producer, they are trying to attract more IT companies and therefore setting up a sales business here could be very advantageous – locally as well as internationally.
Finally, Jordan allows you to set up an offshore company (or a non-operating foreign company). This form of business allows you to do business with foreign companies while based in Jordan and give many tax incentives for it. As a new sales business, this could be very useful if most of your business is conducted in the EMEA region.
OUR TAKE: Setting up a sales business in the Middle East is a mixed bag. If your customers are in this region, it makes perfect sense to think about a prestigious office in Dubai or a more modest base of operations in Amman or Cairo.
Things to take into consideration include issues like women employees, the need for regional presence, and the budget you can spend on setting up. As opposed to Europe, there are fewer barriers to entry – the region is an expat haven! – but some of the laws and regulations on ownership might be problematic.
Long called the Dark Continent because of its inaccessibility, Africa today is one of the last frontiers of business development. The continent is replete with many natural resources and untapped potential. But if you are considering setting up your new sales company anywhere in Africa, there are many provisos and caveats to consider. Many African nations have poor infrastructure, limited access to communications, and lack direct routes around the continent and internationally.
And yet Africa is developing rapidly in places, catching up with the rest of the world in a hurry and skipping many steps along the way. A sales business could do very well if it is situated in an African country that has proper infrastructure and direct travel routes established. The continent is very diverse, from the much more cosmopolitan Maghreb in the north to the coastal countries in the east and west, to the trade hub of the southern tip.
Morocco conjures up images of Casablanca and Rick’s Café to many foreigners unfamiliar with the country, but Morocco is a country that is placing a lot of emphasis on foreign trade to boost their economy and, as a result, makes it a little easier for you to set up a sales company there to deal with clients in both Europe to the north and Africa to the south.
Morocco has taken advantage of its proximity to Europe and their reasonably low labor costs to build a diverse, open market economy. Even so, the country suffers from high unemployment, poverty, and illiteracy, particularly in rural areas. With their rankings of 17th in Market Performance and 21st in Monetary Freedom, Morocco is Africa’s 3rd best country for business according to World Bank data.
The standard form of a business is a limited liability company, or a Société à Responsabilité Limitée (SARL). Morocco has worked hard to develop its economy over the last few years. The country is very open to the international market and is a major trade partner for France and Spain. Morocco’s GDP steadily has risen by almost 4.5% every year since 2000, a better result than most European countries.
Owing to its history, South Africa is one of the most “Westernized” African countries and has a predictable economy, good business practices, and has a long tradition of small business. English and Afrikaans are official languages and, as a trade route, it is still very important to shipping companies.
Setting up a sales business in South Africa is straightforward and easily done. There are a number of restrictions, however, related to the export of capital, meaning that the banking system may be somewhat hampering with protectionist policies. Also, while doing business in South Africa itself if easy, it is geographically very far from Europe and the Middle East (a 12-hour flight to London from Johannesburg). This means that if you decide to use South Africa as a base, you will be remote from the rest of the EMEA.
By contrast with other nations in Africa, South Africa, is an easier place to conduct business. Yet corruption, as well as health and safety issues, must still be dealt with.
The Democratic Republic of Congo, for example, has rich natural resources but lacked the technical know-how of South Africa to maximize opportunities.
The island of Mauritius, off the coast of East Africa, is ranked 25th in the overall list for ease of doing business. Mauritius gets such a high ranking due to many factors: the country has transformed from a low-income agricultural-based economy into a diversified upper-middle-income economy. The financial, industrial and tourism sectors are growing and this is supported by sound economic policies and prudent banking practices. There are many reasons to say that Mauritius is the best country for business in Africa.
The World Bank’s filtered index for doing business shows Mauritius to be the number one choice for ease of business in Africa.
Like South Africa, however, the island is remote. It is not easily accessed from Europe, the Middle East, and even other parts of Africa. Any business set up in Mauritius would have to be largely e-commerce or online based, but if it were it could be a great location for a new company.
Moreover, local regulations are in the process of being developed and therefore the means of setting up a new company can be quite smooth for foreign nationals. Tax rates are very competitive in Mauritius with corporate income tax at a flat rate of 15 %. The tax system, however, is a hard thing to navigate: there are seven payments to be made each year, which take up an average of 161 company hours to file!
OUR TAKE: There is a great deal of risk involved in setting up a sales company in Africa, even in the top three countries we have selected here. The most pressing of all these risks is your distance from the rest of the market. As an entrepreneur who wants to start a sale company in EMEA, one should really only choose Africa if most of your customers are going to be there.
The risk/reward ratio is steep. Due to generally less stable economic and political conditions, a new business could be in a “boom or bust” situation. On the other hand, when you look at the trends in business, Africa could become a robust consumer area in short order. So it will all depend on your taste for adventure!
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