What to Consider When Setting Up a Business Overseas

“Business-friendly” is a term you lock into when considering a location for your company. This typically refers to when you intend to move your business to another country or region.

Maybe you’re considering a business setup in the UAE or somewhere in Asia. You might relocate or expand your business to these spots for cheaper operating costs, to tap more lucrative markets, or to optimize your supply chain.

No matter the reasons behind your move, take time to assess the location before making an investment decision.

Business-Friendly Nations

The World Bank evaluates the business-friendliness of a country by collecting information on the cost of doing business, the minimum capital required, the procedures involved, and the time it takes to set up a company. It would be prudent to use the same factors when creating a short list of locations.

To narrow down your options, consider the following countries deemed business-friendly.

UAE

Business setup Dubai or Abu Dhabi is becoming an attractive option for many companies. The region has, of late, become one of the fastest business destinations in the world.

Although some corporations now have a 9% tax obligation, the percentage is still one of the lowest business taxes in the world. The corporate tax applies to large multinational companies that meet specific criteria, and the taxable income is above AED 375,000.

The corporate tax applies to companies with a commercial license in the UAE, businesses in construction, development, real estate management, agency and brokerage activities, and free zone businesses. However, according to the government, corporate tax incentives will still be honored for free zone businesses that comply with all regulatory requirements and that do not conduct business in the UAE mainland.

The tax incentives, state-of-the-art infrastructure, 100% foreign ownership, market reach, and opportunities for international expansion make a persuasive case for setting up a business in the UAE.

Singapore

One of the wealthiest nations in the world, Singapore enables businesses to expand their reach through its trade agreements with other countries. It also has one of the more highly skilled workforces, making it easy to fill a capable organization.

Switzerland

According to a World Bank Group assessment, Switzerland scored a high 88 (out of 100) in starting a business. Its overall score for ease of doing business is 76.6, rating high scores on getting electricity, dealing with construction permits, and trading across borders, among other factors. The European country also offers favorable tax policies for businesses, with corporate tax rates currently between 11.9% and 21.0%. The wealthy nation also has one of the more highly skilled workforces globally.

Other countries that rank high in ease of doing business are New Zealand (which has the lowest number of procedures required, at one, and the shortest time to start a business, at 0.5 days), Germany (which has only three procedures to complete applications for electricity), and Canada (which enables the best trading across borders).

Factors to Consider in International Business Setup

Business expansion to other countries indicates that the company is thriving. But you want to ensure that you’re moving in the right direction, literally. Although one country may offer the shortest possible time for setting up a business, it may not have the right market for your company.

After short-listing potential locations for your business, consider the following factors.

Legal Structure

Can you open a local company to start a business or do you need to create an entirely new one?

Different countries will have limitations on the legal structure of foreign businesses. If you have not decided whether you’re going to set up a new branch of your international business or establish a local company with its own legal entity, you’ll want some flexibility.

Language and Culture

Language and cultural barriers can become a point of friction in business. You’ll want to evaluate your organization’s capabilities and your willingness to invest in translating products or services for local markets.

Knowledge and understanding of your host nation’s culture will also go a long way toward contributing to your company’s success.

Laws and Regulations

How will the country’s domestic laws on trade and investment, employment, and tax affect how you run your business? If you’re in a heavily regulated industry (e.g., financial services, healthcare, or oil and gas), have a legal consultation to gain a deeper understanding of the laws and regulations of the country.

You’ll also want to ensure that compliance requirements in the country are achievable and are not going to strain your company’s resources.

Cost and Time to Move

The time it takes to set up a business in a foreign country may take more than a few days. There are other tasks to complete before your big move, from market evaluation and research to property search and hiring.

The cost to move is also a significant consideration. What will business permits and construction (if applicable) cost? What about employee visas and relocation costs? It’s important to work out the numbers first before making that final decision.

Market Opportunities

Ease of doing business must also mean market opportunities. After all, why undertake the considerable effort of moving your business overseas if there is no market for your products or services?

If your intention behind the move is to enter a new market, you’ll want to evaluate the competition as well as the demand for what your company offers. If the market is saturated, perhaps another country might be a more suitable location

Finally, consider how the move might affect your current clients or customers.

What impact will this decision have on how you interact with them and serve their needs? Will it have little to no impact since a different team will handle the new overseas market? Will your suppliers and partners be affected as well through reduced orders or canceled contracts?

Moving your business or setting up a new business in a new country will be challenging. Ensure a smooth transition to secure a lucrative future for your growing business.