Guide on the cost of setting up a business in Dubai

The UAE is booming as a progressive corporate hub in the MENA region and globally. Opening a business in Dubai requires careful consideration of several factors, including the type of company and its operational model. One of the most important aspects to understand is the cost of setting up a business in Dubai, UAE.

Corporate registration cost varies depending on the business activity, legal structure, location, and some other matters. Having complete knowledge prior to your business setup is must, to avoid the pitfalls. One of the major considerations is the expenditure on launching your business in Dubai, UAE.

The city of Dubai is a dream place for expats who want to pursue their career and live better lives. Also, it is a great place for foreign investment where you have multiple business opportunities and flexible business laws which drive you to setup your business in UAE. If you are new here or if you have been living here for years, establishing your business here is quite a tough task for which there are whole lot of considerations.

Dubai offers several options for company formation, from mainland businesses to free zone entities. Each option comes with its own cost structure, ownership rules, and benefits. Setting up a company in a free zone allows full foreign ownership and tax advantages. Whereas, mainland companies provide greater access to the local market.

The cost of your business depends upon the area that you have chosen for your operational work i.e. Dubai mainland or Dubai free zone. Planning your business carefully and knowing the costs upfront can save time, reduce surprises, and ensure a smoother start for your Dubai venture. With the right strategy, your business can thrive in one of the world’s most dynamic commercial hubs.

In this article, we provide you breakup of costs which will give you broader idea for your own business setup. We are narrowing down list of things that you will have to incur your cost on. Do not worry, as we are discussing the expenses of the corporate setups in mainland, free zone and offshore jurisdictions.

Key takeaways of Dubai business ecosystem in the UAE

These are the notable insights of the promising business sector in Dubai, UAE.

• Every month, more than 8,000 new businesses open up in Dubai.
• In 2023, people in the UAE shopped online so much that it added up to AED 27.5 billion! And by 2028, it’s expected to grow even bigger, to more than AED 48.8 billion.
• Setting up a free zone business in Dubai can cost between AED 10,000 and AED 30,000,  it’s a popular choice for startups.
• Business visas for owners and employees cost around AED 3,500 to AED 7,000 each.
• You can now own 100% of your business in many sectors without needing a local sponsor, saving AED 10,000–20,000 each year.
• By 2026, Dubai’s startup market is expected to reach AED 13.5 billion, showing strong support for new businesses.
• Dubai is a desirable location for entrepreneurs due to its strategic positioning and government incentives.
• There are several business establishment choices available in Dubai, each with a different cost structure.
• The main costs are company registration fee, business license fee, visa fee, and office rent.
• Selection of the business setup can greatly impact the operating efficiency and profitability.
• The costs and specifications for mainland and free zone configurations vary.

Process of Dubai business registration with costing

This is the step-by-step procedure to register a business in Dubai.

• Select business activity
• Pick appropriate legal jurisdiction
• Choose company structure
• Obtain initial approval
• Determine business license
• Register company and trade name
• Submit application with documents
• Pay regulatory fee
• Secure UAE visas
• Rent or lease office space
• Get business license

Now, we briefly look upon the steps of the Dubai business setup, with a basic initial costing breakdown.

Select business activity

Specify the type of business you are running.

Pick appropriate legal jurisdiction

When starting a business in Dubai, you must pick the best place to set up. Dubai mainland and free zone are the best options for many new companies. Offshore is another option for the foreign entities, who do not need physical presence in the UAE.

Choose company structure

Sole proprietorship, LLC, branch, or representative office are the possibilities.

Obtain initial approval

Take consent with no objection certificate (NOC) from the free zone administration or Dubai’s Department of Economic Development (DED).

Determine business license

Finalize the license that is suitable for your business activity and arrange the requisite fee.

• Commercial License: AED 10,000 – AED 30,000 (depending on business activity and jurisdiction)
• Professional License: AED 7,000 – AED 15,000
• Industrial License: AED 20,000 – AED 40,000
• Freelancer Permit: AED 7,500 – AED 15,000

Register company and trade name

Decide on and register the name of your business and its trading name.

Submit application with documents

File the registration form with these necessary legal documents with the DED or the chosen free zone authority.

• Business plan (for certain activities)
• Copies of visa
• Passport copies of shareholders and directors
• Memorandum of Association (MOA)
• Lease agreement for office space
• Bank reference letter

Pay regulatory fee

Make payment to the DED or FZ authority for the following.

• Company name registration: AED 500 – AED 2,000
• Notarization and initial approval fee: AED 1,500 – AED 3,000
• MOA drafting and attestation: AED 1,000 – AED 3,000
• Government service fee: AED 3,000 – AED 5,000

Secure UAE visas

Another important part of starting a business in the UAE is getting visas and work permits. If you’re moving to the UAE, you need a visa for yourself, and maybe for your family or employees too. You can choose the type of visa you need depending on who is coming with you or working in your company. Acquire the applicable UAE visas for yourself from these categories.

• Investor/Partner Visa: AED 4,000 – AED 7,000 per visa
• Employee Visa: AED 5,000 – AED 7,500 per visa
• Family Sponsorship Visa: AED 4,000 – AED 6,000 per visa
• Emirates ID & Medical Tests: AED 1,000 – AED 2,500 per applicant

Rent or lease office space

Single out a physical or virtual workspace on rent. Remember, leasing a workplace can turn out a better idea in the long run. Keep these costing estimates in your mind.

• Flexi-Desk (Free Zones): AED 10,000 – AED 20,000 per year
• Shared Office Space: AED 15,000 – AED 30,000 per year
• Dedicated Office (Mainland): AED 25,000 – AED 100,000 per year (varies by location)

Mostly, your business license links to a real office space in the UAE, meaning finding a good office is important. Each area has different rules about office size, usually depending on how many visas your company needs. For example, the DED says all mainland businesses must rent a workspace, with a minimum size of 200 square feet.

Also, each mainland company gets a limit, or quota, on how many people they can hire. This number depends on how big their office space is. The price of the office depends on where it is, how big it is, and what features it offers. A small 200 sq. ft. office in Downtown Dubai may cost around AED 100,000 per year.

But for Free Zone companies, the rules are different. Many Free Zones do not require a fixed office for some types of businesses. This can help save money if you don’t need a full-time space.

Get business license

Collect your business license after the approval from the DED or the free zone.

Factors that influence the Dubai business setup costing

These are some aspects that impact the cost of setting up a business in Dubai.

• Business location options: Choosing between free zones and mainland setups greatly affects your business strategy. Free zones provide full foreign ownership and tax perks but may limit local trade unless a local distributor is involved. Mainland setups, on the other hand, grant easier access to the UAE market but come with stricter regulatory requirements and higher operational costs.
• Licensing and permit fee: Trade license expenses vary widely based on the type of business activity. Industrial and specialized businesses may require additional approvals or certifications, driving costs higher. Understanding these requirements beforehand allows you to plan your budget efficiently and avoid surprises.
• Expenses on office premises: Office space needs vary depending on the business structure. Mainland companies usually must secure a physical office, while Free Zones allow more flexible arrangements, including virtual offices. The size, location, and amenities of your workspace can significantly influence your monthly rental expenses.
• Annual license and visa renewal dues: All businesses in the UAE must renew their trade licenses and visas yearly. Renewal costs differ depending on your business activity and location, and missing deadlines can lead to hefty fines. Staying organized ensures smooth operations without interruptions or penalties.
• Professional consulting expenditures: Engaging business setup consultants can simplify the legal, tax, and licensing process. Fees fluctuate based on the complexity of services, ranging from moderate advisory costs to premium packages exceeding. Investing in expert guidance can save time and reduce risks in compliance.

Reasons of running the corporate operations in Dubai

The UAE is one of the best places in the world to start a business. Its largest city Dubai is safe, modern, and full of amazing opportunities. Let’s look at some simple motives, so many people choose Dubai to build their business dreams.

• Lots of business prospects in one place
• Fully owning your company
• Saving money on taxes

Here we discuss these pointers fleetingly.

Lots of business prospects in one place

Dubai is a busy and exciting city full of chances to grow your business. From tech to fashion, food, travel, and more, many different industries are doing well here. In 2023, people in the UAE spent AED 27.5 billion on online shopping.

This number is expected to grow to over AED 48.8 billion by 2028. Whether you are starting a new idea or opening a branch of your company, Dubai gives you the tools and support you need. Also, the government, through the Dubai Department of Economic Development (DED), helps you choose from many legal business activities. And if your business idea doesn’t fit the list, you can ask for extra permission to make it happen.

Fully owning your company

In the past, foreigners needed a local sponsor (a person from the UAE) to start a business. But now, that has changed, especially for trading companies. You can fully own your business without needing a UAE partner.

It is a big win for anyone looking to grow their company without giving away control. This change also makes the corporate setup cost in Dubai more manageable. As, you no longer have to pay a sponsor or share profits.

Saving money on taxes

One of the biggest benefits of starting a company in Dubai is the low business setup cost. You do not have to pay big taxes like in other countries. There is no corporate tax, and the VAT is only 5%, which is quite low. Also, you can keep all your profits and send them back to your home country.

You do not need to worry about high company setup costs either. There is no need to show big capital to get started. Professional consultants can give you the breakdown of the tax savings in Dubai.

Considerations for costing while forming a Dubai business

Knowing the business setup cost is essential when preparing to open a business in the UAE. Factors like type of business, operational needs, and regulatory compliance affect the cost of starting a new firm in Dubai. Investors need to carefully consider the following crucial elements before entrepreneurial journey in Abu Dhabi, Dubai, Sharjah, and Ajman.

• Business type and legal structure: Various business forms, such as partnerships, LLCs, sole proprietorships, and branch offices, have varying financial and regulatory ramifications.
• Location: Free zones offer 100% foreign ownership but restrict local trade without a distributor. Whereas, mainland enterprises permit trade within the United Arab Emirates.
• Types of license and permit approvals: Expenses differ according to the type of business. Certain industries need specific approvals from agencies like the Food Safety Department or the Dubai Health Authority (DHA).
• Office space and rental costs: While Free Zones provide flexibility with virtual offices, mainland businesses are required to have physical office space.
• Visa and employee sponsorship expenses: Employers need to set aside money for related labor costs, health insurance, and employee visas.
• Corporate taxation and government fee: Although Dubai provides tax advantages, certain companies could have to pay VAT, customs taxes, and service fees.

By taking these aspects into account early you can make cost-effective decisions and prevent needless delays in Dubai company setup.

Dubai free zone company setup tasks that cost money

Setting up your business in free zone provides key benefits such as 100% foreign ownership, exemption from personal and corporate tax as well as import duties, complete repatriation of profits, confidentiality of your assets and many others.

There are various free zones in Dubai. Major ones include Jebel Ali Free Zone, Dubai Airport Free Zone, Dubai Multi Commodities Center, Dubai Media City. Less costly free zones are usually outside of Emirate such as Ajman Free Zone, Fujairah Free Zone.

In order to open free zone company, you are likely to be required a minimum share capital, the amount of which can vary greatly. Major cost heads include the following.

• One-time free zone business registration fee
• Yearly free zone license cost
• Yearly free zone visa fees
• Annual or termly office rent
• Yearly bank guarantee for every employee
• One-time registered agent cost with renewal fees
• One-time fee for trade name reservation
• One-time Memorandum of Association Cost
• Postal services cost
• Health insurance

Mainland Dubai business setup tasks that cost money

Businesses in Dubai mainland may have to recruit a local nominee partner who will hold minimal stake. Do not worry, as the foreign entrepreneur can hold 100% of the company shares. The most common form of mainland business is limited liability company (LLC).

It requires minimum of 2 and maximum of 50 shareholders whose liability is limited to company shares. Just like free zone companies, cost of setting up Mainland companies depends upon various factors like nature, size of business and its premises. Major costs which include for its setup include these.

• Instant license fee from Department of Economic Division (one-time cost)
• Fees for reserving trade name (one-time cost)
• Office rent (yearly or termly cost)
• Drafting the Contract (in case of LLC) and Court Agreement Attestation (one-time cost)
• Memorandum of Association attestation fee (one-time cost)
• Registration fee (one-time cost)
• Trade license fee (one-time cost along with renewal fee)
• Commercial license fee (yearly cost)
• Commercial services improvement fees (yearly cost)
• Administrative services fee (one-time)
• Market fee (yearly or termly cost)

Dubai offshore corporate setup tasks that cost money

Setting up an offshore company means to incorporate your business outside of your home country. Offshore business in Dubai provides numerous benefits to foreigners such as tax exemption, complete ownership and confidentiality of assets and anonymity of name. The cost to setup an offshore firm in Dubai includes the following expenses.

• Company formation fees
• Share capital
• Office fee
• Cost to open bank account
• Agent fee
• Nominee services
• Business maintenance fees

KWS ME helps you to start a cost-effective Dubai business

The UAE is one of the world’s leading trading hubs for international investors. Now, with KWS Middle East by your side, you can confidently launch your new business in Dubai. It enables you to have a profitable corporate start in the UAE, while optimizing the setup costs.

KWS ME is a trustworthy UAE business setup company, making it easy and cost-effective to open your business in Dubai. From selecting the right license to ensuring full compliance with Dubai’s legal and regulatory framework, professionals provide tailored solutions. We specialize in helping entrepreneurs and investors tap into Dubai’s growing market by covering every aspect of the journey.

By partnering with KWS Middle East, you not only save time and effort, but also manage the costs efficiently. We guide you in choosing the most suitable business structure and license that aligns with your budget. It allows you to focus on sourcing quality products, building client relationships, and growing your trading operations, without unknown expenses. Call us at +97180059763, email us at info@kwsme.com, or WhatsApp us at +971509664705 now.

Conclusion

Whether, mainland, free zone, or offshore; cost of setting up a business in Dubai is a tricky and complex process. Consequently, you are better off to hire a professional consultant company for this estimation. After-all, they can provide you in detail about the cost structure according to your business plan.

These professionals help new entrepreneurs in establishing their business in Dubai with ease and efficiency. Also, they cover everything from business planning to company incorporation to financial reporting in the UAE. Therefore, let them handle the basics, and you can focus on running the business, and brainstorming about the corporate expansion.

Are you looking for a new business launch in Dubai with proper estimation of the initial expenses? We at KWS Middle East are successfully serving the companies in the UAE for more than 10 years. Contact our experts advisors for thorough information about the exact figures for your initial budget. Contact our expert advisors for your initial cost calculation, business formation, and taxation compliance assistance.

FAQs about the costing of corporate setup in Dubai

These are the answers to the common questions regarding the expenses of corporate setup in Dubai, UAE.

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