The city of Dubai is a dream place for expats who want to pursue their career and live better lives. It is also 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.
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. In this article, we will provide you breakup of costs which will give you broader idea for your own business setup.
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. For the establishment of mainland, free zone and offshore company, we have narrowed down list of things that you will have to incur your cost on.
Key takeaways
- 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.
Costing considerations while forming a business in Dubai
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.
Process of Dubai business registration with costing
This is the step-by-step procedure to register a business in Dubai. Also, it lists a basic initial costing breakdown of the Dubai business setup.
- Select business activity: Specify the type of business you are running.
- Pick appropriate legal jurisdiction: Offshore, Free Zone, or Mainland are your options.
- 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: 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. Keep these costing estimates in your mind. Remember, leasing a workplace can turn out a better idea in the long run.
- 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)
- Get business license: Collect your business license after the approval from the DED or the free zone.
Expenditure to setup a free zone company in Dubai
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
Dues to setup a mainland company in Dubai
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 fees (yearly or termly cost)
Expenses to set up an offshore company in Dubai
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
Conclusion
Whether mainland or free zone, cost of setting up business in Dubai is a tricky and complex process. We recommend you to hire us as your consultant company so that we can provide you in detail about the cost structure according to your business plan. We have been successfully serving in Dubai for more than 10 years and our highly professional team helps entrepreneurs in establishing their business in Dubai with ease and efficiency. Contact our experts at KWS ME for detailed information about the exact figures and any other guidance related to your company formation.
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