Establishing a business in Dubai is still one of the best options for entrepreneurs looking to take advantage of the business area in the Middle East, especially with its strategic location and legislation that favors investors and world-class infrastructure that supports businesses of any size. But you'll need to be aware of the costs involved when setting up so you can budget properly. This guide outlines the costs you can expect when setting up a business in the city, including costs for licenses, and office rentals, with some options for a low cost business setup in Dubai.
Choosing Your Jurisdiction - Mainland vs. Free Zone
When calculating your startup costs, the first decision will be whether to incorporate your business in the free zone or the mainland.
1. Mainland Business
You'll be incorporated in a mainland entity governed by the Department of Economic Development (DED). Under most structures, you will be required to have a local UAE national sponsor who holds not less than 51% equity (the recent new reforms resulted in 100% foreign ownership in an ever-increasing number of activities). This option is best for businesses that need full or unrestricted access to the local market.
2. Free Zone Business
There are more than 40 dedicated free zones in Dubai (i.e. DMCC, JAFZA, DSO). All offer 100% foreign ownership, repatriation of profits, and no corporate tax. However, the free zones limit local trading unless you have appointed a local distributor or licensed representative agent.
Comparing these options with a Dubai Company Setup Packages calculator will allow you to find the most cost-effective option for your desired business in Dubai or the UAE.
Dubai Company Setup Packages Explained
1. Company registration costs – The company registration fee is a one-off payment made to the free zone authority at the start of the process of registering your company. The fee will be based on the registered entity, i.e. its legal structure and the chosen free zone.
- Name reservation and initial approval – AED 500–1,000.
- Drafting and notarization of the Memorandum of Association (MOA) – AED 1,000–2,500.
2. License Fee – To operate in one of Dubai's free zones, choosing a business license is one of the most important steps. The most common licenses are for trading, service, and industrial. The license fee unlike the company registration fee is considered a recurring expense and can look like the below -
- Mainland License - AED 10,000–15,000 per year.
- Free Zone License - AED 12,000–25,000 per year depending on the prestige of the chosen free zone and what is included.
3. Office Fee - It is mandatory to rent office space in Dubai prior to obtaining your business license. Depending on your business needs each free zone in Dubai will provide various forms of desk space. The approximate costs will be -
- Mainland - A physical office space has to be an office.
- Serviced offices - AED 20,000 - 40,000 per year for a small unit.
- Retail or warehouse spaces - AED 50,000 per annum upwards, depending on location.
Freezone Business Setup in Dubai may have flexi-desk or virtual office options -
- Flexi-desk packages - AED 7,500 - 12,000 per annum.
- Dedicated offices - AED 20,000 - 50,000 per annum.
4. Share Capital – The Minimal share capital requirement differs significantly for each free zone ranging from AED 1000 to AED 1,000,000 depending on the business activities, licenses, etc. In general, the average share capital requirements for free zones in Dubai are AED 50,000.
5. Visas and Immigration - The cost for each investor and employee visa is roughly AED 3,000–4,500. This is for the application fee, medical tests, Emirates ID and stamping. Typically most Dubai Company Setup Packages include a certain number of visas and if you require more, you will need to pay extra.
Role of Business Setup Consultants in Dubai
The complexity of licensing, visas, and regulations is great to understand. The process can be difficult and if wrong decisions are made it can often be financially detrimental. When using reputable business setup consultants in Dubai the amount of information they will provide around licensing and how to take advantage of the finance zones makes any business setup longer and less painful -
- Government Liaison - Assisting with speeding up approvals
- Documentation Assistance - Drafting MOA, licensing application, and administration submissions
- Cost savings - Advising on the least expensive free zone or mainland structure
- Ongoing post-setup support - renewals, office expansion, amendments to employment visas
Consultant fees (AED 5,000 - 15,000+) will be an additional cost to your business startup budget, however, you may find that having a consultant may result in quicker turnaround times and avoid hidden costs.
Strategies for Low Cost Business Setup in Dubai
For the cost-conscious entrepreneur, consider the following approaches.
1. Opt for Virtual or Flexi-Desk Offices - If a physical office space is not required immediately, these solutions could save you 70% on office rent.
2. Take advantage of free zone offers - Many free zones run special deals periodically which discount license fees or waive the deposits for security.
3. Package services - If you use business set up companies in Dubai like ours you'll sometimes find that you'll get office, license, and visas packaged together with a discount right out of the gate.
4. Keep visas to a minimum - Only apply for visas that you need at the start and you can decide to apply for more when your recruitment plans require.
5. Get multi-year renewals at a fixed price - You can negotiate to lock in your offices, licenses, and can even get fixed prices for renewals for 2 or 3 years.
By utilizing these strategies, you will be able to achieve a low cost business setup in Dubai without sacrificing compliance or service.
Choosing Among Business Set up Companies in Dubai
Choosing the right provider is just as important as choosing your jurisdiction. In evaluating business set up companies in Dubai, the following should be on your radar -
1. Transparent Pricing - Detailed breakdown of government costs vs service costs.
2. Reputation - Validated testimonials from clients, and validated case studies.
3. Timelines - Useful information on timelines to issue licenses and processing visas.
4. Aftercare Services - Ongoing aftercare for renewals, expansions, and regulatory information.
A trustworthy partner will do the setup for you, and confidently navigate your business through the ever-changing Dubai business landscape.
Additional Expenses to Factor In
Beyond the fees mentioned above you should also keep in mind -
1. Bank account opening fees - AED 1,000-3,000 depending upon the bank and tier of the account opened.
2. VAT Registration - Requires registration if annual turnover is greater than AED 375,000; registration is free of charge but consultants may charge for assisting with the registration process.
3. Trademark registration - AED 8,000-12,000 (for local protection).
4. Document attestation and translation - AED 500-2,000, depending upon size and language.
Conclusion
Dubai offers a wealth of prospects in its active and fast-paced business environment and will give you opportunities if you choose the right pathway to set up your business. Knowing what the components of the costs associated with a business license in Dubai are, how to take advantage of Dubai company setup packages, and work with professional and established business setup consultants in Dubai, you will be able to cut your costs and gain access to the market sooner. If you are considering a Freezone Business Setup in Dubai, look for flexi-desk opportunities and promotional opportunities to reduce your starting costs. If your Future Dream is to create a successful business in one of the World's Most Dynamic Economies, you should start with a great plan, clear cost expectations, and strategic partnerships.
Are you ready to take action? Compare your options, put the numbers through legitimate Dubai Company Setup Packages, and take the next step towards completing your Future Dream.
