Cost of starting a business in Dubai [Updated]
Dubai is a popular destination among entrepreneurs and investors all over the world. As the Middle East’s business hub, the city boasts of excellent global connectivity and offers entrepreneur-friendly commercial laws. Therefore, starting a business in Dubai is highly profitable, also for its demographical advantage. However, when it comes to company formation in Dubai, understanding the costs for business startup is an essential criterion. Lack of information can lead to undesirable overheads.
Here are some questions that may arise regarding company formation in Dubai:
- Where should I setup a company in Dubai?
- How do I estimate the funds required for setting up a business in Dubai?
- Is there any way to establish a low-cost business in Dubai?
- Which is the cheapest free zone in Dubai for business?
- Will I have to pay the Dubai trade license cost in advance?
- Are there any affordable business solution providers in Dubai, or cheap business setup services in the UAE?
- What is the cost of limited liability company (LLC) formation in Dubai?
- What are the various charges levied by the Dubai government for starting a business?
Here’s what the experts say:
Dubai company registration cost is altered from time to time, so a fixed rate for various approvals and documentation is unlikely. Therefore, it is best to reach out to a well-informed and affordable business setup consultancy in Dubai. Corporate advisors help entrepreneurs get familiar with the charges levied at initial stages, provide update on fluctuation in judicial prices and other governmental services, and advise on probable expenditures saving them from unwanted incurring disbursements.
The cost of setting up a company in Dubai also depends on the type of business activity, the opted jurisdiction, the approvals and certifications involved and so on. To make things simpler, Shuraa Business Setup has curated a list of the latest standard costs of business setup in Dubai. The prices are listed under three categories – Mainland, Free Zone and Offshore.
Mainland business setup / LLC company formation costs
Commercial License, Dubai
Professional License, Dubai
Services included in the cost of LLC business setup in Dubai, UAE
Initial approval from DED
The Department of Economic Development (DED) provides initial approvals to start the business operations. A nominal fee lets you begin operations for maximum six months, so that you have enough time to complete your other documentations. This is a one-time expense involved in Dubai the costs for business startup.
Approval for trade name
The trade name is basically the name under which you will be managing your company. In some instances, there is a possibility that the price will fluctuate based on the name you choose. Trade name includes charges such as – reservation fees, commercial name fees, foreign company name fees, and so on. It may further extend as per your mandate. Approving a trade name is also a one-time cost.
Renting office for LLC
Renting an office space for a mainland business setup in Dubai is mandatory as it helps authorities to ensure companies are legitimate. This allows officials to conduct inspections, monitor operations and ensure immigration are laws adhered to by your company. Getting an office space for rent could be a yearly or a termly cost.
Attestation of MoA (Memorandum of Association)
Attestation of an LLC’s Memorandum of Association (MoA) is done between the partners or the shareholders of the company. The attestation cost may further differ depending on the share capital although it is just a one-time expense.
Drafting the contract of LLC in Arabic and English
The contract of an LLC setup in Dubai is typed under the mutual consent of the partners. It is essential that the contract is drafted in Arabic as well as in English for better understating between all the shareholders. The translation cost may be incurred apart from the drafting of the contract. This again is a one-time cost.
Department of Economic Development charges (DED fee)
The Ministry of Economy, under every Emirate, charges a nominal one-time fee to register LLCs. However, there are other yearly fees varying from business to business.
Mainland trade license fee (Included in the DED fee)
Acquiring a trade license is a one-time expense, although depending on the business activity, the cost may vary. Sometimes, a security deposit is also required to be made while applying for a trade license. Licenses and other viable activities are under regular scrutiny from the departments and could involve probable cost on intervals.
Commercial license fee / Tejari
The commercial license fee, also called Tejari, needs to be paid every year for engaging in commercial activities.
Dubai Chamber of Commerce fee
The Dubai Chamber of Commerce needs to be paid annually. The amount mentioned is for a general trading company. For an industrial or a manufacturing company, the cost may differ.
Commercial services improvement fee
This is a yearly amount paid for the improvement of works done by the governmental departments.
Administrative services fee
There is also an administrative fee charged for all the paperwork done by the department, however, it is a one-time expense.
Other important expenses –
- One-time general trading company formation
- One-time contracting license fee
- Economic department charges real estate brokers company fee
- The government charges a small percentage of the amount of the premises rented. In case of an office or a shop, 5% is payable, while for a warehouse it is 20%
- Additional charges may be levied depending on the nature of the business setup
Free zone company formation cost
The free zones across the UAE are governed by their own set of rules and regulations and thus, the procedures and charges for setting up a company also differ. While some aspects such as having a local sponsor, rental costs and visa fee are similar, other components such as smart desk, office units, warehouses, license fee, registration fee, shared capital requirements, visa fee and bank guarantee may differ based on your choice of area.
Here are the three most popular Dubai free zone license cost, according to Shuraa experts:
International Free Zone Authority (IFZA)
AED 17,900 (cost includes provision for one investor visa) and AED 11,900 (without a visa).
These prices, however, vary based on the type of company such as FZE or branch office.
Services included in the costs of free zone business setup in Dubai
Free zone company registration fee
This is a one-time payment made to the free zone authority at the initial stage of registering a business. The cost differs according to the company type – such as FZE or branch office.
Free zone license fee (included in company registration)
This is a yearly charge applicable to companies under a free zone jurisdiction. The licensing fee is applicable to trading companies, services companies as well as industrial companies. The licensing is done by the free zone authority of a particular jurisdiction, which is a single window procedure.
Rental cost (included in company registration)
Office rent cost in Dubai free zones is among the first charges involved in a free zone business setup cost. This provides you with 100% ownership of assets and liabilities in the company. However, with convenience and control, there is also flexibility available while renting an office space. Free zone rental costs could be monthly or yearly or even a lease of several years. Also, the cheapest option for setting up company in a free zone depends on its jurisdiction and the renting choices offered. Furthermore, the rented place states the number of visas that can be obtained or the business activities that can be conducted by your company.
Renting options available in majority of free zone business setups:
- Smart desk: The most inexpensive way to start a free zone business setup is through smart desk service, which, as the name suggests, means having only a desk for yourself. This is best for suited for freelancers and small-time businesses.
- Office units: These are small areas created into a self-sufficient office space. The cost of an office unit under a free zone jurisdiction, again, depends on the area selected.
- Permanent office / warehouses: A permanent office is a full-fledged office space. The cost of a permanent office is comparatively more than a smart desk or office unit, nevertheless, it also offers more perks. The same goes for a free zone warehouse.
- Share capital requirements: Establishing a free zone company requires investment by either the shareholders of the company or the sole proprietor. If you decide the share capital at an initial stage, the proceedings get easier. The amount may either be equally divided among the shareholders or may be a total investment within the company. Most of the free zones in the UAE have a minimum share capital requirement for starting a company.
- Free zone visa fee: A free zone company has limited employment visa entitlement, that depends according to the area of office space acquired by the owner. Visa fee can be levied yearly and requires renewal. For a new employee outside of the UAE, expenses involve a residency stamp, medical fitness certificates and an ID Card. Whereas, for a new employee inside the country, the expenses include a residency stamp, medical fitness certificates, ID card, issue of visa without leaving the UAE.
- Bank guarantee for free zone: Another expenditure for free zone companies is the prerequisite of having a bank guarantee. A free zone company needs to show a certain amount of bank guarantee for every employee.
- Registered agent fee: Unlike LLCs, a UAE local agent is required in case of a free zone, to mandate all the governmental procedures. This register agent needs to be paid for his assistance; it is an initial cost that can be repeated during the renewal of licenses.
Depending on the free zone of your choice, some of the other important expense to note are:
- Name approval charges
- Notarization charges
- Insurance expenses
- Premium bank account in Dubai
- Typing and shipping fees
- Medical check
- Police clearance
- Emirates ID card
Offshore company formation costs
Offshore company formation, Dubai
Services included in the costs for offshore business setup in Dubai, UAE
Offshore company formation fee
An offshore company registration fees is a yearly. The registration fee varies depending on the offshore jurisdiction opted by the owner of the company as well as the type of business activity that will be carried out.
Standard share capital
An offshore business is a flexible instrument to conduct commercial activities as well as make investments. However, some offshore jurisdiction might have a requirement of a standard share capital, while some do not have any such constraints.
Offshore registered office fee
Having a local presence is essential for incorporating an offshore company in Dubai. However, there is no compulsion to have a fully operational office subject to the business activity. Yet, having a registered address is a must. This expense is payable annually.
Charges for opening bank account
Having a bank account is essential to operate commercially in the UAE. This is a one-time, preliminary expense.
Directors, shareholders or related nominees are appointed for decisive and signatory purposes during the absence of the owner. The nominees are given limited rights by the owner and their services are chargeable.
Just like mainland and free zone companies, offshore business setups also require a local agent. This local agent needs to be paid on yearly basis for his services, whenever the company engages in any governmental procedures.
Offshore business maintenance fee
A maintenance fee is paid towards the jurisdiction authority of the offshore region. This is an annual fee for the first legal year, then second year onwards, a fixed sum is paid towards the offshore authority.
Please note that the business setup costs specified in the article are to provide budding entrepreneurs and business aspirants an overview of the principal costs involved in setting up a business in Dubai or elsewhere in UAE. Whether you are planning on investing your Dollars or Euros, these costs will be calculated in AED and may differ, with aspect to the company type, business setup jurisdictions, the legal structure of the company and so on. To get the best quotes and a tailored pricing structure for your business startup or company proceedings, speak to our business consultants for free today!
Start with Shuraa
Our business setup service providers can help you establish a business in Dubai or anywhere in the UAE with ease and efficiency. These services are chargeable, and a nominal amount is applied to the facilities provided by them. Nevertheless, it is worth, as it saves a lot of time, effort and most importantly money!
To know more on the Dubai business set up cost or to find out the low-cost business setup in Dubai or in any other Emirate, contact Shuraa, as we offer you the best prices in the market.