Dubai is a popular destination known for its majestic towers, modern lifestyle, client-friendly policies and favourable business environment. These reasons and many other benefits attract businessmen from around the world. Formation of businesses in such a thriving city is a beneficial opportunity and can be a big success for not only internal but external users as well. However, any business setup comes with a set of costs and expenses. In this write-up below, we will explore the details of the cost of opening a company in Dubai.
Business Model and License
Before thinking about the business setup cost in Dubai, the first thing to make decisions while setting up a business is the type of business model and license for the company. This helps determine the nature of your company, the essentials for its business activities, the future, and finances (fees and taxes).
The first factor that affects the cost of setting up a business in Dubai is the type of business model for the company.
Selection for the right type of legal structure is a crucial step because each structure has its benefits and challenges. The costs also differ from one another.
There are various options available for entrepreneurs who wish to start a business in Dubai, like sole proprietorship, partnership, limited liability company, branch office or free zone company. Each type has different legalities, documentation, and approvals, so make sure to research the structure well, the pros and cons, and other considerations. Choose the model that best suits your business requirements and objectives and is beneficial to the businessmen and investors.
Another factor that affects the cost of setting up a company in Dubai is the type of business license. There are three main types of business licenses in Dubai: Commercial, Professional, and Industrial. Each license has its own set of rules and regulations, different fee structures, and approval to conduct specific activities relating to the company.
For example, a commercial license is obtained to work for industries relating to trade, retail, or wholesale activities. A professional license is obtained to provide services like consulting, accounting, or education. Apply to obtain the correct license that is appropriate for the business.
Cost of Opening a Company in Dubai – Factors Involved
The business setup cost in Dubai can differentiate depending on several factors like type of business, business activities and other formation procedures. The factors affecting the Dubai company setup cost are explained below in detail –
a) Legal Fees:
This includes the fees for compliance regulations and payments to the lawyers and authorities for the services and guidance they provide to complete the legal procedures.
b) Registration Fees:
This includes the fees involved in all kinds of required registrations. Various forms, applications, and payments to The Department of Economic Development (DED) are the costs for the business setup in Dubai.
c) License Fees:
Another factor affecting the cost of opening a company in Dubai is the license fees. It includes the fees for obtaining necessary licenses from the authorities, approvals, renewal fees, etc.
d) Rental Fees:
Rental fees are expenses paid by the company for the company's land. The office space, storage space or any other place used for the company involves monthly rental fees. The fees depend on the location and size of the building.
e) Visa fees:
The Dubai company formation cost also involves the visa fees. For individuals who wish to start a business in Dubai, it is mandatory to acquire a visa for residency and a stress-free stay in the city. Visa also involves necessary fees for the tests, forms, and documents.
f) Sponsorship Fees:
A local sponsor (individual or company) is appointed for most of the business activities in the UAE. The costs involved here are the fees paid to the sponsors for their services to the company.
g) Bank Account Fees:
Creating a bank account for business transactions is necessary for the company. So, the bank charges certain fees for the provided bank account services in Dubai.
h) Other Fees:
There are some other factors, like furniture, resources, equipment, salary, etc, that affect the cost of opening a company in Dubai. The purchasing and leasing are the fees borne by the company.
Business Setup Cost in Dubai
(Mainland vs Freezone vs Offshore)
The factors that affect the cost of opening a company in Dubai differ for each jurisdiction depending on the legalities, necessities, and taxes. The comparisons between the costs are explained below –
1. Mainland Company Formation Costs:
The cost of forming a mainland company in Dubai depends on various factors and differs in comparison to other structures due to the industry, type of company, and legal regulations. On average, the cost of setting up a business in Dubai can range from AED 15,000 to approximately AED 50,000.
2. Free Zone Company Formation Costs:
The cost for a free zone company is affected by various factors –
- The business license is a direct expense that costs around AED 2,500 – AED 50,000. It depends on the freezone the company is set.
- The type of the business, government fees and taxes also impact the costs for a Dubai freezone company formation.
3. Offshore Company Formation:
The costs vary due to many factors, including the type of offshore company, local laws, and other registration processes. The overall cost, on average, ranges from AED 30,000 to AED 70,000 approximately. The offshore company formation costs are mainly affected by incorporation fees (AED 10,000 – AED 20,000), agent fees (AED 5,000 – AED 15,000 annually), virtual office fees (AED 5,000 – AED 10,000/year), government fees (AED 5,000 – AED 20,000) and bank accounting fees (AED 5,000 – AED 10,000).
Dubai is a destination that attracts various businessmen and investors from around the world who wish to set up a business due to the environment, friendly policies, and tax exemptions. However, a company formation includes certain costs due to various factors that vary from one and another. The cost of opening a company in Dubai requires proper planning, budgeting and support from the right consultancy firm. It is helpful in estimating the costs. Commitbiz is a popular firm that understands the cost of opening a company in Dubai. The professional's experience and knowledge can be beneficial to the individuals because it’s helpful in making decisions and functioning in further steps. Save your time and reach out to us.
What is a Free Zone and what are its benefits?
Free Zone is a geographical area in which a business can conduct its business with 100% ownership and various other benefits depending upon the Free Zone. Most of the time the Free Zone is dedicated to a particular industry.
What is Mainland and what are its benefits?
A Mainland company is licensed by the DED and allows the organization to conduct business within the local markets as well as outside the borders of UAE.
What is Offshore and what are its benefits?
An offshore company is one established in a different jurisdiction while its parent corporation in another jurisdiction. This is not a branch company as there is no requirement for a physical office. They are not physically present in the country that they choose to be registered as an offshore company.