What is the Cost of Setting up a Business in Dubai?

by Zaara 30, Aug 2022

cost to set up a business in Dubai

Location plays a very big role during the incorporation of a business. Most people prefer to set up a business in a Free Zone in the United Arab Emirates. This is because of the various benefits which the free zones provide such as infrastructural benefits, access to Air, Water, and Land transport, and assistance during the incorporation and growth of the business. 

For all those planning to migrate their business to Dubai, the costs of setting up a business can be a big deterring factor. Having a clear idea of how much it may cost to set up a business in Dubai can make the going easy for businesses aspiring to have a presence in Dubai.

In this blog, we give you a breakup of the costs involved in company incorporation in Dubai.

When it comes to choosing an area for your business in Dubai, you have three options: the city’s Free Zone Area, the Mainland Area, or the Offshore Area. The total costs incurred during the incorporation of a business will depend on the area chosen for the incorporation. Get clear idea about Dubai business setup cost.

1) Free Zone Company Setup Costs

Free Zone Company Incorporation has its own advantage, particularly in terms of costs. However, one has to understand that there are numerous free zones and the cost of incorporation will differ in each of them. Apart from the location, the cost of the business will depend on many different factors such as business structure, nature of business, infrastructure requirement, number of visas required by the business, accessibility to suppliers and raw materials, etc. 

Some of the most sought-after Free Zones in which the people prefer to incorporate a business are the Dubai Creative Clusters Authority (DCCA) and the Dubai Multi Commodities Centre Authority (DMCC). Both are located in the emirate of Dubai. Apart from these, there are also free zones in other emirates for instance Jebel Ali Free Zone, Dubai Airport Free Zone, and Dubai Silicon Oasis Free Zone.

  1. Office Rent on a yearly basis

The rent for the building required by the business depends on the Free Zone the business is established. The area and the nature of the business will also be key factors in deciding the total number of visas required. The choices to be made by the management are regarding the location where the business is established, Smart Desk services if required, Office Space, and a Permanent Office. There may be a service charge included which is calculated as a percentage of your lease.

  1. Free Zone License on a yearly basis

Every business must obtain a license before starting a business in any of the Free Zones. The license cost will be applied to trading companies, services companies, and industrial companies which are established in the Free Zone. The management of the Free Zone is the authority that issued the license to the concerned business.

  1. Free Zone Business Registration

This cost is incurred when the required Free Zone Authority registers the business and recognizes that the business is established in the Free Zone. This cost depends on the Free Zone the company is established in e.g. Hamriyah Free Zone, DMCC, etc., or the nature of the company established e.g. Free Zone Establishment (FZE) or Branch Company.

  1. Free Zone Visa with Renewal

The Free Zone is required to obtain the Visas for their employees according to the office space chosen by the management of the company. The fees of the Visas may vary depending on employees who are coming from outside of the UAE or are locals of the UAE.

  1. Bank Guarantee

Every Company established in the Free Zone must provide a bank guarantee for all of its employees. For example, this can be 45 days' salary with an additional one-way ticket to their native country.

2) Mainland Company Setup Costs

Just like free zone costs, the costs of setting up a business in the mainland area depend on factors such as the nature of the business, visa permit counts, and premises.

A list of most of the expenses to be incurred by a business has been provided below while registering a company in Dubai Mainland. It is to be kept in mind that the business setup in Dubai cost listed here to give you an idea and may differ depending on multiple factors, including the kind of company, business type, location, and the requirement of the business. There are also some additional costs that ultimately add up.

The cost mentioned below is for Limited Liability Company Setup as it is the most preferred corporate entity in the UAE.

  1. Preliminary Approval of Business License

First and Foremost in order to commence business in Mainland Dubai, the management needs to acquire a business license. This license can be acquired from the Department of Economic Development (DED). This license will allow the organization to conduct all business operations straight away. The Dubai Mainland license cost may differ depending on the type of license required by the business.

  1. Trade Name Approval

Getting the name approved of the business is a very important requirement to start business operations. There are a number of charges to be paid for the approval of the name of the business which include the following:

  • Reservation Cost
  • Cost of Commercial Name
  • Cost of Foreign Company Name
  1. Office Rent

Most of the businesses in Dubai require dedicated offices. This is merely to make sure that it’s a legal business since it allows the authorities to conduct inspections, supervise operations and confirm that immigration laws are being followed. The office rent will depend upon the size of the office, amenities provided, and the location of the office.

  1. Attestation of Memorandum of Association (MoA)

The Memorandum of Association (MOA) is prepared for a business by discussion among the partners or shareholders of the company. The attestation cost can vary depending on the capital invested by the shareholders or the share allocated to the shareholder according to the agreement of all the parties.

  1. Drafting Contract and Court Agreement Attestation

Drafting of the contract requires it to be done in both Arabic and English languages, so the business may also incur a fee for the translation of the contract. All partners or their lawyers have to sign the Court Agreement Attestation at the court.

  1. Ministry of Economy Fees

This fee is paid by the management of the company on an annual basis to the concerned authority for conducting commercial activities in Dubai Mainland.

  1. Trade License Fee

The business will have to pay up a Trade License Fee and the cost of this license will differ depending on the nature of your business. You might also be inquired to present proof of a security deposit made for the Trade License Fees.

  1. Chamber of Commerce Fee

Paying the Chamber of Commerce Fee will entitle the business to a certificate issued by the Chamber of Commerce which will allow the recognition of goods and will help in estimating the tariffs for customs. The cost for a general trading company may vary from a Manufacturing Company to or Industrial Company.

  1. Administrative Services and Public Waste Municipality Fee

These are the fees which are the Administrative costs that are paid for the necessary paperwork made to be prepared by the department and the public waste.

  1. Market Fees or Term Costs on a yearly basis

This is a fee introduced by the Dubai Government. In this, a percentage of the whole rent is remunerated by the government. An office or shop gives 5% of the rent as Market Fees whereas a warehouse gives 20% as Market fees.

3) Offshore Setup Costs

Offshore locations to set up a company have been in vogue in the recent few years. One of the best bets is to incorporate an offshore company into Jebel Ali Free Zone (JAFZA).

Here is the cost break-up of an offshore company formation in Dubai.

  1. Standard Share Capital

Setting up an offshore business provides the management with a flexible instrument to conduct commercial activities as well as make investments. However, some offshore jurisdictions might have a requirement for standard share capital, while some do not have any such constraints. So the management should conduct the necessary Due Diligence and also check the requirement of the business.

  1. Offshore Business Registration

An offshore company registration fee is made on a yearly basis whereas 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.

  1. 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 business activity. Yet, having a registered address is a must. This expense is payable annually.

  1. Offshore Bank Account Opening Fee

Having a bank account is essential to operate commercially in the UAE. This is a one-time, preliminary expense and can help you a lot in the development and growth of the business.

  1. Nominee Services

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.

  1. Offshore Business Maintenance Fee

A maintenance fee is paid to the jurisdiction authority of the offshore region. This is an annual fee for the first legal year, then from the second year onwards, a fixed sum is paid to the offshore authority.

Commitbiz | One-Stop-Shop for Business Incorporation in Dubai

If you feel the need to hire a business setup consultant in Dubai due to the super long process of business setup in Dubai, then we at Commitbiz can assist you. You manage your business proceedings while we complete all the procedures for you. Instead of paying fees at every step to the government, you will just have to pay us a one-time fee, and voila! Your business will be registered in just a few days.

Contact us or chat with our consultants today!

FAQs

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.

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