What is the Cost of Business Setup in the UAE?

by Zaara 17, Jun 2021

What is the Cost of Business Setup in the UAE?

The costs of setting up a business may be a major deterrent factor for all those seeking to relocate their business to UAE. Having a better understanding of how much it would cost to set up a UAE company will make it easier for businesses that want to be present in the UAE. This blog provides you an overview of the costs of setting up a business in the UAE

When it comes to selecting a business area in UAE, you have 2 choices: the free zone area of the region, and the more desirable mainland area. The costs incurred depends on which of the two fields of business you want to do.

How to Start a Business in the UAE with Little or No Money?

The part that will have a major effect on the cost of setting up a business in the UAE is whether you want a free zone or set up on the mainland.

Although both can be done on a budget, the all-in-one feature of free zone setups can make it one of UAE’s most cost-effective ways of registering a company.

If budget is your main focus, start by searching for the affordable free zone that will suit your needs. Apart from price, establishing a free zone has many benefits.

In addition to taking benefit of the UAE's zero percent tax rate, you will also enjoy the benefits of a full customs tax deduction, no currency limits, and the right to resettle 100 percent of your money and income.

If however, you want to trade directly with the local UAE market, then you should set up a mainland company. Depending on the type and scale of your business, it can still be done in a cost-effective manner.

A company formation consultant can help you determine the structure that best fits your needs and your budget.

Costs Incurred Depend on Two Areas to do Business

Free Zone Setup Costs

Setting up your business in the freezone area of the town has its own benefit, particularly in terms of cost. Costs however differ according to the free zone, i.e. depending on which free zone you want to set up your business. In addition, the costs in a free zone area often rely on the layout of the company, design, building and a number of visas pursued. The following are part of the costs

  • One-time fee for registering a company in the city
  • One-time fee for the name-booking
  • A fixed fee for a company license
  • An annual fee for construction
  • Visa charge/person

Mainland Setup Costs

Just like the cost of the free zone, the cost of setting up a business in the mainland area depends on factors such as the size of the business, the number of visa licenses, and the locations. Some extra costs that increase the cost however include:

Mandatory Government Fees

It includes notary fees, trade licenses, departmental registration, and lawful translations. All these can be either a one-time or yearly fee.

Business Incorporation Fees

It comprises the fees for submitting documents, a plan of inspection, etc. It is basically a one-time fee.

The compulsory provision is new business registration with the Ministry of Labor and Immigration. They have to amend the registration every two years.

Additionally, You will have to pay out a yearly sponsorship fee, a one-time legal charge, a charge for a commercial building, and a visa per citizen.

If you're planning to establish an LLC, AED 300,000 would be the necessary share capital. When you get LLC's trade license, you can translate your share capital into working capital. [Exhibiting a share capital is not compulsory].

To maintain to retain an International Branch Office in the UAE, you also need to grow on the following on a yearly basis;

  • PRO service rates for the management of trade licenses
  • Enrolment fee for Ministry of Economy
  • Enrolment fee for the chamber of commerce
  • The fee to a central auditor for an annual audit
  • Waste management charge
  • Fee for parent group audit certification by the central auditor
  • Residue management fee (not available in the UAE)
  • Corporation PO Box Fee

Cost of Company Formation in the UAE

It is not easy now to set up a company and require some fee at different stages. The business organization has to determine how and where the business has to be set up. If the company is set up in the free zone or in the mainland, there are unique points that the company's management needs to bear in mind.

Cost of Company Formation in Mainland

The framework has been chosen for the company, the operation being carried out, the total number of visas needed, etc. are only some of the considerations that need to be considered in order to finalize a cost for the company. The company will mainly be required to spend on the following:

  • Booking fee for a one-time business name
  • State one-time fee (including trading license charge, operation charge, etc.)
  • Charge on incorporation
  • What amount the sponsors pay
  • Commercial premises bill
  • Registration and Visa fees for businesses
  • Visa (based on population)
  • License renewals

A business would have to deposit AED 150,000 into the company's bank account which will serve as the limited liability company's paid-up money.

Cost of Company Formation in Freezone

Just like the mainland, the company's importance depends on different factors such as the operation being carried out, the market activity being practiced, and several other factors.

The key spending would occur because of:

  • Registration cost
  • License cost
  • Rent of the place
  • Visa obligation
  • Profit shares

Other than this, there are many other factors that need to be held in mind when creating a free zone business.

Besides the expenses involved with the place, there will be costs that will be the same for during the business's setup. Such expenses will include raw material and human resources taxes, power, transport, etc.

The setting up of a company can be difficult and complicated for an entrepreneur, and it is recommended that the services of a business setup consultancy are availed.

You may be all at shore trying to grasp the fee structure of setting up the business in UAE. Hiring a business consultancy company to register your UAE business start-up will make it much simpler for you; local business set-up recommendations such as Commitbiz will guide you through the set-up process and help you launch a business on a spin-key basis. Contact us today!