Why is Dubai a Cost-Effective Place for Doing Business?

by Zaara 18, Mar 2020

Why is Dubai a Cost-Effective Place for Doing Business?

Dubai is among the world’s famous business destinations preferred by investors. A growing economy, strategic global location, state-of-art infrastructure, and an incredibly attractive tax administration have long made it the environment of choice for ambitious entrepreneurs from every corner of the globe.

There are many investors and established businesses in recent times are considering expanding to Dubai; however, they are facing difficulties when it comes to incorporating a business in this Emirate. Therefore, in this article, we decided to give business owners an outline of costs involved to start a company in Dubai.

The big city and bright lights can also be intimidating for many. For this reason, many businesspersons feel that to succeed in the Emirates, as they must possess substantial capital for their startup. While there are considerable benefits to running a business from the UAE such as zero income tax, world-class broadband and a multilingual workforce these attractions count for little if a prospective company cannot afford to get started.

The Cost of Business Setup in Dubai

Starting a company in Dubai can be a progressive decision as well as a challenging experience. When it is about company incorporation, the cost of setting up a company in Dubai becomes a vital criterion. Comprehending with the business formation cost in Dubai as well as in various parts of the Emirates is critical. However, unawareness and absence of knowledge can lead to dangerous, undesirable overheads.

The government of Dubai alters the cost of business setup in Dubai from time to time and having a fixed price or fees is unlikely. Therefore, under such instances, well-informed and affordable business setup services as provided by Commitbiz. Cost of business formation in Dubai also depends on the business activity, the opted jurisdiction for starting a business, the approvals and certifications involved and so on. Nevertheless, to make things simpler, we have listed the different costs involved in business formation.

Dubai has two main jurisdictions, Mainland and Freezone. Therefore the prices depend on every jurisdiction.

Dubai Mainland

Limited Liability Company is a desirable business setup structure formed by investors. An LLC can be formed by a minimum of two and a maximum of fifty persons whose liability is limited to their investment in the company’s capital. Foreign equity in the company cannot exceed 49% meaning you will need a local partner who has a majority share in the company. Generally, the minimum capital is Dhs 300,000. The cost involved are –

  • Get an instant license which is a one-time cost from the Department of Economic Development Dubai. It allows you to start business operations right away.
  • You'll need to get approval for the name you have chosen for your company. The cost might change somewhat based on the title. There are numerous fees to be paid for this, including reservation fees, commercial name fees, foreign company name fees, etc.
  • Office rent is paid on the yearly term and it is mandatory to have an office. This is to ensure that it's a legitimate business since it allows the authorities to do inspections, monitor operations and verify that immigration laws are followed.
  • The Memorandum of Association is done between the partners of the company. The attestation fees can be different depending on the share capital.
  • You will also be charged the Ministry of Economic fee to register your business.
  • Depending on the type of your business, the trade license fee can vary. You will also be asked to show proof of a security deposit.

Dubai Free Zone

Starting a business in a free zone has many advantages, including having a 100% foreign ownership and exemption from all import duties. There are many different free zones, and the costs and benefits vary depending on the location and the type of business. The price for different free zone varies depending on what the free zone authority finalises. It includes –

  • The first cost is that of office rent. The cost depends on the free zone, the place you rent will dictate the number of visas that your company can get. A service charge is also calculated as a percentage of your rent.
  • Free zone license is another expense which must be paid yearly. This fee applies to trade companies, services companies, and industrial companies. The chosen Free Zone is the one that does the licensing.
  • Next is the registration of your business. This fee is paid to the free zone authority to allow you to commence business.
  • In any free zones, you will need a UAE local agent to mandate the governmental procedures. Therefore, you will need to pay that too. You will have to take help from this agent to set up the business but also once it’s time to renew your license.

Now that you know the different costs that will be incurred while opening a company in any of the Dubai jurisdictions, a business consultant can be of good help. We at Commitbiz have years of knowledge in this field and can make this process hassle-free. Contact us today for a consultation.