Cost of Starting a Company in Dubai
Written By Antima – 17th Nov’22
Worldwide businesspeople and investors swarm to Dubai. As the economic center of the Middle East, the city benefits from strong international ties and entrepreneur-friendly business regulations. As a result, starting a business in Dubai is quite profitable as well as demographically favourable. However, knowing how much it costs to launch a business is crucial when it comes to doing so in Dubai. A lack of knowledge could result in unwanted overheads.
A predetermined fee for different approvals and paperwork is improbable because registering a corporation in Dubai varies in price. As a result, it is best to get in touch with a knowledgeable and reasonably priced business setup consultancy in Dubai, which can help entrepreneurs understand the fees assessed at the outset, provide updates on changes in the cost of judicial services and other governmental services, and give them advice on likely expenses so as to avoid idling money.
The type of business, the jurisdiction selected, the permits and certificates needed, and other factors all affect how much it costs to start a company in Dubai. Three categories of costs are established: Company formation options include offshore, free zones, and the mainland.
Requirements for forming an LLC in the United Arab Emirates
Initial approval from DED
The Department of Economic Development (DED) must grant initial permission before a company can start operating. You can begin operations for a small fee for up to six months, giving you plenty of time to complete your other papers. This is a one-time cost included in the startup costs for a business in Dubai.
Approval of a business name
The trade name is the name you will operate your firm under. Depending on the name you choose, the price could change. Trade name fees include expenses like reservation fees, commercial name charges, foreign business name expenses, and so forth. Depending on your directions, it might be expanded further. A one-time fee is also charged for the approval of a trading name.
Renting an office for LLC
Renting office space is necessary for a mainland business operation in Dubai because it helps the government ensure that businesses are legitimate. This makes it possible for officials to conduct inspections, keep an eye on activity, and ensure that your company abides by the law. You can lease an office on an annual or temporary basis.
Attestation of MoA
The partners or owners of the company certify the LLC’s Memorandum of Association (MOA). Despite being a one-time fee, the attestation cost could change depending on the share capital.
Drafting the LLC contract in Arabic and English
The partners give their consent to the typing of the contract for establishing an LLC in Dubai. To guarantee that all stockholders can comprehend the contract, it must be written in both Arabic and English. The cost of translation might also be incurred in addition to the authoring of the contract. Additionally, this is a one-time cost.
The Ministry of Economy in each Emirate charges a small one-time fee for the formation of LLCs. Other yearly expenses, however, vary from business to business.
Mainland trade license fee (Included in the DED fee)
The cost of a trade license is a one-time expense, however, it varies depending on the business activity. Regular departmental inspections of licenses and other practicable operations may at some time be charged.
Tejari / Fee for commercial license
Tejari or a commercial license fee is required to conduct commercial operations. It is a type of fee that must be paid annually.
Fees for the Dubai Chamber of Commerce
It is necessary to pay the Dubai Chamber of Commerce annually. The amount is for a general trading company. An industrial or manufacturing company may charge a different price.
Fee for commercial services improvement
This is an annual sum provided to the government for the development of its departments’ work.
Fee for administrative services
Additionally, there is an administrative fee for all of the department’s records; however, this is an upfront expense.
Other major expenses
1. Initial setup costs for a basic trading business
2. One-time fee for a license to contract
3. The economic department assesses a fee to real estate brokers’ businesses
4. Based on the price of the rented space, the government assesses a small fee. For an office or a store, a 5% fee is needed; for a warehouse, a 20% fee is needed.
5. There can be further charges, depending on the type of company establishment.
Costs incurred for free zone business setup
The processes and costs for establishing a business in Dubai may vary because each of the UAE’s free zones is governed by its own set of laws and regulations. While certain characteristics, such as having a local sponsor, renting out jackets, and paying the visa price are consistent across all regions, others, such as the smart desk, office space, warehouses, licensing and registration fees, shared capital requirements, visa fee, and bank guarantee.
Cost of establishing a free zone business in the UAE
Free zone company registration fee
When registering a business for the first time, this one-time payment is made to the free zone authorities. Depending on the form of company, such as an FZE or a branch office, the charge varies.
Free zone license fee (included FZC registration)
Businesses operating in the Freezone must pay this annual levy. The license fee applies to all enterprises, including those engaged in service, trade, and industry. It is a one-stop shop, and the free zone authority of a certain jurisdiction handles the license.
Rental cost (included FZC registration)
One of the early fees related to starting a free zone company is the cost of office rent. You now have total control over your possessions and obligations. A freezone may be rented on a monthly, yearly, or even multi-year basis. The legal system and the available rental possibilities determine which option is the least expensive. The rental location also details how many visas can be obtained or what kinds of business can be conducted there.
Important expenses according to the freezone
- Name approval charges
- Notarization charges
- Insurance expenses
- Business bank account
- Typing and shipping fees
- Medical check
- Police clearance
- Emirates ID card
Types of renting options available in the free zones
1. Smart desk: Using a smart desk service, which, as the name implies, includes having nothing more than your desk, is the least expensive way to start a free zone business. This is the best choice for independent contractors and small businesses.
2. Office units: These are small areas that have been transformed into independent work areas. Once more, the region of choice affects the price of office space in a free zone.
3. Permanent offices/warehouses: A permanent office is an office that is ready to use all the time. A permanent office costs more than a smart desk or office unit, but it offers more advantages. For a warehouse in a free zone, the same is true.
4. Share capital requirements: An owner or shareholder of the company must invest in order to create a free zone corporation. The funds may be invested entirely in the company or distributed equally among the owners. A minimum share capital is necessary to launch a business in the majority of free zones in the UAE.
5. Visa fee: The number of work visas that can be issued to an organization operating in a free zone depends on how much office space the owner has invested in. A visa’s cost can be assessed once each year, and it must be renewed. For a new employee working outside of the UAE, expenses include a residence stamp, medical fitness certifications, and an ID card. A residence stamp, medical fitness certifications, an ID card, and the issue of a visa without leaving the country are included in the charges for a new employee working within the UAE.
How Radiant Biz helps you
In matters like business setup, people tend to get confused and get in chaos due to several rules and requirements. This is the time when people tend to look for an expert. A lot of chaos can be avoided if guidance is taken from the very beginning. Every venture may have unique requirements like location, customer convenience, logistical feasibility, and banking services.
We at Radiant Biz strive to understand these unique precepts and provide expert and reliable consultation to our clients with updated laws and governing regulations, awareness of their rights, and cost-effective business solutions tailor-made to their business needs and budget.