INTRODUCTION OF BUSINESS SETUP COST:
In the UAE, the business setup cost is also known as the startup cost. Initially, one-time early-stage expenses occurred to register the company before it was operational and generated revenue. It includes different kinds of expenses like legal fees, licenses, permits, office space, equipment, initial inventory, and marketing.
One-time expenses include things like website development, machinery, initial branding, and company incorporation.
Ongoing expenses, or operational costs, include office rent, staff salary, utilities, stationery, and inventory refilling.
Typical costs include legal and administrative, technology, marketing, and physical setup.
However, before starting a business in the UAE, you need to know the exact cost of business setup. The Mainland and the free zone have different rules and regulations for overseas investors, which also affect the price of the business setup cost in Dubai. Let’s take an overview of the expected cost before and after the business setup.
LOW-COST BUSINESS SETUP IN DUBAI:
There are many expenses to start a new business in international markets, but in Dubai, the costs of LLC business setup in the UAE depend on your business location. Common costs will be part of setting up a business in Dubai. Listed below here.
BUSINESS REGISTRATION & GOVERNMENT FEE:
The business registration fee is a one-time payment paid by the owner to the free zone authority during the early stage of company registration. The legal structure of the company determines the exact cost. The cost of registration varies widely depending on location, but it typically ranges from AED 9000 to AED 10000 (DETAIL BELOW).
TRADE NAME REGISTRATION:
(AED 500 to AED 1000) for a business name.
INITIAL APPROVAL FEE:
(AED 3000 TO AED 5000) paid to the UAE government.
MEMORANDUM OF ASSOCIATION:
(AED 1500 TO AED 3000) for the incorporation process
NOTARY & TRANSLATION COST:
(AED 1500 TO AED 2500) for some document notarization
BUSINESS LICENSE FEE:
This is a very important step in selecting a business license in the Dubai free zone. Three basic licenses—service, manufacturing, and trading—are commonly available. License fees and registration fees are recurring costs that can range from AED 10000 to AED 50000 annually.
COMMERCIAL LICENSE
Used for trading or retail business activities.
A PROFESSIONAL LICENSE
Used for service businesses such as education and consulting.
INDUSTRIAL LICENSE:
Only for manufacturing or production.
BUSINESS OFFICE FEE:
To obtain a business license in Dubai, an office space is required. Every free zone provides a facility for different desk spaces to meet the company’s legal requirements, like innovative services and flexible desks, which can range from AED 10000 to AED 40000 annually.
FREE ZONE OFFICE:
Free zones provide cost-effective business setup environments in Dubai. A physical office is mandatory to register a company in Dubai, and the expense range in the free zone for an office is AED 11000 per year, which often includes the license cost.
- Low-cost business setup in the UAE.
- 100% foreign ownership.
- Tax-free, with no customs duties on import and export.
- Typically, focus on a specific industry.
RESTRICTION: Without local distributors, free zone companies cannot trade with mainland zone companies.
MAINLAND ZONE:
The mainland zone is more expensive compared to the free zone, ranging from AED 25000 to AED 40000 per year.
No restriction.
Ideal for targeting local customers, like restaurants, retail stores, etc.
Allow to trade without a local distributor.
SHARE CAPITAL:
In a free zone, the share capital amount is different, depending on the business activities and licenses, ranging from AED1000 to AED1000000, but the average share capital required amount for a free zone is AED45000.
ECOMMERCE BUSINESS SETUP COST IN UAE:
E-commerce business setup costs in the UAE vary from AED 5000 to AED 30000, depending on location (free zone vs. mainland), license type, and visa requirements. Flexi desk packages start at AED 5500 to AED 6000 in the Northern Emirates free zone.
Comprehensive and usual Dubai-based setups cost AED 12000 to AED 25000.
MAIN COST FACTORS:
FREE ZONE LICENSE:
(economical option), from AED 5500 to AED 6000
MAINLAND LICENSE:
Usually AED 5000 to AED 20000, depending on office space requirements.
E-TRADER LICENSE:
AED 1070 is one of the easiest and most affordable options for GCC/UAE local persons.
VISA COST:
AED 2000 TO AED 5000, plus additional visa cost. Not included in the license cost.
CONSULTANCY FEE:
tarts from AED 1500 to AED 8000 for professional service.
WEBSITE DEVELOPMENT & PAYMENT GATEWAY:
Based on complexity and cost, they vary.
NOTE: A free zone is cheaper and provides 100% ownership to international sellers, while the mainland provides direct access to selling inside the UAE.
VISA COST:
As a business owner, the investor business visa cost is 3000 to 7000 to stay and operate your business legally, with details listed below.
VISA APPLICATION FEE: AED 2000 TO 4000
MEDICAL FEE: AED 1000 TO AED 1500
FAMILY SPONSORSHIP: AED 5000 TO AED 8000 additional per family member.
The visa will be valid for 2 years, so add this cost to your recurring plan.
LOCAL SPONSOR FEE:
If you registered your company in the mainland zone, then the local sponsor fee will apply to you: AED 12000.
According to UAE law, a mainland-registered company must hire a local person with 51% shares.
Sponsorship fees start from AED 12000, and they will not participate in operations; it mostly depends on negotiable arrangements.
Note: if you need 100% ownership of your business, then a free zone is best for you.
OTHER COSTS:
In addition to other costs, don’t forget these recurring and upfront costs.
HEALTH INSURANCE:
It is compulsory for all visa holders, ranging from AED 1000 to AED 5000.
CORPORATE BANK ACCOUNT:
The minimum amount required to open a corporate bank account in the UAE is AED 99.
LEGAL & CONSULTING FEE:
AED 5000 TO AED 20000 is another expense if you hire professional experts for this purpose.
PROCESS OF BUSINESS SETUP IN UAE:
When you know the cost of setting up a business in the UAE, you just need to follow these steps to process it.
PICK BUSINESS LOCATION:
mainland zone or free zone. According to the business nature and need.
CHOOSE BUSINESS ACTIVITIES:
Trading, professional, e-commerce, and services.
REGISTER YOUR TRADE NAME:
The name should not be registered already in the UAE naming guideline list.
APPLY FOR LICENSE:
Submit your file to the concerned government authority to process for getting the license.
APPLY FOR VISA:
After approval of everything, you need to apply for a visa to enter the country when it’s issued.
CONCLUSION:
The cost of business setup in the UAE varies, depending on location, and can be reduced if you register your business in a Dubai free zone. A free zone is a cheaper and faster way to enter the UAE. The free zone provides 100% ownership of the business to an international seller. Tex is free, and there is no customs duty on import and export, but free zone international sellers are unable to trade with mainland companies without a local distributor. The free zone registration process consumes less time and can be completed within 2 weeks. The mainland zone is more expensive compared to the free zone, but the mainland sellers have direct access to sell products inside the UAE. The mainland registration process is taking more time because it involves external approvals.
