How much does it cost to set up a company in UAE?

Setting up a company in the United Arab Emirates (UAE) is an exciting opportunity for entrepreneurs looking to tap into a dynamic, tax-friendly, and globally connected market. Dubai, in particular, stands out as a hub for innovation and commerce, attracting businesses from startups to multinational corporations.

However, understanding the business setup cost in Dubai is critical for effective financial planning and a smooth incorporation process. This guide provides a detailed breakdown of the costs associated with establishing a company in the UAE, focusing on Dubai’s mainland, free zones, and offshore jurisdictions. Whether you’re a first-time entrepreneur or an experienced investor, this article will help you navigate the expenses and make informed decisions.

Why Choose Dubai for Business Setup?

Dubai’s strategic location, world-class infrastructure, and business-friendly policies make it a top destination for global entrepreneurs. The UAE offers tax exemptions, 100% foreign ownership in certain jurisdictions, and access to international markets. Understanding the business setup cost in Dubai allows you to align your budget with your business goals and choose the right setup option.

Benefits of Starting a Business in Dubai

• Tax Advantages: No personal or corporate income tax in most cases, with a modest 5% VAT and 9% corporate tax in specific scenarios.

• Global Connectivity: Dubai’s position as a bridge between East and West facilitates trade and market access.

• Diverse Opportunities: Over 900 business activities across 20 sectors, from tech to trading, are supported.

• Streamlined Processes: Company setup can be completed in 2-4 weeks, with remote options available.

Types of Business Jurisdictions in Dubai

Before diving into the business setup cost in Dubai, it’s essential to understand the three primary jurisdictions for company formation: mainland, free zone, and offshore. Each has distinct cost structures, regulatory requirements, and benefits.

1. Dubai Mainland Business Setup Cost

Mainland companies are licensed by the Department of Economic Development (DED) and can operate anywhere in the UAE, including the local market. They are ideal for businesses targeting UAE consumers or government contracts.

Key Costs for Mainland Setup

• Trade License Fee: Ranges from AED 15,000 to AED 35,000 annually, depending on the business activity (e.g., commercial, professional, or industrial).

• Initial Approval and Trade Name Registration: AED 235 for initial DED approval and AED 700-3,000 for trade name registration.

• Office Space: Mandatory physical office space costs AED 50 per square foot per year on average, with prices varying by location (e.g., Downtown Dubai vs. Business Bay).

• Memorandum of Association (MoA): Attestation costs around AED 1,200, plus AED 500 for drafting and court agreement.

• Visa Costs: Investor or employee visas cost AED 3,000-5,000 each, including medical tests and Emirates ID.

Total Estimated Cost: AED 14,500-45,000 for a mainland company, depending on license type, office size, and visa requirements.

Advantages of Mainland Setup

• Unrestricted access to the UAE market.

• Flexibility to engage in diverse business activities.

• No local sponsor required for most sectors since 2021 reforms.

2. Dubai Free Zone Business Setup Cost

Free zones are designated areas offering 100% foreign ownership, tax exemptions, and simplified setup processes. They are ideal for businesses focusing on international trade, tech, or niche industries like media or logistics.

Key Costs for Free Zone Setup

• License Fees: AED 10,000-50,000 annually, depending on the free zone and business activity (e.g., trading, services, or industrial). For example, IFZA offers licenses from AED 12,000, while DMCC starts at AED 20,000.

• Registration Fees: A one-time fee of AED 9,000-10,000 for free zone authority registration.

• Office Space: Flexi-desks start at AED 15,000 annually, while private offices or warehouses can cost significantly more (e.g., AED 20,000-50,000).

• Visa Costs: AED 3,000-7,000 per visa, with packages often including 1-3 visas. Additional visas may cost AED 5,000 each.

• Bank Guarantee: A refundable deposit for employee visas, typically 45 days’ salary plus a one-way ticket to the employee’s home country.

Total Estimated Cost: AED 10,000-70,000, with lower-end packages (e.g., Sharjah Media City at AED 5,500) and premium options (e.g., DMCC) at the higher end.

Popular Free Zones and Their Costs

1. International Free Zone Authority (IFZA) AED 12,000-25,000 Affordable packages, fast setup, suitable for startups and SMEs.

2. Dubai Multi Commodities Centre (DMCC) AED 20,000-50,000 Premium services, ideal for trading and commodities businesses.

3. Sharjah Media City (SHAMS) AED 5,500-12,500 Low-cost options, media and creative industries focus.

4. Ras Al Khaimah Economic Zone (RAKEZ) AED 5,699-20,000 Flexible packages, zero-visa licenses available.

Advantages of Free Zone Setup

• 100% foreign ownership and full profit repatriation.

• No VAT or corporate tax under certain conditions.

• Streamlined processes with minimal bureaucracy.

3. Offshore Business Setup Cost

Offshore companies are designed for international trade, asset protection, or holding companies without a physical presence in the UAE. They cannot trade in the local UAE market.

Key Costs for Offshore Setup

• Incorporation Fees: AED 15,000-20,000 for registration and documentation.

• Registered Agent Fees: Annual fees of AED 2,000-5,000 for a mandatory local agent.

• Renewal Fees: AED 10,000 annually to maintain legal status.

• Bank Account Setup: Additional charges for opening a corporate bank account, which may require a UAE residence visa.

• Legal Documentation: Attestation and notarization cost AED 1,000-5,000.

Total Estimated Cost: AED 27,000-40,000.

Advantages of Offshore Setup

• High privacy and confidentiality.

• No requirement for a physical office.

• Suitable for international trading or investment activities.

Factors Influencing Business Setup Cost in Dubai

The business setup cost in Dubai varies based on several factors. Understanding these can help you budget effectively and avoid unexpected expenses.

1. Business Activity

The type of business activity (e.g., trading, consultancy, manufacturing) determines the license type and associated fees. Specialized sectors like healthcare or finance may require additional approvals, increasing costs. For example, a Dubai Health Authority (DHA) approval can add AED 5,000-10,000 to the setup cost.

2. Jurisdiction

Mainland setups are generally more expensive due to office space requirements and broader market access. Free zones offer cost-effective packages but restrict local trading unless a distributor is appointed. Offshore setups are the least expensive but limited to international operations.

3. Office Space

Office space is a significant cost driver. Mainland companies require a physical office, while free zones offer flexi-desks or virtual offices to reduce expenses. Location and amenities (e.g., serviced offices in DMCC’s Uptown Tower) also impact costs.

4. Visa Requirements

Each visa, whether for investors or employees, adds AED 3,000-7,000 to the setup cost. Free zone packages often include a visa quota, but additional visas increase expenses. Family sponsorship visas cost AED 5,000-8,000 per person.

5. Share Capital

Mainland companies have a minimum share capital starting at AED 1,000, while free zones like DMCC require AED 50,000. Some free zones, like KIZAD, mandate higher capital (AED 150,000 for LLCs).

Step-by-Step Process to Set Up a Company in Dubai

To manage costs effectively, follow these steps for a seamless business setup in Dubai:

1. Choose Your Business Activity: Select the activity that aligns with your business goals (e.g., e-commerce, consultancy, trading).

2. Select a Jurisdiction: Decide between mainland, free zone, or offshore based on your target market and budget.

3. Register a Trade Name: Ensure the name complies with UAE regulations and pay AED 700-3,000 for approval.

4. Apply for a License: Submit documentation to the DED (mainland) or free zone authority. Required documents include passport copies, a business plan, and a No Objection Certificate (NOC).

5. Secure Office Space: Lease a physical office (mainland) or opt for a flexi-desk (free zone).

6. Obtain Visas: Apply for investor and employee visas, including medical tests and Emirates ID.

7. Open a Bank Account: Provide your license, Emirates ID, and residence visa to open a corporate account.

8. Complete Registration: Pay registration fees and obtain your trade license to start operations.

Tips to Minimize Business Setup Cost in Dubai

Reducing expenses without compromising compliance is possible with strategic planning. Here are actionable tips:

• Opt for a Flexi-Desk: Choose a shared office or virtual office in a free zone to save on rent.

• Select a Cost-Effective Free Zone: Zones like SHAMS or RAKEZ , Ajman offer lower license fees (AED 5,500-12,500).

• Limit Visa Quotas: Start with fewer visas and add more as your business grows.

• Work with Consultants: Experienced firms like Shuraa Business Setup can streamline the process, avoiding costly errors.

• Choose the Right Business Activity: Some activities have lower licensing fees, so research thoroughly.

The Role of Business Setup Consultants

Navigating the complexities of company formation can be challenging, especially for first-time entrepreneurs. Business setup consultants like Shuraa Business Setup offer tailored packages to simplify the process and reduce costs. With over 25+ years of experience, Shuraa provides services such as:

• Guidance on jurisdiction and license selection.

• Document preparation and attestation.

• Visa processing and bank account setup.

• Free tax consultations and compliance support.

By partnering with experts, you can save time, avoid penalties, and ensure your business is compliant with UAE regulations.

Dubai Business Setup Cost Breakdown

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Ongoing Costs to Consider

Beyond initial setup, businesses in Dubai face recurring expenses to maintain compliance and operations:

• License Renewal: AED 10,000-50,000 annually, depending on the jurisdiction and license type.

• Office Lease Renewal: AED 15,000-50,000 for flexi-desks or private offices.

• Visa Renewals: AED 4,000-7,000 every 2-3 years per visa.

• Employee Costs: Salaries, mandatory health insurance, and end-of-service gratuities.

• Utilities and Services: Internet, telecommunications, and accounting services can add AED 5,000-10,000 annually.

Why Invest in Dubai Now?

Dubai’s economy is booming, with a record 2,025 new companies registered in 2020 alone. The UAE’s pro-business policies, including 100% foreign ownership and zero taxes in free zones, make it an attractive destination. With initiatives like Meydan Free Zone’s Fawri service, which offers a license in 60 minutes for AED 15,000, starting a business has never been faster.

Conclusion

The business setup cost in Dubai varies widely based on jurisdiction, business activity, and operational needs. Mainland setups range from AED 14,500-45,000, free zones from AED 10,000-70,000, and offshore companies from AED 27,000-40,000. By carefully selecting your jurisdiction, optimizing visa quotas, and partnering with experts like Shuraa Business Setup, you can minimize costs and maximize value. Dubai’s vibrant economy, strategic location, and investor-friendly policies make it an ideal place to launch your business. Start planning today to turn your entrepreneurial vision into reality in the UAE.