The most imperative step in establishing a feasible business plan is to recognize the preliminary costs of setting up a business. Dubai’s tax free nature is striking option to a lot of investors from the world over, but it’s essential to keep in consideration the costs involved in issuing a trade license. The DED’s website offer valuable information that allow budding business owners to estimate the exact cost involved in attaining their business licenses.
If you intend to commence business in one of Dubai’s many free zones, bear in mind that every free zone has its own start-up procedures and costs. Many free zones also have a minimum prerequisite of capital investment that the business owner need to have if they intend to establish the company in the free zone as compared to opening a branch of an existing company. Another cost of running a business in Dubai free zone is sponsoring employees for the business and providing them with the suitable visas and paperwork to allow them to live in Dubai.
Businesses should consider the potential costs of importing goods to UAE. Dubai customs has comprehensive guidelines for all types and cost involved in importing the goods in UAE. If the company intend to trade within the GCC, custom fee will be less costly all to thanks to the recently established GCC common market, which encourages trade and employment among GCC nationals.
For individuals planning to move their business to Dubai, costs of setting up can be a big daunting aspect. Having an apparent plan of how much it may costs to set up a business in Dubai can make life easy for businesses preparing to move to Dubai.
When it comes to deciding the right area for your business in Dubai, you can make a choice from the two options available: the city’s free zone area and the more popular mainland area. The costs incurred will generally depend on which of the two areas you desire to do business in.
The Costs of Opening a Business in Dubai:
Once you have determined to set up a business in Dubai, it is normally recommended to apply for the appropriate business visa for Dubai, where cost will be applied. The minimum share capital for limited liability companies not required to open a business in Dubai. Investors may be interested in free trade zones of Dubai where they can have complete ownership of their company but considering the cost associated to the business start-up process in the city. It is always advisable to know that there are no taxes on profits of companies formed in Dubai, and the corporate tax exemption for about 50 years.
Costs for Permits and Licenses
The company’s permissible legal documents, the business licenses and other registration procedures will be subject to various costs. It is also imperative to know that a business license or permit requires to be renewed once every year, where additional costs should be considered. Other additional costs for your business start-up may contain an office for lease, the insurance, and the equipment. The company registration process in Dubai is quite easy, but full support and legal assistance can be offered by our lawyers in Dubai. Dubai attorneys can give assistance during the company set-up process.
What To Think About When Setting a Business in Dubai
Any business requires a bank account for various cash transactions, i.e. deposits or withdrawal. You can locate various banks in Dubai, local and foreign, all of them having diverse charges for their services. An entrepreneur is recommended to formulate excellent analysis and solicit information about all costs involved in your new business.
If your business start-up needs additional capital, a local partner or sponsor can facilitate in this regard. A written agreement is suggested for both parties, where details about costs and charges must be pointed out. Once you set up your company, it is suggested to appoint accountants who can ensure your financial matters such as payroll, bookkeeping, tax advice, and investment plans,. It is suggested to consider the expenses for these kinds of services.
Free Zone Setup Costs
Setting up your business in Dubai freezone has its own benefits, predominantly in terms of costs. Though, costs differ by free zone i.e. it depends on which free zone you prefer to set up your business in. In addition to that, cost of setting up in a free zone also relies on the business model, nature, structure, and a number of visas required. The following are the costs that is required in a free zone set up:
- Single-time fee for registering a business in the Dubai
- Single-time fee for name-reservation
- An yearly fee for a business license
- An yearly fee for building
- Visa fee per person
Mainland Setup Costs
The costs of setting up business in the mainland rely on factors i.e. the business activity, visa permit and property. However, some other operating cost that increase the cost include:
- Obligatory government fees.
- These include attorney fees, trade license, and registration at government department. All these costs may be paid annually.
- Business incorporation coats
- This contains amounts for document submission, an understanding of inspections etc. This is above a onetime fee.
- Another compulsory obligation is fresh company registration with Immigration and Ministry of Labor. Every two years the registration needs to be renewed.
- You will have to give an annual sponsor fee, annual legal fees, commercial site fee and visa cost per person.
- If you intend to set up an LLC, the share capital necessary is likely to be around AED 300, 000. Once you obtain the trade license for LLC, you can change this share capital to working capital.
To keep a Foreign Branch Office in Dubai, you will also be required to increase on the following cost on an annual basis:
- PRO Service costs for trade license management
- Cost for Ministry of Economy registration
- Cost for Chamber of Commerce registration
- Cost for yearly audit by a local Auditor
- Cost for Waste Management
- Cost for certification of Parent company’s audit by a local Auditor.
- Cost for Corporate PO BOX
If you’re considering setting up your company in Dubai, cost is a main aspect to consider. Here are certain costs that you need to keep in mind. Many foreigners come to Dubai to pursue their dreams and to have good lives. If you intend to set up business in Dubai, you should consider multiple factors before opening a business opening a company. The initial costs are one of the major aspects which will give you an idea about taking on this new challenge. So here is a list of some of the major costs you’ll need to add to your financial plan.
Bear in mind that the costs listed here to give you an idea and may differ depending on multiple factors, including the kind of company, business type, location and the requirement of the business. There are also some additional costs that ultimately add up.
LLC (limited liability company)
A limited liability company can be created by at least two and at most of 50 persons whose liability is limited to the shares in the company’s capital. Foreign shareholding in the business cannot go beyond 49%, which means that you will require a local partner with majority share0f 51% in the company. Normally, the lowest amount of capital is around AED 300,000.
Preliminary Approval of License from DED (cost: AED110 One Time)
To commence business in Dubai, you can begin by getting an immediate license from the Department of Economic Development (DED). It permits you to set up business operations straight away, it takes around 120 days to complete all the necessary other documentation.
Trade Name Approval Cost around AED 700-900 One-time (AED 2,000 – 3,000 for Non-Arabic Company Names)
You’ll require approval for the name you have selected for your company. The cost may change a little depending on the name. There are a number of charges to be paid for this, including reservation cost, cost of commercial name, cost of foreign company name, etc.
Office Rent Yearly or Term cost
It is obligatory to contain an office space to set up your business. This is merely to make sure that it’s a legal business since it allows the authorities to conduct inspections, supervise operations and to confirm that immigration laws are being followed.
Memorandum of Association (MOA) Attestation: One-time fee Around AED 400
The MOA is done among the partners or shareholders of the company. The attestation cost can be varying depending on the share capital invested.
Drafting the Contract and Court Agreement Attestation: One-time fee roughly around AED 1,000 – 2,000 for CAA with additional AED 300 for typing
The contract of an LLC is drafted with common consent of the all the stakeholders. The contract requires to be drafted in both Arabic and English language, so there may be further fee for the translation. All partners or their lawyers have to sign the Court Agreement Attestation at the court.
Ministry of Economy Fee: One-time Fee around AED 3,000
You will pay this fee to register your company.
Trade License: One-time fee with renewal cost of around AED15,000 and another AED 3,000 renewal For general trading license
Depending on the nature of your business, the trade license cost may differ. You might also be inquired to present proof of a security deposit.
Commercial License Fee Per Annum Cost of around AED 700
This fee will be paid yearly to conduct commercial activities.
Chamber of Commerce Fee Per Annum Cost around AED 1,200
The cost for a general trading company may vary from manufacturing or industrial company.
Commercial Services Improvement Fee Per Annum Cost roughly around AED 400
This fee is used for the improvement tasks that governmental departments conduct.
Administrative Services Fee and Public Waste Municipality Fee: One-time fee around AED 50 and additional cost of AED1,000 for waste
Administrative costs are paid for the necessary paperwork made by the department and the public waste fee
Market Fees Per Annum or Term cost around AED 1,250 and may vary accordingly
A percentage of this is remunerated to the government on the whole amount of rent. An office or shop gives 5% whereas a warehouse gives 20%.
For a Free Zone Company
Establishing a Free Zone company has many advantages, including complete ownership and immunity from all import duties. There are several different Free Zones and the costs and advantages may differ depending on the location and kind of business.
Some of the chief ones in the Dubai fall inside the Dubai Creative Clusters Authority (DCCA) and the Dubai Multi Commodities Centre Authority (DMCC). There are also free zones for instance Jebel Ali Free Zone, Dubai Airport Free Zone and Dubai Silicon Oasis Free Zone.
Cost effective alternatives lay typically outside of the Emirate, for example Sharjah Airport International Free Zone, RAK Free Trade Zone, Fujairah Free Zone and Ajman Free Zone.
Bear in mind that you will probably need a minimum share capital to start the company and this can also differ immensely.
Office Rent Per Annum or Term Cost around AED 15,000 plus
The cost of rent may differ depending on the Free Zone it is in. The area you lease will dictate the amount of visas that the business can acquire. Your choice comprise of a Smart Desk, an office space and a permanent office. There may be service charge included which is calculated as a percentage of your lease.
Free Zone License Per Annum Cost around AED 10,000 – 50,000
This cost is applied to trading companies, services companies and industrial companies. The selected Free Zone issues the license.
Free Zone Registration: One-time fee around AED 5,000 – 45,000
This cost is given to the Free Zone authority to permit you to register the company. The cost may vary relying on the Free Zone and the company type, for example Free Zone Establishment (FZE) or Branch Company.
Free Zone Visa Per Annum Cost with Renewal Fees of around AED 3,000 – 5,000 each
Free Zone companies have some degree of visas permissible according to the office space. The visa fees may vary depending on employees who are from outside or inside the UAE.
Bank Guarantee Per Annum Cost
Each Free Zone company has to prove a specific amount of bank guarantee for its employees. For example, this can be 45 days salary with additional a one-way ticket to their native country.
Registered Agent Fee One-time Fee including Renewal Cost
In every Free Zone, you’ll be required a UAE local mediator to mandate every governmental process. Hence, you will be required to give a certain amount for his assistance. You will require the local agent in the company set up and also during renewal of your license.
Other costs includes initial approvals, trade name approx around AED 500-1000, Memorandum of Association cost around AED 1000-2000, Health insurance premiums and other postal services
So, these are the necessary costs linked to set up of the company.