The very first step for establishing a business is assessing the preliminary business establishment costs. The zero company and personal income tax policy enforced in Dubai has attracted many foreign investors’ attention. However, there are costs for obtaining a trade license, and business registration should be evaluated in advance.
There are two options for selecting an area for establishing a business in Dubai: i) Dubai free zone, and the more popular ii) Dubai mainland areas. The aforementioned costs regarding registering a business thus are subject to the selected area.
There are few steps to take for setting up a business in Dubai mainland:
Initial approval from the Department of Economic Development (DED)
This is a one-time cost issued by DED and amounts to AED 110. This initial approval from DED allows foreign entrepreneurs to start their business 120 days from the license issuance, while the other documents are under investigation by DED.
Approval of trade name
This is another one-time cost and ranges between AED 700 – 900 if the name selected for the business is Arabic, and can increase to AED 3,000 for non-Arabic names.
Office rent
This is a monthly charge, and as a standard, it is AED 80 per sq. feet in Dubai mainland. Renting a physical space for conducting a business is mandatory in Dubai mainland as DED considers this space and the documents associated with this space for approving the legitimacy and registration of the business set up.
Attestation of Memorandum of Association (MoA)
An MoA needs to be drafted in a law firm or any other legal entity eligible for writing this piece of document. This MoA needs to be approved by all shareholders and be submitted to the DED. As this process needs to be done only once, the cost associated with it (AED 400) is also a one-time cost.
Drafting of contract and court agreement attestation
This draft also needs to be approved by all shareholders and is a one-time payment amounting to AED 1,000 – AED 2,000 + AED 300 for preparations performed by a legal firm. The contract draft and court agreement both need to be written in Arabic and English.
Registration with Ministry of Economy
This step is necessary for the official registration of the business in the UAE and is a one-time cost of AED 3,000. Once this payment is made, the business becomes officially legal.
Trade license fee
There are various trade licenses available in the UAE, and based on the nature of the business, the license costs vary. The first time the license is issued, its cost is around AED 15,00, while the license’s annual renewal is much cheaper, i.e., around AED 3,000.
Commercial license fee
Plus trade license, a commercial license is mandatory for operating a business in the UAE. This license should be renewed annually and costs AED 700 (same for the renewal).
Fee for Chamber of Commerce
The costs associated with this fee vary based on whether the business entity is manufacture-related or industrial. On average, the annual fee charged by the Chamber of Commerce is AED 1,200.
Fee for improvement of commercial services
This is a fee charged by the government for the services they offer in the whole process and is a one-time payment of AED 400.
Fee for administrative services and waste collection
This fee is charged by the DED and is self-explanatory. This is a one-time fee, costing AED 1,050.
Market fees
This fee is charged by the government and is similar to paying annual tax. Usually, this fee constitutes the office rent, 5% of the rent for shops, and 20% of the rent for warehouses. Thus, this fee is subject to variations, but approximately, it can amount to an annual cost of AED 1,250.
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