How much does it cost to open
a business in Dubai?

When planning a business in the UAE, rely on the reliable, first-hand information
that we receive daily from our real-life experience of doing business in Dubai.

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Doing business in the UAE guarantees a high income and a fast pace of development for almost any business. Therefore, cast aside any doubts and begin to implement your ideas. In this article we will provide you with start-up capital calculations and look at the main aspects of what the costs of entering the UAE market are.

The United Arab Emirates is extremely dynamic. Business decisions here are made instantly. Even the slightest delay can lead to the market niche you are targeting being filled by a more active and confident investor. Therefore, if you have a winning business idea - do not hesitate: bring it to the market urgently!

Often, businessmen take a wait and see attitude, and wait to try and fully understand the legislative, market and multicultural features of the UAE, in order to really assess how much it will cost to open a new business, relocate an existing one, or work out exactly how much initial capital will be needed to implement a start-up?

Hypothesis confirmation - market analysis

Market analysis for the first stage of entry into the UAE can be organised in various ways. For example, carry it out on your own, or send an employee to the country and set him the appropriate tasks. This is the simplest and least costly solution. In addition, you could arrange a contract with one if the "Big Four" consulting companies, or similar, and be sure of the quality of the analysis. Another way is to use a specialised consulting company, represented in the UAE market, and give them a clearly defined technical task to come up with a plan.

For an agreement with a consulting company at the “Big Four” level, an amount of at least 25,000 USD should be included in your estimates. In the case of cooperation with a specialised consulting company, represented in the UAE market, a simple market analysis will require an investor budget of 2,000 to 3,000 USD, a more complex one, 10,000 to 15,000 USD.

Place of business location - targeting the right target audience

In the United Arab Emirates, a foreign investor has the right to register a company in the local market or in one of the free economic zones (SEZs), of which there are more than 30. Many factors affecting market opportunities depend on the place of registration of the business, primarily on the ability to work with certain customer groups. Therefore, at the initial stage of organising a company in the UAE, it is necessary to create a portrait of the target audience that you are targeting.

In addition, other important factors depend on the location of the business, in particular, the organisation of logistics, the need to include a local partner in the founders, or whether to conclude an agreement with an agent, plans for registration of tax residency, a list of banking services, the choice of the territory for doing the business, and the rental costs of offices, warehouses or retail space.

Thus, if you intend to focus primarily on the internal target audience of the country, then the location of your business is the local territory. In the local UAE market, the main legal forms of companies that can belong to foreign investors are: Limited Liability Company (LLC), Civil Company (CB) and Sole Establishment (SE).

These types of companies have unlimited prospects for work both in the UAE and in international markets. Local companies are registered with the Economic Department and have a special status, which allows for a trusting attitude towards them on the part of banks, counterparties, state regulatory agencies, as well as international tax and regulatory bodies. They have the right to provide services to local legal entities and individuals, organise retail trade (on the basis of their own store, renting shelves in supermarkets, online trading, trading through a representative), and organising production of any scale.

It is easier for a local company and its owner to obtain tax residency status. Given the stronger connection with the UAE and the complex structure, as well as the obligation to register with a real office or commercial premises, such legal entities do not have problems confirming the control and control centre, which is one of the main requirements for obtaining tax residency status.

According to the legislation of the Emirates, local companies have a complex structure that provides for the participation of a local partner (with a 51% stake) or cooperation with a local agent to perform representative functions in front of state bodies. At the same time, the UAE's business practice makes it possible to include in the list of the founders a so-called nominee partner (for remuneration), who does not participate in the management and financial aspects of the company.

If your business is mainly focused on international markets, then you should consider a Free Economic Zone as a location. Each of the SEZ has its own internal regulations, rules and features. Companies registered in the territory of a SEZ can be 100% owned by a foreign investor, and the state has entrusted the administration of the Free Economic Zones with control over their activities. The main legal forms are a Free Zone Company and a Free Zone Establishment.

When considering Free Economic Zones, it is necessary to pay attention to one important point. As a rule, free economic zones are managed by European management, using advertising and marketing technologies aimed at convincing foreign businessmen that registering in free economic zones is much easier and more profitable. Moreover, it is often not stated that companies registered in a Free Economic Zone only have the right to conduct business in international markets or within that particular SEZ and are limited in their working with consumers within the UAE. The Emirates state authorities do not take measures to promote doing business in the local market, and the basic information is distributed in Arabic. For this reason, foreign investors often have a distorted view of the advantages of the local market over Free Economic Zones. This point must be considered when choosing a place to register a business.

UAE law also provides for the possibility of a foreign company registering a branch or representative office for doing business. The branch is not an independent legal entity but is considered to be part of the parent company, which fulfils contracts and carries out the activities specified in the license. The representative office does not have the right to conduct business but is exclusively engaged in promoting the activities of the head office, collecting information and orders that will be carried out by the parent company.

Thus, the choice of a location for a business is primarily determined by its orientation to the target audience. If you intend to work both in the domestic and international markets, then you should register a local company. If you are interested in conducting international business outside of the UAE, or in the development of wholesale trade in the Emirates or intend to operate exclusively within a Free Economic Zone, it is advisable to place the company in one of the SEZ.

To make the right choice for the place of registration, and the legal form of your legal entity, contact a professional and experienced business registrar. The cost of a consultation starts from 1,500 USD. Some consulting companies offer free consultations on the condition of ordering business registration services. Moreover, specialised businesses offer ready-made packages of consulting, legal and secretarial support, including initial consultations on choosing a place of registration. The cost of a minimum package starts from 600 USD per month.

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Registration activities during the establishment of a company

The costs of registering a business in the UAE include:

Services of a professional registrar who will take care of all legal formalities, interaction with government agencies and the necessary support. Their costs directly depend on the volume of work performed.

Certification of documents in court (including registration of relationship with a local partner on the waiver of rights to manage a business and make a profit, etc.). Necessary activities that are required depending on the type of business being planned. A criminal record certificate may be required; when opening a subsidiary from another jurisdiction, the legalization of all constituent documents will be required. For certain types of activities, you need a detailed business plan, confirmation of specialized education, etc.

In addition, when registering a local company, in the budget an annual remuneration to a local partner or agent for the official representation of your interests with state bodies should be considered. When starting a business in a Free Economic Zone, it is necessary to consider the cost of paying for the state registration actions of the FEZ administration.

Examples of registration costs:

Local company with a commercial license for trade (ownership share of a local partner - 51%). Registration costs include:

  • Professional registrar services - from 4,200 USD
  • Registration fees - from 1,000 USD
  • Certification of documents in a court in Dubai - from 1,000 USD
  • Remuneration to a nominal local partner - from 4,300 USD per year

Local company with a professional license for the provision of consulting services services (100% foreign ownership, cooperation with a local agent). Registration costs include:

  • Professional registrar services - from 4,200 USD
  • Registration fees - from 1,000 USD
  • Certification of documents in a court in Dubai - from 1,000 USD
  • Local agent remuneration - from 4,100 USD per year
  • Confirmation of the qualifications of employees (special courses and certification for a manager at the American University of Dubai), preparation of a business plan, legalisation of documents etc.

Branch of a foreign company. Registration costs include:

  • Legalisation of constituent documents - the cost is formed depending on their quantity and composition
  • Obtaining permission from the Ministry of Economy and payment of additional registration fees - from 4,000 USD
  • Placement of a bank guarantee in favour of the Ministry of Economy - from 13,600 USD (this amount cannot be withdrawn or used and will be returned after completion of the branch's activity and license cancellation)
  • Professional registrar services - from 4,500 USD
  • Certification of documents in a court in Dubai - from 1,000 USD
  • Local agent remuneration - from 4,200 USD per year

Representation of a foreign company. Registration costs include:

  • Legalisation of constituent documents - the cost is formed depending on their quantity and composition
  • Professional registrar services - from 4,500 USD
  • Certification of documents in a court in Dubai - from 1,000 USD
  • Local agent remuneration - from 13,200 USD per year
  • Payment of registration fees at the Ministry of Economy - from 4000 USD
  • Placement of a bank guarantee in favour of the Ministry of Economy - from 13,600 USD (this amount cannot be withdrawn or used and will be returned after the branch is closed and the license is cancelled)

Trading company registered in a Free Economic Zone of Dubai – DMCC. Registration fee is from 20,000 USD, which includes:

  • Legalisation of constituent documents and obtaining prior permission from the DMCC administration
  • Payment of registration fees at the establishment of the company
  • Professional registrar services

Business Registration: Licensing

In addition to the costs of registration activities, when you open a company in the UAE, you have to pay license fees. Licenses are classified depending on the type of activity - professional (provision of services), commercial, production (industrial).

It must be emphasised that despite the absence of most traditional taxes, licensing is a hidden taxation in the UAE: the state annually charges a fee for renewal of licenses. Moreover, this is a state tool for monitoring your activities; each area requires coordination and obtaining permission from the relevant department. Accordingly, complex types of business must be coordinated with several supervisory bodies at once.

License cost examples:

Simple license to trade one type of product:

  • Approval from the Ministry of Economy of the UAE
  • Cost - 4,200 USD per year

A complex license for construction activity G + 1, which gives the right to carry out construction and installation works, construction of buildings, structures of any purpose with a height of not more than 2 floors, as well as their general maintenance and other construction works:

  • Approval from the Ministry of Economy of the UAE
  • Approval in the UAE Construction Department
  • Accreditation of personnel in the Construction Department, including the provision of documents and passing exams to confirm qualifications - from 3,500 USD per specialist
  • License cost - from 7,000 USD

Many types of business in the UAE are controlled by several supervisory authorities, as a result of which the approval process is complicated and increases the licensing costs. It may be difficult for an investor to understand all the intricacies of registration and licensing. Specialised consulting businesses come to the rescue. The average price for services to coordinate business with government departments and to obtain the required permissions start at 3,000 USD

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Control centre

According to the legislation of the United Arab Emirates, each company registered in the local territory must have a physical office where operations are carried out, tax and financial statements are stored, and bank accounts are managed. Confirmation of the existence of a real existing control and monitoring centre for the company is in line with current global trends and is a common practice within the framework of international standards.

It should be emphasised that, when specifying the prices for office rents in the UAE, we do not consider options for premises that do not meet business standards, the use of which will negatively affect interactions with banks when opening an account, with state regulatory bodies (Migration Service, Ministry of Labour, etc.) and may damage the business reputation and operations of the enterprise. Therefore, in this article we only consider the costs of office space that meets high business standards and inspires confidence with banks and the state regulatory authorities.

In downtown Dubai, the cost of annual rent of an office space of 50 square metres will be approximately 20,000 USD. Traditionally such offices will not have been decorated or have furniture, are not connected to electricity, the Internet, or telephones. All of these works are carried out by the business owner at his own expense and according to his tastes. In specialised business centres, where the offices are already renovated, equipped with furniture, connected to the Internet and telephones and are completely ready for work, you will pay a similar amount for a room of 20 square metres, (this is the minimum suitable for obtaining registration for the main activities, except when the licenses require large areas for doing business). As a result, the cost of renting an office in a fully equipped business centre in Dubai is lower than in an office that still needs to be decorated and equipped with furniture and appliances.

It is important to note that for some types of activities, the Free Economic Zones of Dubai allow investors to register companies in a virtual office, the cost of which is approximately 4,500 USD per year. However, the lack of a physical office - a control centre - can cause problems when interacting with the Immigration Service, which can impose restrictions on recruiting employees by refusing to issue work visas. Also, many types of business are not allowed to be conducted in a virtual office. In addition, the investor may face stricter oversight by supervisors. Restrictions may also be imposed by financial institutions on the subsequent implementation of settlement and cash services.

A 20 sqm. office for rent in a business centre in Dubai will cost 20,000 USD per year. The price includes a separate room, equipped with furniture, all utilities (water, electricity, air conditioning). In addition, this price includes daily cleaning, a reception with professional staff, a business address and incoming mail processing, a dedicated telephone number and an incoming call answering service, free access to a meeting room and conference room, IT support, free network storage (up to 4 GB) and free Wi-Fi.

Interaction with government oversight departments

An important step in registering a business is to register the company with the Ministry of Labour and the Immigration Service. In addition, the investor and each employee of the company, who is not a local resident, must apply for residence visas. An investor visa is issued for a period of 3 years, and a work visa for 2 years, with subsequent extensions.

In addition to registering with the Ministry of Labour and the Immigration Service, a company whose turnover exceeds 375,000 AED per year (100,000 USD) must be registered with the UAE Federal Tax Service and get a tax payer number (VAT number).

It is sometimes difficult for investors who want to open companies in the UAE to understand the procedures for immigration, labour and tax registration, therefore, we recommend that you contact professional consultants who can provide you with competent support and help in interacting with the relevant government agencies.

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