In order to work out how much money does it require to set up a company in the United Arab Emirates (UAE), it is important to first work out the type of company you want to establish, which sector will your company operate in, the location of the business, and finally the need of the business.
One of the most common company formation in the UAE is either a Limited Liability Company (LLC) or a Free Zone Company. Before digging into the numbers, let us understand the difference between the first and foremost.
Firstly, let us look into Limited Liability Company and what is required for you to get it set up.
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Cost of LLC Company Formation in Dubai
A limited liability company (LLC) can easily be formed by a minimum of 2 people and can include up to 50 partners or shareholders. This company type implies that the owners are not personally liable for the company’s debts or liabilities. The concept of an LLC is a hybrid of a corporation with those of a partnership or sole proprietorship.
Company Ownership in Dubai
If you are a foreign investor then your partnership could not exceed 49 percent, which means that you must have a local partner who would hold the majority shares of the company. However, under the new legislation, this rule has been thrown out of the window and foreign nationals can now own 100 percent of the company. This decision was passed on December 1, 2020.
Cost of Getting an Instant License and a Trade Name
In order to get any company up and running, the two fundamental things which you require are an instant license and a trade name under which your company will operate. For starters, you can acquire an instant license from the Department of Economic Development (DED). There is a one-time cost that you need to pay to the DED for the instant license. After getting the instant license, you will be able to officially start your business operations. The process will include document submission and verification process, which can take up to 120 days.
When it comes to selecting a suitable name for your organisation, you will have to get it approved first and foremost. The reason behind this is because the authority does not let you select a name that has already been registered by someone else. The fee of the trade name registration also depends on the name itself. Fees that need to be paid include reservation fees, commercial name fees, foreign company name fees, and so on.
Again, it is also a one-time cost for the trade name registration. However, the non-Arabic names cost more.
Cost of Renting Office Space
In UAE, it is mandatory to have an office space in order for you to set up your business. Although this step might seem unnecessary it is done to ensure that the business is actually a legitimate one, which then enables all the relevant authorities to conduct the inspections, monitor the business activities, and ensure all the laws such as the immigration laws are being followed.
Cost of Documents Attestation
In order to register an LLC company, you will require a Memorandum of Association (MOA), which is a legal document that defines the relationship between the company with its shareholders. This legal document is required for every process of company registration, company bank account opening, and so on.
There’s a one-time cost for the MOA. However, the fee can vary depending on the share capital. It is worth mentioning that this document is open to the public and mentions various details regarding the company; its official and registered name, physical address of the registered offices, the shareholders of the company along with the number of shares they own within that company.
In other words, the MOA and Article of Association (AOA) both act as they constitute the company. The AOA is essentially a document that specifies the regulations of the company and defines the purpose as to why the company was established in the first place.
Cost of Drafting a Company’s LLC Contract
In addition to drafting an LLC contract, you also require a Court Agreement Attestation (CAA) and for both these things. There is an additional for the typing of both these contracts.
Once you have the documents attested from the relevant departments, you will need an additional cost for the registration of the LLC which will be paid to the Ministry of Economy.
The trade license is on a slightly higher scale as part of their one-time fee. However, you will need to renew it annually for a general trading license. This price can change depending on the type of your business and the authority might require additional proof for the business.
Dubai Freezone Company Setup Cost
On the other hand, the Free Zone or a Free Trade Zone in Dubai are basically business zones where companies can be established. Some Free Zones are renowned for e-commerce company registrations, some are famous for education company registrations, and so on. Depending on your business type, you will select a Free Zone and register your company there. It is worth mentioning that all the companies registered in the Free Zones are exempt from all types of taxation i.e. Value Added Tax (VAT), Income Tax, Corporate Tax, and Customs. Business owners have 100% sole proprietorship of the companies established in the Free Zones across all of Dubai.
The cost of company registration varies depending on which Free Zone are you looking to register your company in. Some major Free Zones in Dubai fall under the Dubai Creative Cluster Authority (DCCA) and the Dubai Multi Commodities Center Authority (DMCC). Other prominent ones include Jebel Ali Free Zone, Dubai Airport Free Zone, and Dubai Silicon Oasis Free Zone.
The ones mentioned above are considered to be costly. However, there are cheaper options as well but the trade-off is that they exist outside of Emirate. All these zones also have their individual identify – some are renowned for e-commerce company registrations, whereas others are famous for educational company registrations. Some of the prominent ones are called Sharjah Airport International Free Zone, RAK Free Zone, Fujairah Free Zone, and Ajman Free Zone.
Understanding Office Space and License Expense in Free Zones
As mentioned beforehand, each Free Zone has its own pricing model; some tend to charge less for office spaces per square feet but might charge more for license registration process. These things will vary from one Free Zone to another. It is worth noting that the office rent will also determine the number of visas that your business can obtain.
The different options can include opting for a Smart Desk, which is typically for freelancers who do not typically require an office space. Another option is an office suite which is small and sufficient for one or two people. And lastly, a permanent office which is a full-fledged office equipped with every you require to ensure that your work is never troubled.
There is also the cost of Free Zone registration, which is a one-time fee. This money will be paid to the Free Zone Authority which will then officially allow you to register your company.
It is important to understand that Free Zone has yearly renewal visa fees. The fees for an employee from within the UAE will differ from the one who is coming from abroad, this decision was made to accommodate foreign employees and encourage foreign investment within the UAE.
The additional fees which you will have to pay can include Bank Guarantee Cost and Registered Agent Fees.
Riz & Mona Packages
Setting up a company in Dubai has never been easier. However, if you feel difficulty in performing the process, you have the option of hiring a reliable consulting firm. Riz & Mona offers flexible business setup packages in Dubai and across UAE. You can find our wide range of packages here.