The UAE economy is projected to grow by 5–6% in 2025, driven by diversification into non-oil sectors like technology, renewable energy, and logistics. The IMF and World Bank forecast 5.1% and 4.1% growth, respectively, while the UAE Ministry of Economy emphasizes a focus on sustainable development and innovation. (source)
After all, the UAE has established itself as a global hub for business, attracting investors and entrepreneurs from across the globe.
One of the most appealing opportunities for company formation in the UAE is the Free Zone. This offers numerous benefits, such as 100% foreign ownership and tax advantages like exemptions on import, export, corporate, and personal taxes.
However, understanding the cost of UAE Free Zone company setup is crucial for entrepreneurs. This article explores the associated costs and factors influencing them.
Keep reading to learn more.
Factors Affecting Business Setup Costs in UAE Free Zones
Several factors influence the cost of setting up a company in a UAE-free zone. Key considerations include:
- Free zone Location: Premium locations like Dubai typically have higher startup costs compared to smaller emirates.
- Business Activity: The type of economic activity determines the required license, directly impacting costs.
- Office Requirements: Costs vary depending on whether you opt for a dedicated office, shared workspace, or flex desk.
- Number of Visas: Each residency visa incurs a fee, so more visas mean higher expenses.
- Additional Services: Value-added services such as legal advice, bank account creation, and PRO assistance contribute to the overall cost.
Types of Business Licenses and Their Costs
To operate in a UAE-free zone, businesses must obtain a license. Common license types and their approximate costs include:
- Commercial License: Commercial licenses vary significantly by free zone. AED 9,020 (registration) + AED 20,285/year (license) in DMCC. AED 5,550–17,000 in Ajman Free Zone.
- Service License: Designed for service-oriented businesses; annual fees start at approximately AED 12,000.
- Industrial License: Required for manufacturing companies; costs range from AED 15,000 to AED 25,000 annually.
- Freelance Permit: Freelance permits start at AED 8,000 (no visa package) in Umm Al Quwain Free Trade Zone, while RAKEZ offers SME packages at AED 16,500/year inclusive of visas.
Initial Setup Costs
Below are typical initial costs associated with starting a business in a UAE-free zone:
- Registration Fees
A one-time registration fee ranges from AED 5,000 to AED 15,000, depending on the free zone authority.
- License Fees
License costs vary by category and are renewable annually. For example, DMCC license fees start at AED 20,285/year.
- Office Space Rental
Dedicated office spaces start at AED 20,000 annually. But, flexi-desks start at AED 15,000/year in DMCC, while Ajman Free Zone offers tailored office solutions via its cost calculator.
- Visa Processing Fees
UAQ Free Trade Zone offers a two-visa package for AED 13,500, averaging AED 6,750 per visa.
Overview Initial Setup Costs
Cost Component | Estimated Cost (AED) |
Registration Fees | 5,000 – 15,000 |
License Fees | 10,000 – 20,000 |
Office Space Rental | 5,000 – 20,000 |
Visa Processing | 3,000 – 5,000 |
Total Estimated Cost | 23,000 – 60,000 |
Ongoing Operational Costs
Operating a business in a Dubai free zone involves recurring expenses such as:
- License Renewal Fees
Annual renewal fees are typically similar to initial license costs.
- Office Rent
Office space rental fees must be budgeted annually.
- Visa Renewal Costs
Residency visas are typically valid for 2-3 years before renewal, not annually.
- Banking and Accounting Services
Accounting services and bank account maintenance fees add to operational costs.
- Insurance
Some free zones mandate insurance coverage costing between AED 1,000 and AED 5,000 annually.
Other Additional Costs
Additional expenses may arise during business operations:
- Import duties and customs fees for trading companies.
- Digital marketing and advertising budgets for brand promotion.
- Consultant or legal counsel fees for compliance matters.
- Refundable bank guarantees are required by certain free zones for visas or other services.
How to Minimize Costs When Setting Up a Business in a Free zone
Consider these tips to reduce expenses:
- Opt for affordable packages offered by free zones like Ajman Free Zone business setup tailored to various activities.
- Choose shared office spaces or flex desks to lower rental costs.
- Take advantage of bundled packages that include registration, licenses, and visas.
- Plan your visa requirements carefully and apply only for essential visas.
- Seek professional assistance from business setup consultants to streamline processes and avoid costly errors.
Conclusion
UAE Free Zone business setup offers complete ownership and operational flexibility. Free zones like Ajman Free Zone provide ideal conditions for expanding your enterprise due to their numerous advantages. Understanding setup costs thoroughly is vital for effective financial planning.
By considering all aspects outlined in this article and implementing cost-effective strategies, you can efficiently manage your budget while positioning your business competitively in the global market.
Book your free consultation call today with the experts of JSB Incorporation to start your business setup.