What will it cost to set up a business in the UAE in 2022?

Here is a breakdown of mandatory costs and potential additional costs you should be aware of.

Have you ever been thinking of starting a business here in the UAE but are unsure of how much investment you will have to make in order to make it successful? The UAE has a vibrant business community, and many people are interested in starting their own business while working in the UAE.

Over 45,000 newly issued business licenses were issued in Dubai alone during the first half of this year, according to Dubai Economy and Tourism (DET).

Whether you start a sole proprietorship or a small LLC, starting a business can be a rewarding experience. In the UAE, LLCs or Limited Liability Companies offer more operational flexibility than other business structure options, according to business set up experts.

You can have 100 per cent ownership, conduct business anywhere in the UAE, and also conduct a wide range of business activities through this license.

Costs associated with setting up a business

Although there are some mandatory costs that you need to budget for, there are also some factors that may raise the cost of your overall project.

The type of company and the number of shareholders

Depending on the type of company you wish to set up, as well as whether the company is being set up by an individual or by a corporation opening a branch, set-up costs can vary.

Setting up a business in the UAE can be complex due to the fact that the costs vary depending on what you want to do, and who owns the business.

A company setting up a branch office in the UAE, for example, would need to complete more documentation requirements than an individual setting up a business.

The business set up process is easier and cheaper if you are a resident and all of the shareholders are individuals. The set-up process for an onshore business that is started by an individual is relatively straightforward, with some fixed and variable costs.

Activities related to your business

The type of business activity that your business will conduct also affects set up costs.

There is a possibility that your business activity will require special approval from relevant authorities, such as the municipality, civil defense, or another organization.

As an example, starting a nursery or play school would require several approvals from the education authorities. There would also be inspections and audits to ensure compliance with the infrastructure, health and safety requirements. Alternatively, if you are setting up a clothing store or a content management company, you will not need any additional approvals.

Regulatory authority

When it comes to setting up a company, the jurisdiction refers to where you will be establishing it: Is it in a special economic zone or a free zone? Is it going to be on the mainland? Where will you set up your business?

Economic regulations will differ from Emirate to Emirate or free zone to free zone. There can also be some variation in costs between free zones and emirates.

For instance, Abu Dhabi offers a two-year license at the time of business establishment, which means you won't have to renew it the following year.

How much does it cost to set up a mainland LLC?

Here is a breakdown of some of the mandatory and variable costs you must pay when setting up an LLC on the mainland, keeping these factors in mind:

1: Submit your trade name and receive an approval – Dh1,000

Since LLCs on the mainland fall under the jurisdiction of the economic department in an Emirate, you would have to visit the economic department of the Emirate in which you wish to start the business. The initial approvals for your business license will be obtained here. You must submit your trade name and get an initial approval based on the guidelines set out by the relevant authority. You will receive an approval certificate and a provisional trade license number after completing the process.

2: Get MOA, other documents notarised and attested – Dh2,000

Your Memorandum of Association (MOA) outlines your business activities and shareholders agreements, among other aspects of your business operations. Any document that your company needs must be notarized and attested. In the UAE, this can be done at a notary. This process can also be completed online in Abu Dhabi.

3: Choose an office location. Ejari – Dh210

There are multiple options for business owners in the UAE, depending on their operational needs and budget, from establishing a virtual office to renting a flexi desk at a business center. Whatever option you choose, the Ejari, which is a registered lease agreement, is the document you need to complete your set up process. There is a cost of approximately Dh210 for this.

4: Obtain any additional approvals

Depending on the type of business you are setting up, this step may vary significantly. You would need special approvals from the municipality or regulatory authority within the sector, for example, for education, health, or food. A sports center or club would require additional approvals from the sports governing body in the Emirate.

Costs for these additional approvals can range from Dh10,000 to Dh30,000.

5: Get your trade licence – Dh20,000

Once you have all the documents in place, you will need to visit the economic department once again to apply for the trade license. Once all the documents are in order, the trade license will be issued.

Step 6: Obtain your establishment card and immigration card – Dh2,500 + Dh5,500

Registration with the Ministry of Human Resources and Emiratisation (MOHRE) and the General Directorate of Residency and Foreigners Affairs (GDRFA) of the Emirate is the next step.

MOHRE requires you to apply for an establishment card, and GDRFA requires you to apply for an immigration card. You can apply for work permits and visas as a company with both of these cards.

MOHRE's establishment card costs Dh2,500, while the Immigration card costs Dh5,500.

Total cost – Approximately Dh31,000

You would need to keep a budget of at least this amount for setting up and registering a fully owned LLC on the mainland.

Additional fees to consider

According to your operational needs, you may need to budget for the following additional costs:

Depending on how many authorities you need to obtain approvals from, additional approvals can significantly increase your budget. To find out how many approvals you will need for your business idea, and how much they will cost, you should speak with a business setup consultant.

• Rent – Rent would also need to be considered, depending on how large and where your office is located.

• Utility deposit – You will also need to pay a security deposit to the water and electricity authority of the Emirate if you set up your own office. Approximately Dh2,000 will be refunded as this deposit. Utility costs for your operations must also be taken into consideration every month.

• Visa costs – If you are planning to apply for an investor visa, you would need to separately budget for the visa costs, which is approximately Dh6,000.

• Business set up service fees – As the process for setting up a business requires all the steps listed above, you may wish to hire a company formation specialist to ensure that you fulfill all the requirements in terms of documents and approvals. Each business set up consultancy will charge you a certain fee for their service.