COSTS AND VALUE
Dubai is a cost-effective place to do business. With zero corporate tax, zero personal income tax and zero duties on imports, exports and re-exports, it makes operating your business as economical as possible. Where to set up your business is a big decision that will likely impact the trajectory of your company’s growth and Dubai’s popularity with companies from all over the world, is a testament to its success at being a good value location.
Dubai has a reputation for being a high-end destination, with extravagant buildings and luxurious resorts but that doesn’t mean that it is an expensive place to do business. In fact, there are numerous cost-effective and flexible packages for businesses of all sizes to choose from. When it comes to low cost ways to set-up a company in Dubai choosing, a Free Zone license is a good decision when you take into account various factors such as administrative fees and office options, particularly when compared to those associated with setting-up a Mainland business.
A COST-EFFECTIVE WAY TO SET UP A BUSINESS
There are several differences between a Free Zone and a Mainland business license in Dubai:
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Mainland License - If your target customers are in the UAE's local market then starting a Limited Liability Company (LLC) with a mainland license is required.
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Free Zone License - If you are involved in imports, exports or re-exports then a Free Zone license could be the best option for you.
If your requirements are met by a Free Zone, then it could be the best value option for you and there are a wide range of options to choose from when it comes to license types and office choices.
SPEED - GET UP AND RUNNING QUICKLY
In business, time is money. So it can be critical to be able to go through the registration and licensing processes and get your office up-and-running as quickly and efficiently as possible. This is one of the reasons why Dubai Free Zones are so popular from a value point of view as the speed with which they clear licence applications, issue visas, and set-up office space and other amenities in a matter of a few days or weeks helps businesses on their way as quickly as possible. Setting-up a mainland business requires navigating the multiple government authorities for licensing, visas, telephone and internet connectivity, immigration services, customs and many more. Most of the Free Zones in Dubai have a dedicated customer service department to deal with any requirements you might have in order to speed things up.
SCALE - GROW AS QUICKLY AS POSSIBLE
Whether you are a small start-up or a larger established company, once your business is up-and-running the next focus turns to growing it in the most sustainable and strategic way in order to optimize your resources effectively. Dubai has a unique set of ingredients to do just that. The city has a unique location between East and West and its unrivaled connectivity gives businesses based here great access to multiple growth markets around the world. For import, export or trading companies, accessibility and distribution is key. Dubai, as an epicentre for trading and a hotspot for importing and exporting, has the hard and soft infrastructure in place to help your businesses scale across the region. As a regional business hub for a number of sectors, Dubai is home to most of the region’s multinational headquarters and, with a pro-business regulatory environment, is the place to be in order to grow your business cost-effectively.
HOW MUCH DOES IT COST TO SET UP A FREE ZONE COMPANY IN DUBAI?
While the various costs involved in setting-up a company in a Dubai Free Zone vary significantly from Free Zone to Free Zone and depending on what type of company you want to set-up, there are a few common factors that you will need to consider:
Registration Fees
These are the fees that you pay to the Free Zone to set-up your business. These are a once-off cost and, like with most fees relating to Free Zones in Dubai, these differ from Free Zone to Free Zone, but can start from as low as AED 3,500 depending on what type of company you are registering.
License Fees
This is the fee that is paid to the Free Zone for whichever license you choose. The type of licence you need depends on the primary activity your business will be involved in, and different free zones offer different license options, the fees for which vary. Free Zone licenses generally must be renewed every one to three years, but this depends on the Free Zone and license you select. Licenses include Trading, Service and Industrial and generally cost between AED 10,000 to AED 50,000 annually. In many cases, the license renewal fees can differ to the initial license fee for the first year.
If you are a freelancer you can apply for a Freelance License via the new GoFreelance scheme from TECOM Group or Dubai South which residents can now utilise starting from AED 7,500. Non-Profit licenses are available at International Humanitarian City and are generally cheaper than Commercial licenses. Non-residents of Dubai can also apply for a virtual company licence should they wish.
Visas
Once your business is up and running, as the business owner, you can apply for your own Residence Visa as well as any visas you may need for family members. This initial visa cost is a once-off fee and gives the applicant the legal status of investor and the ability to do business in the Free Zone. For employee visas, Free Zone companies are limited to a certain number of visas depending on which license package they choose. The general cost is between AED 3,000 to AED 6,000 per person inclusive of renewal fees, and these remain valid for a period of between one and three years. Residence visas are needed in order to open a personal bank account, to sponsor family members, rent property and to apply for a driver's license.
Office space
Whether you're a small start-up, an SME or a large corporation, Dubai Free Zones offer multiple cost-effective ways for you to lease or buy office space. Each Free Zone has their own offerings, many of which include the opportunity to scale as your company grows. From plug and play flexi-desks, co-working space and serviced offices to multi-storey offices for lease or sale and even custom-build solutions, there are options for every type of company.
Office costs can vary significantly from Free Zone to Free Zone, depending on the part of town the office is located in and the standard of the building. The type of office depends on the amount of staff you plan on accommodating and is generally calculated based on square-footage. You can opt for serviced or unserviced offices, furnished or unfurnished, and payment terms can be annual or fixed-term depending on which Free Zone you select. The cost typically starts from around AED 15,000 to AED 20,000 annually but it’s best to do your own research to see the average office costs for the areas you want to be based in for more accurate information.
Several Free Zones offer co-working and flexi-desk options as well as additional spaces like conference rooms which are cost-effective ways to operate for companies that have flexible requirements. If you don’t need a physical office space, Dubai Free Zone licenses can be incorporated without one.
It is important to consider that, in some Free Zones, licence costs might be lower but office costs higher. In some Free Zones, visa costs are higher although other costs are lower. Some Free Zones offer helpful packages that include many of the above elements like registration, licenses and office space bundled together at competitive rates and these packages can vary significantly from Free Zone to Free Zone. Some Free Zones also offer special rates for start-ups or residents of their community.
THE BENEFITS OF CHOOSING A DUBAI FREE ZONE
The choice of which city to set up your business in is a fundamental one, and while there are also a number of Free Zones in the other Emirates of the UAE, different Emirates offer different kinds of opportunities, both long term and short term. It’s important to consider the differences between the Emirates and how they might impact your company in particular. Business regulations can differ between the Emirates and setting-up your business in another Emirate from an administration point of view with the intention of primarily operating out of Dubai can pose challenges. Some investors and entrepreneurs can be attracted by cheaper license costs in these Emirates without being aware of the potential drawbacks, some of which include:
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Activities - The activities that each Free Zone offers licensing for differs from Free Zone to Free Zone and this is an important factor to consider when evaluating Free Zones in other Emirates. Free zones often cater to specific industries, which can make it easier to navigate the legality of starting a business within those industries. With a much wider range of Free Zones in Dubai that cater to specific sectors, you are more likely to find a Free Zone that matches your company’s needs and offers the right Activities and thus avoid a situation where you take out a license at a Free Zone that does not permit you to engage in the type of business you may now, or in the future, want to operate in.
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Bank accounts - Setting up a bank account in Dubai with a license from another Emirate can pose challenges and some banks have more stringent requirements for opening such accounts. Being based in a Dubai Free Zone minimizes these potential issues.
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Being where the action is - If your Free Zone is in another Emirate outside Dubai, then you must take up an office there. In doing so, you may miss out on the networking and cluster effects of being based where the action is, especially if your industry has a prominent presence in Dubai itself. It is beneficial to be as close as possible to where your customers, prospects, suppliers and potential staff are.
While some of the Free Zones in Dubai might be more expensive, it’s important to consider the fit for your business and how the Free Zone you choose might impact the future success of your company in the long run.