Are you dreaming of owning a business in Dubai? With its promising economic climate and vast opportunities, Dubai is an enticing destination for entrepreneurs worldwide.
However, understanding the costs and procedures involved is crucial before taking the plunge.
This comprehensive guide will cover everything you need to know about the financial aspects of starting a business.
From business license cost in Dubai to operational expenses, discover if Dubai is the right city for your business expansion journey in 2024 and beyond.
Immediate Rewards of Launching a Small Business in Dubai
Attractive Tax Benefits
One of the most appealing aspects of starting a small business in Dubai is the city’s attractive tax benefits. With a limited corporate tax imposition, businesses can fully repatriate their profits, making Dubai an ideal destination for entrepreneurs and startups.
Strategic Geographical Position
Dubai’s strategic geographical position serves as a significant advantage for small businesses. As a central hub connecting Europe, Asia, and Africa, Dubai is ideal for businesses targeting global market penetration. This superior connectivity benefits various industries aiming to expand their reach.
High-Quality Infrastructure
Dubai’s high-quality infrastructure, including state-of-the-art transportation, communication, and logistics facilities, makes conducting business efficient and cost-effective.
This advanced infrastructure attracts investments from around the globe, creating a thriving business ecosystem that supports growth and fosters innovation.
Understanding Trade Licenses in Dubai
What is a Trade License?
A trade license is issued at the time of company formation which allows and designates the activities that any company can carry out in the UAE and globally. Issued by the Department of Economic Development (DED)or one of Freezone Licensing Authorities in UAE, it is valid for numerous business activities in Dubai and other emirates in UAE, including exporting and importing merchandise and commercial activities.
Types of Trade Licenses
The type of trade license required depends on several factors, including:
- The chosen business setup is a Mainland company, Free Zone company, or Offshore Business.
- The chosen business activities.
- Business location (and office space/office rent).
- The number of business partners.
- Requirements of Additional Approvals
- Ownership Structure of the company
Despite the UAE’s recent updates to its business regulations to streamline the process, it can still be overwhelming. Partnering with company formation specialists such as Vytal can help you navigate these complexities and select the appropriate business setup.
Costs of Trade Licenses
To give you a clearer picture, here’s a breakdown of the costs associated with different types of trade licenses:
License Type | Commercial License | Professional License | Industrial License | Tourism License |
Purpose | For trading activities | For service providers | For manufacturing and industrial activities | For travel and tourism sectors |
Initial Approval Fee | AED 100 to AED 300 | AED 100 to AED 300 | AED 100 to AED 300 | AED 100 to AED 300 |
Trade Name Reservation Fee | AED 620 to AED 720 | AED 620 to AED 720 | AED 620 to AED 720 | AED 620 to AED 720 |
License Fee | AED 10,000 to AED 15,000 | AED 5,000 to AED 10,000 | AED 10,000 to AED 30,000 | AED 15,000 to AED 20,000 |
Office Rent(depending on the location and size of the office) | AED 10,000 to AED 50,000 | AED 10,000 to AED 50,000 | AED 15,000 to AED 100,000 | AED 10,000 to AED 50,000 |
Administrative Service Fees | AED 3,000 to AED 5,000 | AED 3,000 to AED 5,000 | AED 3,000 to AED 5,000 | AED 3,000 to AED 5,000 |
Total Cost | AED 25,720 to AED 70,720 | AED 18,720 to AED 66,020 | AED 28,720 to AED 136,020 | AED 28,720 to AED 76,020 |
Costs of Small Business Licenses in Dubai
Managing costs effectively is crucial for small businesses. Choosing shared or co-working spaces can significantly reduce expenses compared to renting an entire office. The government also offers multiple incentives and support programs for small businesses. Partnering with VytalCS can help you take full advantage of these resources.
Freelance Permit
For individuals offering professional services:
- Freelance Permit Fee: AED 7,500 to AED 15,000
- Co-working Space Rent: AED 5,000 to AED 15,000
- Total Cost: AED 12,500 to AED 30,000
Small Retail Shop
For small retail shops, selecting a moderate space can help manage costs:
- License Fee: AED 10,000 to AED 15,000
- Trade Name Reservation Fee: AED 620 to AED 720
- Small Shop Rent: AED 20,000 to AED 40,000
- Total Cost: AED 30,620 to AED 55,720
Home-Based Business
For businesses operating from home, such as online services and catering:
- License Fee: AED 5,000 to AED 10,000
- Trade Name Reservation Fee: AED 620 to AED 720
- Total Cost: AED 5,620 to AED 10,720
Additional Costs and Considerations
Visas
Each visa costs between AED 4,000 and AED 7,000. Depending on your business size, you need a budget for employee and investor visas.
Sponsorship Fees
The requirement to have a local sponsor is no longer applicable for most of the activities, hence, this fee can be avoided depending on the type of business activity you will be conducting.
Bank Account Opening
Some banks may require a minimum maintenance balance to open the bank account, usually ranging from AED 50,000 to AED 300,000
Utilities and Operational Costs
These include water, internet, and electricity costs, which may increase according to your business activities.
Marketing and Advertising
Initial marketing and advertising costs can vary depending on your business activity and target audience.
Factors Influencing Business License Cost In Dubai
Nature of the Business
The type of business activity plays a pivotal role in determining the cost of a small business license in Dubai.
Number of Company Partners
The number of company partners can affect the cost. Generally, having fewer partners leads to lower costs.
Rented Office in Dubai
Renting office space in Dubai increases the cost of your business license due to the 5% market fees on annual rent imposed by the DED.
Added Approvals
Certain business activities may require additional approvals, escalating the cost of a small business license.
Documents Required to Open a Small Business in Dubai
Once the Registry Office approves your business name, you must apply for the company’s MoA (Memorandum of Association) and AOA (Articles of Association) with the DED. Along with your business plan and completed application, you also need:
- Proof of ID and address for shareholders and directors
- Passport copies of directors and shareholders
- Copy of company name confirmation
- Details of business activity planned
Partnering with Vytal: Your Gateway to Seamless Business Setup in Dubai
Partnering with a local company set up agency like Vytal is the first decisive step towards establishing your business in Dubai.
Our expert business consultants specialize in navigating the complexities of UAE regulations and will handle every aspect of your company setup.
From managing business activities to securing essential trade licenses, we ensure a streamlined process that allows you to start trading promptly.
Step 1: Comprehensive Company Setup
Our team manages all facets of your business setup, ensuring compliance with local laws and regulations. We expedite the process, providing the necessary documentation and approvals to commence operations swiftly.
Step 2: Choosing the Optimal Legal Structure
Dubai’s innovative Free Zones offer tailored legal structures to optimize business operations. You can maximize benefits such as full ownership and local government support by selecting the proper structure tailored to your industry and growth plans.
Step 3: Registering Your Business Name
Navigating UAE’s stringent naming regulations is crucial. Vytal assists in selecting and registering a business name that complies with all regulatory requirements, ensuring your brand identity is established effectively.
Step 4: Securing Residency Visas
Our dedicated teams facilitate the acquisition of residency visas, essential for you and your dependents to live and work in the UAE. We guide you through the visa application process, ensuring compliance and timely approvals.
Step 5: Opening Corporate Bank Account
Opening a corporate bank account is crucial for managing your business finances in Dubai. A corporate account is essential for handling payments, payroll, and financial operations, establishing credibility with clients and suppliers.
Vytal helps you select a bank that aligns with your business needs and guides you through preparing and submitting the required documentation.
Step 6: Finding Your Ideal Office Space
With your trade license secured, Vytal helps you locate and secure the perfect office space within Dubai’s vibrant Free Zones.
Whether you require a dedicated office or flexible co-working solutions, we ensure your premises align with your business needs and customer expectations.
Partner with Vytal today and embark on your journey to business success in Dubai. Our commitment to excellence and expertise guarantees a seamless setup process, allowing you to focus on growth and profitability from day one.
Frequently Asked Questions
1. How much is a business license in Dubai?
The cost of a business license in Dubai varies depending on the license type and the specific business activities. On average, the cost ranges from AED 10,000 to AED 25,000. This includes initial approval fees, trade name registration, and license issuance. Additional fees may apply for specific activities or requirements.
2. How much does it cost to open a business in Dubai?
The cost to open a business in Dubai can vary widely based on the business type, location, and other factors. Generally, you can expect to spend between AED 30,000 to AED 70,000, which includes licensing fees, office space, visa costs, and other administrative expenses. Free zone setups have different cost structures compared to mainland businesses.
3. How do you get a business license in Dubai?
To get a business license in Dubai, follow these steps:
- Determine the type of business activity.
- Choose a business structure (e.g., LLC, sole proprietorship).
- Select a business name and get it approved.
- Apply for initial approval from the Department of Economic Development (DED).
- Draft a Memorandum of Association (MOA) or Local Service Agent (LSA) agreement.
- Choose a business location and get approval for the tenancy contract.
- Submit all documents to the DED and pay the required fees.
- Receive the business license.
4. Can I sell online without a license in the UAE?
You cannot legally sell online in the UAE without a proper business license. Selling online without a license can result in fines and legal action. Obtaining an e-commerce license is essential if you plan to conduct business online.
5. How do you get a business permit in Dubai?
A business permit in Dubai is essentially a business license. To obtain the permit, follow the steps outlined in question 3. Ensure you comply with all the regulations and provide the necessary documentation.
6. What license is best for a small business?
The best license for a small business in Dubai depends on the nature of the business. A trade license issued by the Department of Economic Development (DED) is suitable for most small businesses. For e-commerce businesses, an e-commerce license is ideal. Free zone licenses are also popular for their tax benefits and 100% ownership options.
7. Do I need a license to sell on Amazon in the UAE?
You need a business license to sell on Amazon in the UAE. Depending on your business structure and activities, this could be a trade license, e-commerce license, or free zone license. Amazon requires sellers to provide a valid trade license to operate legally on their platform.
8. How much is a small business license in Dubai?
A small business license in Dubai typically costs between AED 10,000 to AED 15,000. The exact cost will depend on the business activities, location, and other regulatory requirements.