Cost of Setting Up a Company in Dubai: Practical Guide

Published on October 1, 2025 and written by Cyril Jarnias

Dubai, the jewel of the United Arab Emirates, is attracting an increasing number of entrepreneurs from around the world thanks to its business-friendly environment and tax benefits. However, before embarking on the entrepreneurial adventure in this dynamic city, it’s crucial to fully understand the costs associated with company formation. This article will guide you through the various financial aspects to consider when establishing your business in Dubai, from registration fees to operational expenses, including strategies to optimize your costs.

Essentials: Registration and License Fees

The first step in creating your company in Dubai involves obtaining the necessary approvals and registering your business with the competent authorities. This initial phase includes several costs that are important to budget for:

Trade License: The cost of a trade license in Dubai varies depending on the type of activity and chosen jurisdiction (mainland or free zone). For a mainland company, license fees typically start around 15,000 AED (approximately $4,100), while in free zones, they can begin from 10,000 AED (approximately $2,700).

Registration Fees: Registering your company with the Department of Economic Development (DED) or the relevant free zone authority involves additional fees. These costs vary but can average between 3,000 and 5,000 AED ($820 to $1,360).

Trade Name Approval: Choosing and getting approval for your company name is a mandatory step that typically costs between 500 and 1,000 AED ($135 to $270).

Investor Visa: If you plan to reside in Dubai to manage your business, you’ll need to obtain an investor visa. Associated costs, including medical tests and Emirates ID, can amount to approximately 5,000 AED ($1,360) per person.

It’s important to note that these costs can vary depending on factors such as the nature of your activity, chosen legal structure (LLC, sole establishment, branch, etc.), and your business location (mainland or specific free zone).

Compliance and Transparency: Regulatory Costs Not to Overlook

Once your company is established, it’s essential to remain compliant with local regulations. These obligations generate recurring costs that need to be anticipated:

Annual License Renewal: Each year, you’ll need to renew your trade license. The fees are generally similar to the initial license cost, averaging between 10,000 and 15,000 AED ($2,700 to $4,100).

Audit and Accounting: Companies in Dubai are required to maintain accounting compliant with international standards. Annual audit and bookkeeping fees can range from 5,000 to 20,000 AED ($1,360 to $5,440) per year, depending on your company’s size and complexity.

Mandatory Insurance: Certain insurances are mandatory, particularly health insurance for your employees. The cost depends on the number of employees and coverage level, but budget at least 1,500 AED ($410) per employee per year.

Local Sponsorship Fees: If you opt for an LLC structure on the mainland, you’ll need a local sponsor holding 51% of your company shares. Annual sponsorship fees can vary considerably, ranging from 15,000 to 50,000 AED ($4,100 to $13,600) or more, depending on negotiated agreements.

• Employee visa renewals: Approximately 3,000 AED ($820) per employee every 2-3 years
• Chamber of commerce fees: Between 1,000 and 2,500 AED ($270 to $680) per year
• VAT registration (if applicable): Free, but requires rigorous accounting

It’s crucial to budget these compliance costs from the start to avoid any unpleasant surprises. Transparency and regulatory compliance are essential for operating smoothly in Dubai.

Starting on the Right Foot: Initial Investment to Plan For

Beyond registration and compliance fees, it’s crucial to plan for sufficient initial investment to launch your activity under the best conditions. Here are the main expense categories to consider:

Share Capital: The minimum share capital amount varies depending on the business type and chosen jurisdiction. For a mainland LLC, there’s no legal minimum, but capital of 300,000 AED ($81,600) is often recommended. In some free zones, the minimum can be as low as 50,000 AED ($13,600).

Office Rental: Real estate costs in Dubai can be high. For a small office in a business district, budget between 50,000 and 150,000 AED ($13,600 to $40,800) per year. Alternatively, virtual or shared office options are available starting from 15,000 AED ($4,100) per year.

Equipment and Furniture: Fitting out your premises can cost between 20,000 and 100,000 AED ($5,440 to $27,200) depending on the size and desired standard.

Recruitment and Salaries: Salaries in Dubai vary considerably by sector and skills. Budget for at least 3 to 6 months of salaries, approximately 150,000 to 300,000 AED ($40,800 to $81,600) for a small team of 3 to 5 people.

Marketing and Communication: To establish yourself in the local market, an initial budget of 50,000 to 100,000 AED ($13,600 to $27,200) may be necessary for website development, advertising campaigns, and networking activities.

Working Capital: It’s prudent to plan for working capital covering at least 6 months of operations, which can represent between 300,000 and 1,000,000 AED ($81,600 to $272,000) depending on the nature and scale of your activity.

• Security deposits: For office rental and utility services, budget approximately 10% of the annual rent
• Bank fees: Opening a professional bank account can cost between 2,000 and 5,000 AED ($540 to $1,360)
• Optional insurance: Civil liability, property insurance, etc. (varies by activity)

It’s important to note that these figures are estimates and can vary considerably depending on your sector, business model, and ambitions. A detailed analysis of your project and a solid business plan are essential to determine the precise initial investment you’ll need.

Controlling Costs: Common Operational Expenses

Once your business is launched in Dubai, it’s essential to understand and anticipate recurring operational expenses to ensure your activity’s sustainability. Here’s an overview of the main expense categories to consider:

Rent and Utilities: Commercial real estate costs in Dubai remain among the highest in the world. For a medium-sized office in a prime business district, budget between 100,000 and 300,000 AED ($27,200 to $81,600) per year. Don’t forget to include utilities (electricity, water, air conditioning) which can represent 10 to 15% of the rent.

Salaries and Benefits: Payroll often constitutes the most significant expense category. Salaries in Dubai are competitive, especially for skilled positions. For a team of 5 to 10 people, budget an annual amount of 1 to 3 million AED ($272,000 to $816,000), including benefits like health insurance and annual air tickets.

Marketing and Business Development: To maintain your market visibility, a continuous marketing budget is necessary. Depending on your sector and strategy, this can represent between 5% and 15% of your turnover, or 50,000 to 500,000 AED ($13,600 to $136,000) per year for an SME.

Professional Services: Outsourcing certain functions like accounting, audit, legal, or IT can cost between 50,000 and 200,000 AED ($13,600 to $54,400) per year, depending on your company size and complexity of needs.

Banking and Financial Fees: Account maintenance fees, transaction commissions, and potential loan interest can represent 1 to 3% of your turnover.

Travel and Entertainment: In a business city like Dubai, expenses related to travel, business meals, and networking events are unavoidable. Budget 50,000 to 200,000 AED ($13,600 to $54,400) per year depending on the intensity of your commercial activities.

• Supplies and consumables: Between 1,000 and 5,000 AED ($270 to $1,360) per month
• Maintenance and repairs: Approximately 2 to 5% of your asset value per year
• Training and skills development: 1 to 3% of your payroll

It’s crucial to closely monitor these expenses and regularly reassess them to optimize your cost structure. Implementing an effective financial reporting system will help you identify areas where savings are possible.

Optimizing Your Budget: Cost Reduction Strategies

In a business environment as dynamic as Dubai’s, optimizing costs is crucial to remain competitive. Here are some effective strategies to reduce your expenses without compromising your operations’ quality:

Strategic Location Choice: Although Dubai’s central business districts are prestigious, they’re also the most expensive. Consider emerging areas like Dubai South or Dubai Silicon Oasis, where rents can be up to 40% cheaper. For a startup, opting for coworking space or a virtual office can significantly reduce real estate costs, with potential savings of 50,000 to 100,000 AED ($13,600 to $27,200) per year.

Optimizing Legal Structure: The choice between a mainland company and a free zone company can significantly impact your costs. Free zones often offer more advantageous all-in-one packages, with potential savings of 20,000 to 50,000 AED ($5,440 to $13,600) on establishment and annual renewal fees.

Leveraging Technology: Adopting cloud management tools and automation can reduce your administrative staffing needs. For example, using online accounting software can save you 20,000 to 40,000 AED ($5,440 to $10,880) per year in outsourced accounting fees.

Smart Negotiation: In Dubai, negotiation is common business practice. Whether for your rental contracts, supplier agreements, or even banking services, don’t hesitate to negotiate. Reductions of 10 to 15% are often possible, representing substantial savings on your operational costs.

Optimizing Human Resources Management: Rather than hiring full-time for all functions, consider using freelancers or outsourcing for certain specialized tasks. This approach can reduce your salary costs by 20 to 30%, potentially saving several hundred thousand AED per year.

Investing in Energy Efficiency: In a hot climate like Dubai’s, air conditioning costs can be high. Investing in LED lighting systems and high-efficiency air conditioners can reduce your electricity bill by 20 to 30%, representing savings of 10,000 to 30,000 AED ($2,720 to $8,160) per year for a medium-sized office.

• Pooling certain services with other businesses (e.g., security or cleaning in an office building)
• Optimizing your inventory to reduce storage costs and improve cash flow
• Prioritizing local suppliers to reduce logistics costs and benefit from shorter delivery times

It’s important to note that cost reduction shouldn’t come at the expense of your products’ or services’ quality. The goal is to optimize your expenses while maintaining, or even improving, your value proposition for customers.

Conclusion: Investing Smartly to Succeed in Dubai

Creating a company in Dubai represents an exceptional opportunity for entrepreneurs worldwide, offering access to a dynamic and rapidly growing market. However, as we’ve seen, this investment requires meticulous financial planning and a thorough understanding of the involved costs.

Registration and license fees, although variable depending on business type and location, constitute the first step of your investment. It’s crucial not to underestimate recurring compliance costs, essential for operating legally and smoothly in the emirate.

The initial investment, covering share capital, premises, equipment, and working capital, may seem substantial, but it’s key to a solid start. Realistic budgeting of these expenses will allow you to approach the market with confidence and the necessary resources to seize opportunities as they arise.

Common operational expenses, although significant in a city like Dubai, can be optimized through intelligent management and well-thought-out cost reduction strategies. The balance between expense control and growth investment is delicate but essential to ensure your company’s sustainability and success.

Ultimately, the cost of creating and managing a company in Dubai should be seen as an investment in your entrepreneurial future. With adequate planning, rigorous financial management, and a strategic approach to business development, the opportunities offered by the Dubai market can largely compensate for initial and operational costs.

Key Points Recap:

• Registration and license fees vary between 20,000 and 50,000 AED ($5,400 to $13,600)
• Total initial investment can range from 500,000 AED to several million AED depending on project scale
• Annual operational expenses for an SME can reach 2 to 5 million AED ($544,000 to $1.36 million)
• Cost optimization strategies can generate savings of 15% to 30% on operational expenses

By adopting a thoughtful approach and surrounding yourself with the right advice, you can successfully navigate Dubai’s entrepreneurial ecosystem, transforming every dirham invested into an opportunity for long-term growth and success.