Cost Analysis of Setting Up a Mainland Company in Dubai: Fees, Breakdown & Key Factors

Dubai has become a favorite among investors and entrepreneurs because of its business-friendly environment, world-class infrastructure, and strategic access to international markets. Setting up a company in Dubai requires careful planning, especially budgeting for various expenses.

Companies in Dubai have three principal jurisdictions to choose from: mainland, free zone, and offshore. Although free zones offer full foreign ownership and offshore companies have maximum tax benefits, mainland companies provide the most versatility. 

Mainland companies can be situated anywhere in the UAE, conduct local and international trade, and tender for government contracts. Establishing a mainland company, though, comes with a variety of fees that businesses must take into account.

This article gives a detailed cost breakdown of a mainland company setup in Dubai, including setup, licensing, office space, visa fees, operational expenses, and how to invest intelligently. 

Understanding the Mainland Company Setup in Dubai

A mainland company is authorized by the Department of Economic Development (DED) and is controlled by UAE law. In contrast to free zone companies, which are officiated by their specific authorities. Moreover, a free zone company’s activities are limited within their designated zones and require a distributor to conduct business in the local market, whereas mainland companies have unlimited market access.

Key Benefits of Mainland Companies

• No geographical limitations: Offices can be established anywhere in the UAE.
• Government contracts: Only mainland companies can bid for UAE government contracts.
• No minimum capital requirement: Unlike some free zones, most mainland companies are not required to have a high minimum capital deposit.
• No currency restrictions: Companies are free to carry out transactions in any currency.
• Full foreign ownership: Recent reforms allow for 100% foreign ownership in specific industries, eliminating the need for a local sponsor.

Considering these benefits, many entrepreneurs opt for a mainland company despite its relatively higher incorporation costs.

Main Costs of Establishing a Mainland Company

1. Company Licensing

To establish a mainland company, companies need to follow the DED licensing procedure. Primary costs are:

• Reservation of trade name: Starts from AED 620 (additional charge for premium or special names)
• Initial approval from DED: Starts from AED 120 (depending on business activity)
• The license fee: Starts from AED 7,000 (depending on activity and sector)

Some businesses, like restaurants or medical providers, need extra permissions from government agencies like Dubai Municipality or the Ministry of Health, which costs more.

2. Office Space & Rental Fees

A mainland company needs to have an office, and rent differs greatly depending on the location:

• Prime locations (Downtown, Business Bay): Starts from AED 80,000 per annum
• Less expensive areas (Deira, Al Qusais, Al Barsha): Starts from AED 30,000 annually
• Virtual offices (if allowed): Starts from AED 10,000 annually
• Ejari (rental agreement) fees: Starts from AED 220 
• Utility deposits (DEWA): Starts from AED 2,000 

3. Local Sponsor or Service Agent Fees

Some business sectors mandate a UAE national’s involvement, hence a local sponsor is required. The ownership would be allocated as 51% ownership with the local sponsor and 49% with the foreign investor in an LLC structure. 

Sponsorship fees usually start from AED 15,000 annually depending on business activity and mutual agreement with the sponsor.

4. Visa & Immigration Fees

Entrepreneurs and employees need to get residency visas, and there are a number of fees associated with it:

• Investor visa: Starts from AED 3,000 (processing fee, medical test, Emirates ID)
• Employee visas: Starts from AED 5,000 per employee
• Dependent visas (spouse, children, domestic workers): Starts from AED 3,500 per individual

Ministry of Labour fees also have to be added by businesses, and these range according to the company category and employees.

5. Bank Account & Financial Expenses

Getting a corporate bank account in Dubai also has minimum balance requirements and compliance requirements:

• Minimum balance requirement: Starts from AED 50,000 (depending on bank and business activity)
• Bank processing & compliance charges: Starts from AED 1,000
• VAT filing: Starts from AED 2,000 
• Bookkeeping services: Starts from AED 12,000 annually

6. Operating & Compliance Costs

After the business is established, there are recurring costs to keep the business running.

Employee salaries & benefits

• Minimum salary is based on the job title and business activity.
• Mandatory employee health insurance: Starts from AED 1,000 per employee
• End-of-service benefits (gratuity): 21 days' salary for each year of service

Business insurance:

• Public liability insurance: Starts from AED 5,000 annually
• Professional indemnity insurance (for doctors, consultants, etc.): Starts from AED 3,000

License renewal & PRO services:

• License renewal: Starts from AED 10,000 per annum
• PRO services for government documents and visa issuance: Starts from AED 8,000 annually

Cost Optimization Strategies

A mainland company formation can be costly but there are ways to reduce expenses:

1. Select an affordable office location: Opt for less costly districts such as Deira or Al Barsha instead of high-end Downtown Dubai.

2. Negotiate sponsorship fees: Joint sponsorship services are provided by some business consultants to help reduce costs.

3. Outsource PRO and accounting services: It is cheaper to outsource the services of accounting and PRO to third-party companies compared to having full-time employees.

4. Research payment plans in installments: Most service providers allow companies to pay for other services and licenses in installments.

Through wise financial planning, entrepreneurs can start their businesses while maintaining financial stability.

Establishing a mainland company in Dubai is advantageous in many aspects, from full market access, and government tender eligibility, to the possibility of full foreign ownership in specific sectors. 

Its establishment, however, involves a sequence of costs, ranging from office space and licensing to visas and monthly running costs. The initial setup cost requirement starts from AED 50,000 and ongoing operational costs start from AED 100,000. 

Professional business setup consultants are advised to be hired in order to make the process smoother, assure compliance, and reduce costs whilst avoiding incurring unnecessary costs.

Despite the initial cost, the establishment of a mainland company in Dubai can prove to be very rewarding with long-term growth potential within one of the world's fastest-growing economies. 

By carefully projecting and efficiently controlling expenditure, business organizations have managed to thrive despite the emirate's competitive business atmosphere.

Seek our professional on-the-ground guidance, contact us via mail at info@radiantbiz.com or WhatsApp & call us at  +971 55 234 7124!

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