Trip Expert International offers business setup services in the UAE. JONATHAN YBERA/EXPAT MEDIA
Setting up a business in one of the UAE’s free zones remains one of the most affordable and straightforward options for entrepreneurs, particularly startups and first-time business owners.
Business setup experts say a freezone licence offers lower startup costs, simplified requirements and the flexibility to establish a company without leasing a physical office, making it an attractive choice for freelancers, online businesses and small enterprises.
Andrei Kent Sunga, Business Development Manager at Trip Expert International, said that freezone licences are often the best starting point for entrepreneurs before expanding to the mainland.
“We recommend getting a freezone licence, especially for startups, because it’s much cheaper compared to a mainland licence,” Sunga told Expat Media. “If your business becomes stable later on, you can always change to a mainland business licence.”
UAE freezone vs mainland business licence
While both business structures allow entrepreneurs to legally operate in the UAE, they differ in terms of cost, office requirements and permitted business activities.
Sunga said that one of the biggest advantages of a freezone company is that entrepreneurs are generally not required to lease a physical office. “In a mainland company, you need to have an office in the UAE, so you’ll need an Ejari registration and tenancy contract,” he said.
This significantly reduces startup costs for many entrepreneurs launching online businesses, consultancy firms or professional services.
However, certain regulated business activities cannot be carried out under some freezone licences and may instead require a mainland licence and approvals from the relevant government authorities. Sunga cited activities such as massage services, beauty salons and parts of the gold and jewellery sector among businesses that may require mainland licensing, depending on the activity and regulatory authority.
Entrepreneurs are advised to verify whether their intended business activity is permitted by the freezone authority before applying.
How much does a freezone business licence cost?
Sunga said the licence itself typically costs between Dh5,555 and Dh7,000, depending on the issuing authority. However, entrepreneurs should prepare for additional government fees that are necessary to complete the business setup.
These include:
• Establishment Card
• E-channel registration
• UAE residence visa
• Emirates ID processing
Combined, these additional requirements typically bring the total setup cost to approximately Dh17,000 to Dh20,000, including the business licence. “The licence is only one part of the total cost. Business owners also need to prepare for the Establishment Card, E-channel and residence visa,” Sunga explained.
Other business setup costs
Aside from licensing expenses, entrepreneurs should budget for several other operational and regulatory requirements.
These may include:
• Corporate Tax registration
• Company stamp
• Company logo
• Company letterhead
• Corporate bank account
• Accounting services
• Annual tax filing
• Licence renewal
Sunga said Trip Expert International includes several of these services within its business setup packages. He added that the company charges approximately Dh550 for Corporate Tax registration.
Businesses that exceed the UAE’s mandatory VAT registration threshold must also register for Value Added Tax (VAT), with registration services costing around Dh550, according to Sunga.
Under current UAE regulations, VAT registration generally becomes mandatory once taxable supplies exceed Dh375,000 annually.
Annual renewals
A common misconception among first-time entrepreneurs is that the initial licence fee is a one-time payment.
Sunga reminded business owners that licences must be renewed annually. “The renewal is usually around the same cost, approximately Dh17,000 to Dh20,000, or lower depending on the authority.”
Business owners who decide to close their company should also expect cancellation fees before the licence can be officially terminated.
Don’t overlook these visa expenses
Entrepreneurs applying for UAE residence visas through their companies should also budget for medical examinations and health insurance.
Sunga said the medical fitness tests generally cost between Dh40 and Dh100, depending on the medical centre. Basic health insurance usually costs around Dh200 to Dh400 for applicants aged 45 and below, while applicants aged 46 and above may pay between Dh1,000 and Dh2,000, depending on their age and coverage. “These aren’t hidden fees. They’re simply expenses people often don’t mention when discussing residence visas,” Sunga said.
Is a freezone licence right for you?
A freezone business licence is generally ideal for:
• startups
• consultants
• freelancers expanding into a company
• digital businesses
• e-commerce companies
• professional services
• trading businesses permitted within the chosen freezone
Entrepreneurs planning to operate businesses requiring physical commercial premises or activities regulated outside the scope of freezones may eventually need to transition to a mainland licence.
Before choosing a licence, applicants should carefully review the permitted business activities offered by each freezone authority, as these can vary across the UAE.
Quick UAE business setup guide: What to budget for
Before launching a company, entrepreneurs should prepare for:
Initial costs
• Business licence
• Establishment Card
• E-channel registration
• Residence visa
• Emirates ID
• Medical examination
• Health insurance
Ongoing costs
• Annual licence renewal
• Corporate Tax compliance
• VAT registration, if applicable
• Accounting services
• Licence cancellation fee if closing the business
Experts recommend budgeting beyond the licence price alone to avoid unexpected expenses during the first year of operations. CAM/ICA/Expat Media
For all the latest news from the UAE and the world, follow us on Facebook, Twitter and Instagram and subscribe to our YouTube page
+ There are no comments
Add yours