Free Zone Setup Costs: What You Actually Pay
Dubai has over 40 free zones, and the cost difference between them is real. The most commonly used free zones for small and medium foreign-owned businesses are IFZA (International Free Zone Authority), SHAMS (Sharjah Media City, technically in Sharjah but widely used by Dubai-based operators), DMCC (Dubai Multi Commodities Centre), and RAKEZ (Ras Al Khaimah Economic Zone).
IFZA is the current benchmark for affordability. A single-activity trading or services company with a flexi-desk address costs AED 12,750 to AED 15,000 for the first year including the license fee, registration, and mandatory establishment card. Adding a second activity code typically adds AED 1,000 to AED 1,500.
DMCC is the most prestigious free zone for commodities, crypto, and financial services-adjacent companies. Costs are noticeably higher: license fees start around AED 18,000 to AED 22,000 per year and DMCC requires a physical office (starting around AED 30,000 to AED 50,000 per year for a small unit) rather than just a flexi-desk.
SHAMS offers competitive pricing for media, consulting, and technology businesses. Annual license fees run AED 11,500 to AED 14,000 depending on the activity and the number of visa allocations you need. RAKEZ is the most cost-competitive for manufacturing and industrial activities, with packages starting around AED 10,000 per year.
All free zone license fees exclude visa costs. A single investor or partner visa adds AED 3,500 to AED 5,500 per visa to the first-year cost, covering the immigration file, Emirates ID, medical examination, and visa stamping. Two visas roughly double that figure.
Mainland LLC Setup Costs
A mainland company in Dubai is registered through the Department of Economic Development (DED). As of 2021, 100% foreign ownership is permitted for most commercial and professional activities under the Commercial Companies Law amendment, so you no longer need a local Emirati sponsor holding 51% in most sectors. Specific sectors, including oil and gas, security services, and certain transportation activities, still require local participation.
The DED registration fee is AED 620 to AED 920 for the commercial registration itself. The trade name reservation and approval fee is AED 620 to AED 720. Initial approval for the business activity costs AED 120. These are government-fixed charges.
The annual trade license fee varies significantly by activity type. A professional license for consulting, IT, or advisory services typically costs AED 8,000 to AED 15,000 per year. A commercial license for trading activities runs AED 12,000 to AED 25,000 depending on the specific activities listed. An industrial license for manufacturing or production is AED 15,000 to AED 30,000. Adding activities to a license increases the fee proportionally.
A mainland company requires a physical office address or a registered desk address via an approved business centre. A basic Ejari-registered desk costs AED 8,000 to AED 15,000 per year in areas like Business Bay, JLT, or Deira. Small dedicated offices start at AED 25,000 to AED 50,000 per year in mid-tier locations.
The first-year all-in for a mainland LLC including DED registration, trade license, one business address, MoA notarisation (AED 1,500 to AED 2,500), and two investor visas typically lands between AED 28,000 and AED 55,000.
License Types and Their Costs
Understanding which license type you need is the single biggest determinant of your annual fee, for the initial setup and every renewal after that.
A commercial license covers buying and selling goods, import and export, general trading, real estate brokerage, and most retail activities. DED commercial license fees start at around AED 10,000 and can exceed AED 25,000 for a general trading license that lists multiple product categories. General trading, which allows you to trade almost any goods, is among the most expensive commercial activities.
A professional license covers service businesses where revenue comes from expertise rather than selling goods. Consulting, marketing, accounting, IT development, design, and training all fall here. Professional licenses at DED are generally cheaper than commercial ones, typically AED 8,000 to AED 15,000 per year, but they require the license holder to have relevant qualifications.
An industrial license is required if your company does any form of production, processing, or manufacturing. These require approval from both DED and the Dubai Industrial City authority if the facility is in an industrial zone.
Free zone licenses are bundled differently. Most free zones sell packages that include the license fee, flexi-desk, and a set number of visa allocations. The activity category still affects price: trading and services are usually the same tier, while financial services and activities requiring additional regulatory approvals from the UAE Securities and Commodities Authority (SCA) or Central Bank carry significantly higher setup costs.
Visa Costs: Investor, Partner, and Employee Visas
Visa costs are consistently the most underestimated budget line for new companies in Dubai. The license sets you up legally, but the visa is what lets you actually live and work there.
An investor or partner visa tied to a company you own is the standard residency route for foreign company owners. The total cost per visa, covering the entry permit, status change or visa stamping, medical fitness test, Emirates ID, and immigration file opening, runs AED 3,500 to AED 5,500 for a free zone investor visa and AED 4,500 to AED 6,500 for a mainland investor visa. These are government fee estimates; professional handling adds AED 500 to AED 1,500 per visa.
A dependent visa to sponsor a spouse or children costs an additional AED 2,500 to AED 4,000 per person, including the medical test, Emirates ID, and residence visa stamping.
Employee work visas require an active quota allocation from the Ministry of Human Resources and Emiratisation (MOHRE). The cost per employee work permit is AED 1,000 to AED 2,000 for the permit itself, plus AED 3,000 to AED 5,000 for the entry permit, medical, and Emirates ID. Budget AED 4,000 to AED 7,000 per new employee in the first year.
Free zones issue their own visa quotas, separate from mainland. Most basic free zone packages include 2 to 3 visa allocations. Additional allocations can be purchased, typically at AED 1,500 to AED 3,000 per additional slot.
Flexi-Desk vs Physical Office: What Each Costs
Your office arrangement has a direct effect on both your setup cost and how many visas your company can sponsor. Every new business owner needs to understand this trade-off.
A flexi-desk gives your company a registered address and access to shared workspace. In free zones, flexi-desk packages are included in many license bundles or cost AED 5,000 to AED 12,000 per year as a standalone. They typically support 2 to 3 visa allocations. If you need more visas, you either upgrade to a dedicated desk or negotiate additional allocations.
For mainland companies, a flexi-desk from a DED-approved business centre (Ejari-registered) costs AED 8,000 to AED 15,000 per year for the smallest registered address packages. The Ejari tenancy contract is a government requirement for obtaining or renewing a DED license, so some form of registered address cost is unavoidable.
A dedicated small office, say 20 to 30 square meters, in a mid-tier Dubai business district (Business Bay, Jumeirah Lake Towers, DIFC periphery) costs AED 40,000 to AED 80,000 per year. JLT and Deira are at the lower end; Business Bay and Downtown at the higher end. A dedicated office removes the visa count ceiling, as the number of visas is then tied to the office area rather than a package limit.
For most international investors setting up in Dubai as a first step, the flexi-desk route is practical for the first one to two years. If you scale and need more than three visas, or if banking relationships require a physical address, upgrading to a dedicated desk is the logical next move.
Annual Renewal Costs: The Recurring Budget
Company formation is a one-time event, but the annual renewal cycle is permanent as long as the company is active. Many investors focus on the setup cost and underestimate the recurring liability.
For a free zone company with a flexi-desk and no employees, the annual renewal cost is typically AED 10,000 to AED 18,000. This includes the license renewal, flexi-desk renewal, and establishment card renewal. It does not include visa renewals.
Visa renewals happen every 2 to 3 years depending on the visa type. An investor visa renewal costs AED 2,500 to AED 4,500 per visa, covering renewal of the residence visa, Emirates ID, and medical retest.
For a mainland company, the annual renewal cycle includes DED trade license renewal (same fee range as the initial license, AED 8,000 to AED 25,000 depending on activity), Ejari address renewal (AED 8,000 to AED 15,000), and any sector-specific approvals that need refreshing.
Audit requirements vary. Mainland LLCs are required to file annual audited financial statements, and an audit by a UAE-registered firm starts at AED 3,000 to AED 6,000 per year for a company with minimal transactions. Free zone companies have varying audit requirements by zone. DMCC requires annual audited statements; IFZA does not mandate them for all company types.
A company kept dormant but in good standing should expect to spend AED 12,000 to AED 20,000 per year on renewals and compliance. A company actively trading with 2 to 3 employees is looking at AED 30,000 to AED 60,000 per year in total ongoing costs including license, office, visas, and audit.
Free Zone vs Mainland: The Real Cost Decision
The free zone versus mainland question comes up at every Dubai company consultation, and the cost difference is real but not always the deciding factor.
Free zone companies cost less to set up, typically AED 12,000 to AED 25,000 all-in for the first year with one visa. They can be 100% foreign-owned. They cannot trade directly with UAE mainland customers without a local distributor arrangement or by paying customs duty on goods entering the mainland market.
Mainland companies cost more upfront, typically AED 20,000 to AED 55,000 in the first year, but give full access to the UAE domestic market, the ability to bid on government contracts, and a more straightforward banking relationship because banks are familiar with DED-licensed entities.
For overseas investors who primarily need a UAE business registration for banking, international payments, and a Gulf address, the free zone option at IFZA or SHAMS is usually the more cost-efficient starting point. For investors who want to actively serve UAE customers, work in real estate, or build a local trading operation, the mainland LLC is worth the higher initial cost.
The corporate tax picture also matters. Since June 2023, the UAE corporate tax at 9% applies to taxable profits above AED 375,000 per year. Free zone companies that generate qualifying free zone income and meet substance requirements remain at 0% tax on that income. This distinction has become a genuine factor in the free zone vs mainland analysis for companies that expect profits above the threshold.
What Drives Your Total Cost: The Variables That Matter
After setting up companies in Dubai for international clients across dozens of nationalities, here is where the cost divergence most commonly comes from.
Activity type: A general trading license is one of the most expensive DED licenses. A single-activity consulting license is one of the cheapest. If your business can be structured as a professional or services entity rather than a trading entity, the annual license cost drops noticeably.
Number of activities: Each additional activity code on the license adds cost at renewal time. Start with the activities you actually need, not everything you might do.
Visa requirement: One investor visa, no employees, is the minimum. Each additional visa adds AED 4,000 to AED 7,000 to the first-year cost. Plan your headcount before choosing a package.
Free zone selection: IFZA and SHAMS are the value tier. DMCC and Dubai Airport Free Zone (DAFZA) are premium, with required physical offices and higher license fees.
Professional fees: Setup agents and business consultants charge AED 2,000 to AED 8,000 above government costs. The cheapest option is not always the fastest. A slow application can delay your visa and banking timeline by weeks.
Alsama provides an itemised cost estimate before any engagement. You will know the government fees, professional fees, and renewal cost at the outset.