The United Arab Emirates (UAE) is known worldwide as a great place for entrepreneurs and businesses. It offers business-friendly policies, tax advantages, and a strong economy. However, many people wrongly believe that starting a business in the UAE is too costly.
In reality, with the right advice and structured plan, you can register a company in the UAE at a low cost without sacrificing quality or bending the rules. At The Corporate Group (TCG), a leading business setup company in Dubai, we have helped many clients successfully setup their business in UAE while keeping expenses within their budget.
This guide is for aspiring entrepreneurs and foreign investors looking for the cheapest option for company registration in UAE. We will provide expert advice, useful tips, and clear steps to help you set up your business affordably in 2025.
Why the UAE is a Prime Destination For Starting a Business
The UAE boasts a robust, business-friendly environment and is situated in a strategic location that serves as a gateway to emerging markets in the Middle East, Africa, and South Asia. Some of the other key features that makes the UAE a appealing for starting business includes:
- The UAE has no personal income tax and a low corporate tax rate of 0% and 9%.
- Foreigners can own 100% of businesses in both freezones and the mainland.
- The UAE provides a politically stable and secure environment for business growth.
- As a foreign business owner in the UAE, you can sponsor your immediate family to live and work with you.
- Setting up a business in the UAE allows for easy, unrestricted transfer of capital gains back to your home country.
- The UAE business environment provides a supportive framework to protect investors’ rights.
Cheapest Business Setup Options in the UAE
To secure the most cost-effective company registration in the UAE, it’s crucial to grasp how different factors in the business setup process can significantly impact the cost of your company formation in UAE. Here, we will provide detailed options for opening a low-cost company in Dubai and the UAE.
Choosing Between Business Setup in UAE Mainland and Freezones
If you’re an aspiring entrepreneur or business owner aiming to start or expand a business in the UAE, your first step should be selecting the right type of entity in UAE to establish your business. In the UAE, the primary choices for setting up an onshore company involve deciding between the UAE mainland and its many free zones.
But how do these entities affect the cost of starting a business in the UAE? Let’s explore further.
- Office Space Requirement:
A mainland company in the UAE must establish an office in the country, which can be quite costly, especially when securing a location in a prime area like Downtown Dubai.
On the other hand, setting up a freezone company in the UAE often does not need an office space. Most UAE freezones typically include a free flexi desk in their business setup packages.
- Local Sponsorship Requirement:
While the UAE now permits 100% foreign ownership for setting up a mainland company, there are still some business activities that necessitate partnering with a local sponsor in the UAE, which involves an agreed-upon annual fee.
When establishing a company in a UAE free zone, you don’t need to be concerned about this cost since free zones offer 100% foreign ownership for all business activities.
- Business License Cost:
The price of a business license in the UAE mainland is generally higher than in the UAE free zones. However, some free zones offer lower costs for getting a business license compared to others.
It’s important to note that the type of activities listed in your business license also affects the registration cost in the UAE. For instance, setting up a professional service, like consulting or e-commerce, tends to be cheaper than starting a real estate or general trading company. We will explore these options in more detail later.
- Legal Structure Consideration:
The legal structure of your company in the UAE is another factor that impacts the cost of starting and running your business. Choosing options like a Limited Liability Company (LLC) or a Sole Proprietorship is usually more easier and cheaper compared to other types, such as a General Partnership, Branch of a Foreign Company, or Representative Office.
- Tax Requirements:
The UAE offers a tax-friendly setting for businesses on its mainland and in free zones. Since 2018, however, businesses with annual net revenues over AED 375,000 are subject to a 5% value-added tax (VAT) and a 9% corporate tax. This mainly affects businesses functioning as mainland entities in the UAE.
Although a company in a UAE free zone enjoys 0% tax on all fronts, it’s required to register for corporate tax within three months of starting the business.
Choosing a Cost-Effective Company Registration in UAE
Considering the options mentioned earlier, it’s clear that establishing a company in a UAE freezone is generally more cost-effective than setting up a business on the mainland. However, each option comes with its own unique advantages and disadvantages.
Let’s explore how setting up a company in a UAE freezone might impact your business operations in comparison to a mainland company.
- Setting up a business in a UAE freezone restricts operations to that specific freezone jurisdiction, while a mainland company can conduct business throughout the entire UAE.
- Under a freezone business license in the UAE, there are restrictions on the number of visas available, but a mainland business license allows for unlimited visa applications.
- A mainland company in the UAE can compete for government contracts, whereas a freezone company is not eligible to do so.
- Several UAE freezone trade licenses cover specific activities under one license, but a mainland license supports a combination of business activities across various categories.
- Setting up a business bank account with a mainland license in the UAE is generally simpler than doing so with a freezone business license in UAE.
Cheapest Types of Business Licenses in UAE
When seeking a cost-effective business registration in the UAE, it’s important to consider the type of business activities you plan to offer, as this affects the cost of obtaining a business license as mentioned earlier.
The UAE provides four primary business license categories: commercial and general trading, professional services, industrial manufacturing and processing, and tourism business activities.
Ideally, some of the cost-effective business licenses in UAE falls under the category of setting up a professional service company or opening an e-commerce shop in UAE . Some examples of business activities includes:
- Professional License: Generally more affordable, suitable for service providers like consultants, technical services, and artists.
- E-commerce License: Ideal for online businesses, often comes with lower registration fees compared to traditional retail licenses.
- Commercial License for Small Trading Activities: Focused on limited trading activities, which can be cost-effective for startups.
- Freelance License: Available in various free zones, allowing individuals to operate as freelancers at a lower cost.
List of Cheap Freezones in UAE to Consider
As previously mentioned, setting up a company in a freezone is an effective method to obtain a cost-efficient business license in the UAE. The prices differ among UAE freezones, and some provide more budget-friendly options for company registration compared to others.
When selecting a freezone based on setup costs, it’s also crucial to consider the specific business activities that each freezone supports, as many are tailored to particular sectors. With this in consideration, it is sensible to consult a business setup expert in the UAE who can provide a detailed guide and steps to help you choose the best option for your business needs and budget.
Here are some freezones you may want to consider, including their activities and locations:
- Ajman Free Zone: Specializes in trading, manufacturing, and professional services.
- Sharjah Airport International Free Zone (SAIF Zone): Focuses on trading, logistics, and manufacturing.
- Ras Al Khaimah Economic Zone (RAKEZ): Offers options in manufacturing, trading, and professional services.
- Fujairah Free Zone: Known for trading, logistics, and industrial activities.
- Dubai Multi Commodities Centre (DMCC): Engages in commodity trading, professional services, and diverse business activities.
- International Free Zone Authority (IFZA), Dubai: Provides opportunities in trading, services, and consultancy.
- Abu Dhabi Airport Free Zone: Suitable for aviation-related businesses, trading, and services.
- Hamriyah Free Zone, Dubai: Offers opportunities in manufacturing, trading, and logistics.
Step-by-Step Process to Company Registration in UAE
Starting a business in the UAE involves navigating the legal processes required for company registration in the Emirates.
Although the UAE ranks among the top 16 countries on the Ease of Doing Business index and offers a straightforward business setup procedure, newcomers to the UAE market often face significant challenges. These difficulties arise whether they attempt to set up a company by yourself or with the help of a business consultant.
Therefore, it is recommended to engage with a reputable and skilled business setup consultant in Dubai and the UAE, such as The Corporate Group (TCG). Here we’ll outline the essential steps to register a business in Dubai and the UAE. If you need a tailored business setup plan and strategy for your company, you can schedule a free consultation with one of our expert business consultants in Dubai.
A Guide to Business Registration in UAE
- Determine Your Business Activity: Identify the type of business you want to establish, as this will influence the licensing requirements and the choice of free zone or mainland setup.
- Choose a Business Structure: Decide on the legal structure of your company based on your business needs and ownership preferences.
- Select a Trade Name: Choose a unique trade name for your business that complies with UAE naming regulations. Ensure it reflects your business activity and is not already in use.
- Obtain Initial Approval: Apply for initial approval from the relevant authorities, which allows you to proceed with the business setup process. This step may involve submitting documents like your passport copy and business plan.
- Draft a Memorandum of Association (MOA): Prepare the MOA, which outlines the company’s ownership structure.
- Secure Office Space: Depending on your business structure, you may need to secure a physical office space. Free zones often provide flexible office solutions, while mainland companies require a dedicated office.
- Apply for Business License: Submit your application for a business license to the relevant authority (Department of Economy and Tourism (DET) formally DED for mainland or the respective free zone authority). Include all required documents and pay the necessary fees.
- Register with the Chamber of Commerce: Register your business with the local Chamber of Commerce to obtain a membership certificate, which may be required for certain business activities.
- Open a Corporate Bank Account: Once your business is registered, open a corporate bank account to manage your business finances.
- Visa Processing: Apply for the necessary visas for yourself and any employees.
- Complete Additional Registrations: Depending on your business activity, you may need to register with other authorities or obtain additional permits (e.g., health permits for food-related businesses).
- Start Operations: Once all approvals and registrations are complete, you can officially start your business operations in the UAE.
Getting Expert Advise From a Business Setup Consultant in UAE
One of the top suggestions for establishing a business in the UAE is to avoid navigating the process alone. Doing so risks mistakes that could lead to future costs that might have been avoided from the start. Engaging a knowledgeable and reputable business setup consultant in Dubai and the UAE not only prevents these extra expenses, but their role is also to ensure your company is set up efficiently, saving you both time and money.
At The Corporate Group (TCG), our skilled business setup consultants in Dubai, UAE, prioritize transparency and professionalism during the company setup process. As a business consulting firm owned by UAE nationals, we take pride in being among the best business setup consultants in Dubai, offering complete business setup solutions in Dubai and the UAE.
We approach your business setup needs with professionalism and urgency, offering guidance and support from the initial company formation stage through to post-setup operations in the UAE. To learn more about how we can help you, kindly request a free consultation with one of our experts today.
