When free zones advertise “AED 15,000 setup,” many entrepreneurs are surprised to find they need AED 50,000+ for their first year. Here’s the complete picture.
License & Registration Costs
Typical license fees vary significantly by free zone and jurisdiction:
| Free Zone | Annual License Fee |
|---|---|
| DMCC (Dubai) | AED 15,000 – 20,000 |
| DIFC (Dubai) | AED 25,000 – 50,000 |
| ADGM (Abu Dhabi) | AED 20,000 – 35,000 |
| RAKEZ (Ras Al Khaimah) | AED 8,000 – 12,000 |
| Sharjah Media City | AED 10,000 – 15,000 |
| Mainland (Dubai DED) | AED 15,000 – 25,000 |
Visa Costs
Each person you want to bring on a visa (including yourself) costs money. These fees are often not included in the “setup package.”
| Visa Component | Cost |
|---|---|
| Entry permit | AED 500 – 1,000 |
| Medical test | AED 300 – 500 |
| Emirates ID | AED 370 |
| Visa stamping | AED 500 – 800 |
| Status change (if already in UAE) | AED 500 – 700 |
| Total per visa | AED 2,500 – 4,000 |
Office Costs
Most business setups require some form of physical address. Costs vary dramatically based on your needs.
| Office Type | Annual Cost |
|---|---|
| Flexi Desk (1–2 visas) | AED 8,000 – 15,000 |
| Dedicated Desk (2–3 visas) | AED 15,000 – 25,000 |
| Private Office (3–6 visas) | AED 30,000 – 60,000 |
| Warehouse | AED 40,000 – 150,000 |
Professional Services
- PRO services: AED 3,000 – 8,000/year (visa processing, renewals)
- Accounting: AED 3,000 – 12,000/year
- Legal setup: AED 2,000 – 5,000 (one-time)
- Business setup consultant: AED 0 – 10,000 (optional)
First-Year Operating Costs
Beyond setup, budget for ongoing operating expenses:
- Health insurance: AED 2,000 – 8,000/person/year (mandatory)
- Bank account maintenance: AED 0 – 500/month
- Software/tools: AED 200 – 2,000/month
- Phone/internet: AED 300 – 1,000/month
- Marketing: Variable
Sample Total Budget Scenarios
Budget Setup (RAKEZ)
- License: AED 8,000
- Flexi Desk: AED 8,000
- 1 Visa: AED 3,000
- PRO/Admin: AED 3,000
- Total: ~AED 22,000
Standard Setup (DMCC)
- License: AED 18,000
- Flexi Desk: AED 12,000
- 1 Visa: AED 8,000
- PRO/Admin: AED 5,000
- Total: ~AED 43,000
Premium Setup (DIFC)
- License: AED 30,000
- Flexi Desk: AED 18,000
- 1 Visa: AED 9,000
- PRO/Admin: AED 8,000
- Total: ~AED 65,000
Team Setup (3 visas)
- License: AED 18,000
- Private Office: AED 35,000
- 3 Visas: AED 15,000
- PRO/Admin: AED 8,000
- Total: ~AED 76,000
VAT Compliance Costs
If your business turnover exceeds AED 375,000 annually, VAT registration is mandatory and compliance adds significant ongoing costs.
VAT registration: Free, but requires business registration documents, bank account details, and business activity description.
VAT compliance costs:
- Accounting software — AED 1,000–5,000 annually (QuickBooks, Xero, Zoho Books)
- VAT filing services — AED 2,000–5,000 annually (if using accountant) or AED 500–1,500 if filing yourself
- VAT consultant fees — AED 3,000–10,000 annually for ongoing VAT advice and compliance support
- Record keeping — additional time/costs for maintaining VAT records, invoices, and documentation
- VAT audits — potential costs if FTA (Federal Tax Authority) audits your business (AED 5,000–20,000+ in consultant fees if issues found)
Total VAT compliance costs: Typically AED 6,000–20,000 annually for small businesses, increasing with business size and complexity.
VAT impact on cash flow: You must collect VAT from customers (5%) and remit to FTA, but also pay VAT on purchases. Net VAT position affects cash flow — if you pay more VAT than you collect, it reduces cash flow.
Visa Quotas and Employee Costs
Free zones and mainland businesses have different visa allocation rules.
- Free zones: Typically 1–3 visas with basic license, more with premium packages
- Mainland: Visa allocation depends on office size (typically 1 visa per 8–12 sqm of office space) and business activity
Visa costs per employee: AED 3,000–5,000 initial (application, medical, Emirates ID, stamping) + AED 2,000–4,000 annually for renewal.
Additional employee costs:
- Health insurance — AED 1,200–8,000 annually per employee (mandatory)
- Work permit fees — AED 200–500 annually
- Labor card — AED 100–300 annually
- WPS registration — free but requires bank account and salary payment system setup
Total employee costs:
- First year: AED 6,000–17,000 per employee (visa + insurance + permits)
- Ongoing: AED 3,500–12,500 annually per employee (renewals + insurance)
For a business with 3 employees, total first-year visa/employee costs: AED 18,000–51,000; ongoing: AED 10,500–37,500 annually.
Other Operating Expenses (OPEX)
Beyond license and visa costs, businesses face ongoing operating expenses:
- Office rent — AED 20,000–100,000+ annually (mainland requirement; free zones offer flexible options)
- Utilities — DEWA (AED 3,000–12,000 annually), internet/phone (AED 2,000–8,000 annually)
- Professional services — accounting (AED 5,000–15,000 annually), legal (AED 3,000–10,000 annually), audit (AED 5,000–15,000 annually if required)
- Technology — software licenses (AED 2,000–10,000 annually), IT support (AED 3,000–12,000 annually), website hosting (AED 1,000–5,000 annually)
- Marketing — digital marketing (AED 5,000–30,000+ annually), print materials (AED 2,000–10,000 annually), events/exhibitions (AED 5,000–20,000+ annually)
- Insurance — business insurance (AED 2,000–10,000 annually)
- Contingency — unexpected costs, regulatory changes, and market fluctuations (budget 10–15% of OPEX for contingencies)
Total annual OPEX: For a typical small business (3–5 employees, basic office), annual OPEX ranges from AED 60,000–150,000+ beyond license and visa costs. This is often 2–3x the initial setup costs, making OPEX planning critical for business sustainability.
Realistic 3-Year Cost Projection
When planning your business, model costs over 3 years, not just the first year:
- Year 1: Setup costs (AED 25,000–75,000) + First-year OPEX (AED 60,000–150,000) = AED 85,000–225,000 total
- Year 2: License renewal (AED 12,000–30,000) + OPEX (AED 65,000–160,000, with 5–10% increases) = AED 77,000–190,000
- Year 3: License renewal + OPEX (with further increases) = AED 80,000–200,000
- 3-year total: AED 242,000–615,000 for a small business
This demonstrates why OPEX planning is as important as setup cost planning. Many businesses fail not because of high setup costs, but because they underestimate ongoing operating expenses.
The figures provided are estimates based on market conditions as of January 2026. Actual costs may vary based on individual approvals and government fee updates.