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 300–370 (AED 100/yr of validity + AED 100 ICP fee) |
| 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: mandatory nationwide since 1 January 2025 — from ~AED 320/year (the basic MOHRE package) up to AED 8,000/person/year for comprehensive cover; compare tiers with our Health Insurance Calculator
- 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 — from ~AED 320/year (basic MOHRE package) up to ~AED 8,000/year per employee — mandatory nationwide since 1 January 2025
- 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 July 2026. Actual costs may vary based on individual approvals and government fee updates.
Frequently Asked Questions
What does it really cost to start a business in the UAE?
Setup runs about AED 25,000–75,000, but the number that matters is the first-year total once operating costs are included: AED 85,000–225,000 for a small business. Over three years, allowing for renewals and 5–10% cost increases, budget AED 242,000–615,000. The advertised "setup from AED X" figure is the licence line alone.
Why do UAE businesses run out of money in year two?
Because they budgeted setup and forgot operating expenses. Licence renewal alone is AED 12,000–30,000 a year, and OPEX typically exceeds the entire setup cost within the first twelve months. Most failures here are not caused by an expensive launch — they are caused by an under-modelled year two.
How much are visas for my business, and how many can I get?
Each visa carries the application, medical, Emirates ID and — where applicable — dependant costs, and they recur on renewal. Your allocation is tied to your licence and office package rather than your headcount plans, so if you intend to hire, check the quota before you buy the cheapest flexi-desk package.
Do I need a physical office to get a UAE trade licence?
Not necessarily — a flexi-desk or virtual office satisfies most free zones and is the standard lean start. A mainland licence generally requires real premises, which is a large part of why mainland setups cost more. The office decision also caps your visa allocation, so treat it as two decisions in one.
What ongoing compliance costs should I budget for?
Annual licence renewal, visa renewals, office rent, accounting, and VAT compliance once you cross the registration threshold — plus corporate tax filing obligations. These are the recurring costs that decide whether a business survives its second year; model them alongside setup on the Business Startup Calculator.