Business Setup Costs in Dubai: Freezone vs Mainland

Why Dubai is a Popular Choice for Business Setup

Dubai’s economy is built on innovation, accessibility, and an open approach to international trade. Entrepreneurs from over 200 nationalities have successfully established companies here, benefiting from:

• Zero personal tax, and 100,000 USD threshold for Corporate Tax

• 100% foreign ownership in both mainland and freezone entities.

• Access to global markets through Dubai’s air, sea, and digital infrastructure.

• Streamlined company registration processes allowing new businesses to launch within days.

These advantages make the UAE business setup cost particularly appealing compared to other global financial hubs such as Singapore or London, where ongoing taxation and overheads are significantly higher.

Mainland vs Freezone: What’s the Difference?

Choosing between a mainland and freezone licence depends on your target market, business activity, and operational needs. Each structure has specific benefits and limitations.

Legal Structure & Ownership Rules

Freezones allow 100% foreign ownership with no need for a local partner. Mainland companies used to require a UAE national sponsor, but reforms now permit complete foreign ownership in most sectors. However, some regulated activities, such as banking or insurance, still require local participation or special approval.

Office Requirements

Mainland entities typically need a physical office space registered with Ejari, the official tenancy registration system. Freezones often provide cost-effective alternatives such as flexi-desks or shared offices, which lower the freezone business setup cost significantly.

When drafting and negotiating lease terms, it’s helpful to consult a resource such as Engel & Völkers’ guide on commercial lease terms.

Business Activity Scope

Mainland companies can trade freely across the UAE and internationally. Freezone businesses, however, can only operate within their designated zone or overseas unless they appoint a local distributor for mainland operations.

Business Setup Costs in Dubai

The business setup in Dubai cost varies depending on location, business activity, licence type, and visa requirements. While both structures involve registration and administrative fees, the overall expense breakdown provides a clearer comparison.

Government Fees & Licensing

Expect to pay between AED 9,000 and AED 15,000 for company registration and initial approval in most freezones. Mainland business licences often start around AED 12,000 but can exceed AED 25,000 depending on the activity and approvals required from specific authorities.

Office Rental & Ejari

Office rent is one of the most significant variables in the UAE business setup cost:

• Mainland: Standard offices or retail units must be leased before applying for licences.

• Freezone: Co-working spaces and flexi-desks are more affordable options, reducing total setup expenses.

Ejari registration typically costs between AED 220 and AED 500, depending on the emirate.

Visa & Immigration Costs

Entrepreneurs should budget around AED 3,000-5,000 per visa, including medicals, Emirates ID, and stamping fees. Some freezones include investor and employee visas in their low cost business setup in UAE packages.

Optional Costs: PRO Services, Insurance, Bank Account Setup

Additional support services such as documentation assistance, corporate bank account facilitation, and business insurance can range between AED 2,000 and AED 10,000. Using an experienced consultancy helps streamline these steps and reduce time to operation.

Low-Cost Business Setup in Dubai

Establishing a low cost business setup in Dubai doesn’t mean sacrificing clarity, compliance, or credibility. It requires selecting the right jurisdiction, matching your business model, and optimizing cost components.

Best Freezones for Affordable Setup

Several freezones stand out for offering cost-efficient packages, particularly suited for start-ups and small enterprises:

• IFZA Dubai: Digital onboarding and licensing from AED 11,900.

• Sharjah Media City (SHAMS): Ideal for creative and digital ventures.

• RAKEZ (Ras Al Khaimah Economic Zone): Excellent value for industrial and service sectors.

• Dubai Silicon Oasis / DSOA: Tailored for tech and consulting firms.

These options often bundle licences, visa quotas, and shared workspaces - making them strong contenders for a low cost business setup in UAE.

Cheapest Mainland Options

Mainland business formation has become more accessible in recent years:

• DED Trade Licence: For e-commerce and freelancing, priced from about AED 1,050.

• Professional Licence: Starting around AED 10,000, depending on the chosen activity.

• Government Incentive Schemes: Some emirates offer discounts or subsidies for first-time entrepreneurs or niche sectors.

Tips for Reducing Initial Costs

To minimize overheads:

1. Use virtual offices or flexi-desk solutions where permissible.

2. Match visa allocations to actual staffing needs.

3. Bundle services (licence, PRO, bank setup) under one provider.

4. Renew licences before expiry to avoid fines.

5. Research banks with no or low minimum balance requirements.

These steps support achieving a low cost business setup in Dubai while maintaining professional standards.

Freezone Business Setup Cost Breakdown

Setting up a company in a Dubai freezone typically involves several key expenses, each contributing to the total cost of formation. The trade license is usually the largest single component, ranging from AED 9,000 to AED 15,000 depending on the business activity and chosen freezone.

Trade Licence Fees

The trade licence forms the core of any freezone setup. Costs typically range between AED 9,000 and AED 15,000, varying according to the nature of the business and the selected jurisdiction. Some freezones also bundle the licence with visa quotas or workspace packages, offering cost savings for new businesses.

Office and Workspace Options

Office solutions such as flexi-desks or shared workspaces can add another AED 3,000 to AED 7,000 annually, offering a cost-effective alternative to traditional office leases. These flexible options suit entrepreneurs who need a registered address without the overheads of a full office.

Visa and Establishment Costs

Entrepreneurs should budget approximately AED 3,000 to AED 5,000 per visa, which covers medical tests, Emirates ID, and stamping. In addition, obtaining an establishment card- required for visa processing- costs between AED 1,000 and AED 2,000.

Optional Bank Account Setup Assistance

Some entrepreneurs also choose to engage professional assistance for opening a corporate bank account, which may range from AED 2,000 to AED 5,000 depending on the provider. This can simplify compliance and speed up account activation.

Total Investment Estimate

Overall, the total investment for a freezone company setup typically falls between AED 18,000 and AED 34,000. Compared to mainland formation, where first-year expenses often exceed AED 30,000 to AED 40,000, freezones remain one of the most practical options for a low-cost business setup in Dubai.

Freezone vs Mainland: Cost Comparison

While freezones appeal to start-ups and SMEs due to their simplicity and affordability, it’s helpful to understand how these figures compare to mainland options. The following section outlines the main differences in UAE business setup cost between the two structures.

UAE Business Setup Cost Comparison Table

Choosing the Right Setup for Your Budget

Selecting between a mainland and a freezone company structure depends on your market, business activity, and growth strategy. A mainland licence is beneficial if you seek UAE-wide operations, while a freezone setup often offers a clearer path for low cost business setup in Dubai, especially for export or digital enterprises.

How Engel & Völkers Commercial Can Help

At Engel & Völkers Commercial Dubai, we support investors and entrepreneurs in every stage of the formation process. From jurisdiction recommendation to licence procurement and cost transparency, our team ensures a smooth setup. Whether you’re exploring a low cost business setup in Dubai or mapping out business setup in Dubai cost, you’ll benefit from our deep local insight and global network.

For insights into market trends and commercial leasing, visit our Commercial Market Report Q3 2025 or our detailed guide on commercial lease terms.