What a Dubai Company Actually Costs in Year One, Month by Month
Ali JasimSetup is the smallest part of year one. A realistic first year for a small Dubai company is the setup cost (from about AED 14,500 in a free zone with no visas, more with them), plus bank account minimum balance requirements that lock up working capital, plus accounting and tax compliance, plus office or desk costs, and then the licence renewal that lands at month twelve and catches people who budgeted for setup only.
Plan the year, not the invoice.
Nearly every cost article about Dubai answers the wrong question. It tells you what setup costs, then stops, as though the company ceases to exist afterwards.
Founders do not run out of money at setup. They run out at month nine, because nobody told them the renewal was coming and the bank was sitting on part of their working capital.
This guide is the cash-flow version.
Month 0 to 1: The Setup Payment
The one everybody plans for. From the current price book, a Dubai free zone company starts around AED 11,920 with no visas and about AED 21,490 with one, before 5% VAT.
A Dubai mainland company runs from roughly AED 17,772 for the simplest activity to about AED 28,287 for a three-partner setup with a heavier activity.
What is inside that number is worth knowing, because it is mostly government fees rather than margin.
Real line items include an initial approval fee of AED 120, trade name reservation at AED 620, the establishment card at AED 640, a company stamp at AED 150 and a sign board fee at AED 50.
Our breakdowns of free zone cost and mainland cost go line by line.
Month 1 to 3: Visas, and the Money That Is Not a Fee
Two things happen here and only one of them looks like a cost.
The visible one is visas. Each one adds roughly AED 8,000 to the package in a Dubai free zone, and that covers the visa allocation, the employment visa, the status change where it applies, the medical and the Emirates ID typing rather than one single government fee.
Our employment visa process guide walks the sequence, and note that ILOE insurance at AED 60 to AED 120 a year per employee is now mandatory and is the employee's obligation rather than yours.
The invisible one is the bank account minimum balance. Most UAE banks require a maintained minimum in a corporate account, and falling below it triggers a monthly charge.
That balance is not a fee, it is your own money, but it is money you cannot spend, and for a small company it can be a meaningful slice of working capital sitting still for twelve months. Budget it as though it were spent, because operationally it is.
See opening a corporate bank account.
Month 1 to 12: The Running Costs
| Item | When | Notes |
|---|---|---|
| Office or desk | Monthly or annual | A flexi-desk is the cheap floor, a real office is a different order of cost |
| Bank charges | Monthly | Plus a charge if you fall under the minimum balance |
| Accounting | Monthly or quarterly | Required. UAE law requires proper books |
| VAT returns | Quarterly, if registered | Only once you cross the threshold |
| Corporate tax filing | Annual | Registration is required regardless of profit |
| ILOE per employee | Annual | AED 60 or AED 120, the employee pays |
| Health insurance per employee | Annual | Employer obligation in Dubai |
Office is the one with the widest range and the most self-deception. A flexi-desk is the cheapest compliant answer and it is genuinely fine for a consultancy.
It is not fine if you need to seat four people, and the jump from flexi-desk to a real office is one of the largest single increases in a growing company's cost base. Our guide to office space costs in Dubai covers the ladder.
The calculator itemises your licence and visa costs from the real fee schedule. The running costs above are yours to plan around it.
Month 3 to 6: Registrations That Are Not Optional
Corporate tax registration is required for UAE companies regardless of whether you expect to owe anything, and it is done through the Federal Tax Authority at tax.gov.ae.
Late registration carries a penalty, which makes it one of the cheapest things on this page to get right and one of the more annoying to get wrong.
See corporate tax registration.
VAT registration becomes mandatory once taxable supplies pass AED 375,000 in a rolling twelve months, with voluntary registration available from AED 187,500. Plenty of first-year companies never cross it.
Plenty of others cross it mid-year and do not notice, which is the expensive version. Our VAT registration guide covers the trigger.
Month 12: The Cliff
This is the month that ends companies which budgeted for setup only. Several things fall due at once:
- Trade licence renewal. Broadly in the same order as the original licence fee. See trade licence renewal cost.
- Establishment card renewal.
- Office or desk renewal, usually payable annually in advance.
- Any two-year visas coming up if they were issued early.
- Insurance renewals.
The practical rule that prevents this being a crisis: from month one, set aside roughly one twelfth of your expected renewal cost every month. It is unglamorous and it turns a cliff into a line item.
Companies that do this renew on time; companies that do not are the ones asking about grace periods and fines. Our renewals page shows how we track these dates for clients rather than relying on anyone remembering.
A Realistic Year One, in Shape Rather Than a Single Number
We are not going to publish one headline figure, because a single number for "a Dubai company" is meaningless across a one-person consultancy and a five-person trading firm. What is genuinely useful is the shape:
- Setup is typically 30% to 50% of the first-year cash requirement for a small company.
- Visas scale linearly and are the biggest lever you control.
- Bank minimum balance is dead capital, not a fee, and it should be modelled as unavailable.
- Compliance is small in absolute terms and carries penalties out of all proportion if skipped.
- Renewal at month twelve is roughly a repeat of the licence portion of setup.
For your own case, price the setup exactly and then build the twelve months around it rather than guessing at both.
The Costs That Scale With You, and the Ones That Do Not
Worth separating, because it tells you which numbers to watch as you grow and which to set and forget.
Fixed regardless of size: the trade licence, the establishment card, the company stamp and sign board, and the basic accounting engagement. These barely move whether you bill AED 200,000 or AED 2 million.
Scales per head: visas, health insurance, ILOE, workspace once you outgrow a desk, and the gratuity provision. This is the part that turns a comfortable budget into a tight one, and it is why headcount planning and cost planning are the same conversation.
Scales with revenue: VAT once you cross AED 375,000 of taxable supplies, corporate tax above AED 375,000 of taxable profit, and bank transaction charges. These are good problems, but they arrive without warning if nobody is watching the thresholds.
The Federal Tax Authority publishes both at tax.gov.ae.
Small Business Relief, While It Lasts
One genuine saving that belongs in a year-one budget: Small Business Relief covers UAE businesses with revenue up to AED 3 million and runs through the end of 2026.
For a first-year company that is most of them, and it means the corporate tax line in your budget may be zero even though the registration and filing obligations are not.
Two cautions. It is relief from tax, not from compliance, so you still register and still file.
And it has an end date, so a budget built on it needs to know what happens the year after. Our guide to Small Business Relief covers the conditions.
What Actually Goes Wrong
From what we see, first-year cash trouble almost never comes from the setup being more expensive than expected.
It comes from three things: the bank account taking longer than planned so revenue arrived late, the minimum balance locking up more working capital than expected, and the month-twelve renewal arriving unbudgeted.
All three are timing problems rather than pricing problems, which is good news, because timing is plannable. If you take one thing from this page, take the renewal reserve.
Our guide to the hidden costs of business setup covers the rest.
The fourth, less common but more damaging, is a company that never provisioned for end-of-service gratuity and meets the bill when its first real employee leaves.
It accrues from day one on basic salary whether or not anyone wrote it down, so a first-year budget that ignores it is understating the true cost of every person on the payroll.
None of this makes a Dubai company expensive. It makes it predictable, which is better.
The businesses that struggle in year one are almost never the ones that spent too much at setup. They are the ones that treated setup as the budget rather than as the first line of it.
Frequently asked questions
It depends far more on visa count than on anything else. Setup alone starts around AED 11,920 for a Dubai free zone company with no visas and about AED 21,490 with one, before VAT. On top of that, year one carries office or desk costs, bank charges, accounting, tax registration, insurance, and the licence renewal that falls due at month twelve. For most small companies setup is only 30% to 50% of the first-year cash requirement.
The bank account minimum balance. It is not a fee, it is your own money, but it has to stay in the account or you are charged monthly, so operationally it is capital you cannot use for twelve months. For a small company that can be a meaningful slice of working capital. The second is the licence renewal at month twelve, which catches anyone who budgeted for setup only.
In our current price book each additional visa adds roughly AED 8,000 in a Dubai free zone, covering the allocation, entry permit, medical, Emirates ID and insurance steps. On top of that sit annual per-employee costs: mandatory health insurance, which is the employer obligation in Dubai, and ILOE unemployment insurance at AED 60 or AED 120 a year, which is the employee obligation.
Annually, so the first renewal lands at month twelve. It costs broadly in the same order as the original licence portion of your setup, and the establishment card, office lease and insurances usually fall due around the same time. Setting aside roughly one twelfth of the expected renewal each month from month one turns that cliff into a routine line item.
Yes. Corporate tax registration with the Federal Tax Authority is required for UAE companies regardless of whether tax is expected to be payable, and late registration carries a penalty. The 9% rate applies only above AED 375,000 of taxable profit, with 0% below, and Small Business Relief covers revenue up to AED 3 million through the end of 2026, but none of that removes the obligation to register.
See the number for your setup
The cost calculator runs on Dubai Business Corporation’s real price book. Answer a few questions and get your total, fully itemised, in under a minute.
