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The cost of investment is one of the most important elements to be taken into consideration when taking the decision if you should invest somewhere or not. Therefore, investors should always consider the required cost of investment by getting the accurate information needed for decision making.
Before proceeding with article or video please read our legal disclaimer.
There are many publications and websites that may help you to estimate the cost of your investment in the United Arab Emirates. This aims at ensuring that investor is aware of such costs in addition to the additional costs which are not covered by the governmental entities, as including information on the entire cost may be impossible due to the diversity of legal forms and followed procedures in each Emirate. Herein, we shall discuss incorporation costs that should be taken into consideration when starting a business in UAE. Hopefully, we will publish later an article that details all company types and determined fees for each Emirate and free zone:
First : Pre-incorporation Costs and Fees:
1- Company Capital (refunded after the incorporation):
Capital is the amount deposited by partners as a start to invest in the project and which varies in each company according to its nature, and activity, such amount shall be deposited in the bank after obtaining initial approval until the final license is issued. After the license issuance, the capital shall be released to the company or the establishment, or refunded to partners without any deductions except for banks and administrative bodies fees in case if the license was rejected.
The incorporation of a company or an establishment requires you to provide a capital for the company. The capital may differ according to the nature of the company type, e.g. institutions do not require capital, while limited liability companies require a minimum limit which is AED 150.000.00 and the capital of private joint stock companies exceed AED 5.000.000.00.
• It shall be paid once only.
• The full amount is refunded to the company without any restrictions.
2– Attestation and Translation Fees of Foreign Documents:
Attestation fees of foreign documents at the embassy of your country as a company or an individual shall be calculated, as the United Arab Emirates uses the attestation system through its embassy and offices in foreign countries and not by virtue of (Apostille Stamp).
It should be noted that for companies or generally commercial documents, the attestation fees are higher. For example, the certification of commercial documents in the United Arab Emirates costs around $600. Such documents include commercial licenses, memorandum of association and board of directors decisions to establish a branch in the United Arab Emirates, any decision, power of attorney, or document required from the foreign parent company.
In addition, attestation fees of UAE Ministry of Foreign Affairs offices shall be taken into consideration as well. Fees shall be lower in case of attesting personal documents such as birth certificates, graduation certificates and others.
You shall also consider that you will pay the translation fees for translating documents in foreign languages into Arabic language after their attestation since Arabic is the official language of the United Arab Emirates, unless the intended entity does not require the translation of the document.
Second: Incorporation and License Renewal Fees:
1- Licensing Fees:
Licensing fees are estimated according to each emirate by the fees of issuing the commercial license, mostly the type of license is of the elements determining the licensing fees, for example, commercial licenses have higher fees than professional and trade licenses. Moreover, the company legal form is considered as an important element in estimating the license value and fees, the license fees shall be paid upon incorporation and a renewal fee shall be paid annually.
Indeed, there may be other fees at the time of incorporation such as waste disposal fees and service improvement fees. As an investor, you have to be aware of such fees, and whether they should be paid annually or just once.
• Licensing fees shall be paid once and license renewal fees shall be paid annually.
2- Activity Fees (Annual Fees):
Activity fees are included in the governmental fees imposed by the bodies issuing the license, whereas each license is concerned with a set of activities licensed to practice, the company shall work on adding any activity it desires to practice to the license.
There shall be an estimated fee for each activity the company desires to add, or the fee will be estimated according to the total of activities under each license. Set out fees shall be imposed for renewal of license of activities every year after expiration of license and upon renewal.
• It shall be paid just once.
• It shall be renewed annually upon renewal of the license.
3- Governmental Approval Fees for Activities (Annual):
Special activities which require approval of concerned bodies, such as the Ministry of Interior, General Culture Authority, Roads and Transport Authority, or Tourism Authority require definite fees. As an investor, you should consider that you will pay fees when renewing the licenses annually.
• It shall be paid just once, taking into consideration that license renewal fees are to be paid annually.
4- Registration Fees at the Chamber of Commerce and Industry (Annual Fees):
Registration in Commercial and Industrial Chambers is a crucial necessity. You should take into account the registration fees set out for registration in the Chamber of Commerce and Industry.
Moreover, annual renewal fees need to be considered as well, as you will find out that several transactions with governmental and official bodies require you to provide the respective entity with a registration certificate issued by the Chamber of Commerce and Industry.
• It shall be paid just once, taking into consideration that license renewal fees are to be paid annually.
Third: Costs Incurred by the Investment:
1- Incorporation and Office or Headquarters Rental Value (Annual Fees):
Investors wishing to invest in United Arab Emirates will find several options available to them to choose from regarding the place dedicated to the activity, noting that some activities require a minimum space such as clinics and medical centers. Moreover, approvals on number of employees depend on the dedicated areas for the headquarters and its spaciousness. Investors shall have multiple options at different prices, as some of the free zones and investment zones provide such several options to investors.
The investor can determine the place according to the value of investment such as business centers and joint offices, the cost usually ranges between AED 18.000.00 to AED 30.000.00 annually if it is just an office. An investor may also make use of additional services provided by business centers. Furthermore, there is another option for investors, which is to get an independent office, noting that their prices vary according to place and area, building type, services provided by the building, and all said aspects differ from one emirate to another, and according to the area.
2- Residence Permit Fees for Investors and Employees (Renewable):
In order for you as an investor or an employee working in a company in United Arab Emirates to stay permanently, you have to obtain a permanent residence permit which is valid for two or three years. Such residence permit need to be renewed annually. Residence permit fees for investors differ from those of resident (employee). Furthermore, you also need to obtain residence permit for you spouse and children wishing to live with you permanently in the country or wishing to enroll in universities and study in the United Arab Emirates. In addition, you have to abide by the regulations and laws that state that you should provide health insurance for yourself, your wife and children.
As for employees, you have to get residence permits and renew them according to the duration of your stay. Finally yet importantly, you shall also obtain health insurance according to legislations of each emirate, noting that fines shall be due in case of non-renewal or renewal delay.
• It shall be paid only once.
• Renewal fees are paid on the expiration of residence permits and health insurance.
3- Service Fees (Water, Electricity and Telecommunications):
The business shall incur service fees set out by the emirate, unless such term in not included in the lease contract, since that in some contracts, such aspects are covered by or included in the annual lease plan. Therefore, you should review the annual lease contract and the data included therein carefully.
You should study the commercial investment costs thoroughly, knowing the annual and financial obligations you will incur during the management of the commercial activity in order not to experience liquidity shortage which, the thing which shall lead to delay in paying off the government renewal fees, and consequently, may be subject to several fines.
Contact us for Corporate Lawyers in Dubai. Also, in case if you have any suggestion to improve the article content or if you would like to contact us for additional information, you can contact the article writer via our e-mail.
Nour Attorneys & Legal Consultants
Lawyer & Legal Consultant
Mohamed Noureldin
For any legal services or inquiry reach us on: info@nourattorneys.com
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