Costs to consider when setting up an LLC in Dubai

Favoured by investors and entrepreneurs for its appealing features and versatility, The Limited Liability Company (LLC) is the most popular corporate structure in Dubai. The main appeal of an LLC lies in its balance of ownership control, operational scope, and ease of doing business. It offers a wide range of business activities, flexible shareholding and access to a diverse and growing market, making it an ideal choice for investors seeking to establish a presence in Dubai’s diverse and growing economy.

What are the main features of an LLC in Dubai?

• Limited Liability: The most significant feature of an LLC is limited liability protection. The liability of the shareholders is limited to the extent of their capital contribution in the company. This means that the personal assets of the shareholders are protected from the company’s debts and liabilities.
• Minimum and Maximum Shareholders: An LLC in Dubai can have a minimum of two and a maximum of fifty shareholders. While the law requires at least two shareholders, it is common for companies to have a single shareholder owning 100% of the shares.
• Capital Requirements: LLCs in Dubai are subject to share capital requirements. In some situations, the share capital will need to be deposited into the company’s bank account. However, in most cases this is not needed.
• Business Activities: LLCs can engage in a wide range of business activities, subject to approval from relevant authorities and obtaining the necessary licenses and permits.
• Management Structure: An LLC in Dubai must have a manager who is responsible for day-to-day operations. The manager can be one of the shareholders or an external party.
• Business Name: The company’s name should reflect its business activity and should not infringe on any existing trademarks or copyrights.
• Local Registration: The process of setting up an LLC involves registering with the Department of Economic Development (DED) in Dubai or the relevant free zone authority, depending on the location of the company.
• Taxation: Dubai offers a favourable tax environment with no personal income tax, no withholding tax, and no capital gains tax. Additionally, many business activities are exempt from or subject to a zero-rated Value Added Tax (VAT). Additionally, some free zones in Dubai provide customs duty exemptions for import-export activities.

What are the costs involved in setting up an LLC in Dubai?

The costs of setting up an LLC in Dubai can vary depending on several factors, including the location of the business (mainland or free zone), the type of business activity, the office space required, the number of shareholders, and other specific requirements. That said, the following is a list of the main costs involved:

• Foreign document attestation: In the case that one or more of the shareholders within the LLC is a foreign company, the foreign company documentation would require attestation and translation into Arabic for use in the UAE. The company documents that would need to be attested would include the certificate of incorporation, certificate of incumbency, the Memorandum of Association (MOA) and the shareholders resolution. The cost of foreign document attestation can vary depending on their country of origin.
• Trade name reservation: A fee is required to reserve the trade name for the company. This fee can vary depending on the emirate and jurisdiction.
• Initial approval and licensing: There are fees for obtaining initial approval from the Department of Economic Development (DED) or the relevant free zone authority and for obtaining the necessary business license.
• Memorandum of Association (MOA) notarisation: The MOA is a legal document that defines the company’s shareholding structure and activities. There are fees for getting the MOA notarised by either a public or private notary.
• Capital requirements: The share capital may need to deposited in the company bank account.
• Office space rental: Depending on the jurisdiction and the nature of your business, you may be required to rent office space. The cost of office space can vary significantly based on the location and size of the office. Some free zones offer incentives to attract businesses, including discounted or subsidised office space rates, flexible lease terms, reduced setup fees, and other cost-saving benefits, making it more affordable for companies to establish themselves within those zones.
• Visa and immigration costs: If you plan to hire foreign employees or obtain residency visas for yourself and your partners, there are associated fees for visa processing and medical examinations.
• Additional fees: Some business activities or industries in Dubai require specific approvals from government authorities or regulatory bodies. These approvals often come with additional fees, which can increase the initial setup costs.
• Miscellaneous costs: There may be other miscellaneous costs, such as translation fees, document processing fees, and administrative expenses.

Conclusion

It’s important to note that the costs of setting up an LLC in Dubai can be influenced by various factors, including changes in government regulations, economic conditions, market demand, and the specific requirements of your business. It’s therefore highly recommended to seek advice from a business consultant or a local service provider to get an accurate and up-to-date estimate of the costs involved in setting up an LLC in Dubai.

How can The Knightsbridge Group help?

The Knightsbridge Group has over 20 years of experience in the domain of corporate structuring and wealth management. We have unparalleled knowledge of business practices and legal requirements in the UAE as well as an international network of contacts and a deep understanding of the needs of modern-day high net worth clients and international businesses.

We can assist you in setting up an LLC in Dubai, advising on the most appropriate jurisdiction for your business, helping you to gather all the required documentation and liaising with government departments or free zone authorities on your behalf to ensure a swift set up and full compliance with all legal requirements.

If you need help with this or any other immigration, financial or corporate structuring issue, please don’t hesitate to contact us on info@kbgroup.ae and we will be happy to help.