Business Setup UAE: Cost Breakdown for Starting a Contracting Company

If you’re considering business setup in UAE by launching a contracting company, understanding the financial commitments involved is absolutely essential. The United Arab Emirates (UAE) offers a robust infrastructure, political stability, and investor-friendly laws that make it highly attractive for entrepreneurs worldwide. However, before you dive in, it’s crucial to break down the costs so you can plan accordingly and avoid unexpected expenses.

Why Set Up a Contracting Company in the UAE?

The UAE is experiencing consistent growth in sectors like real estate, infrastructure, and tourism — all of which require major contracting services. Establishing your construction or contracting company in such a lucrative environment promises vast business opportunities. Moreover, flexible regulatory frameworks and the availability of free zones and mainland options add to the appeal.

Types of Jurisdictions for Business Setup in UAE

The cost of setting up your contracting company greatly depends on the jurisdiction you choose. The three main types are:

• Mainland: Suitable for businesses wanting to operate across the UAE without location restrictions.
• Free Zone: Offers 100% foreign ownership and tax benefits but limits business activities to within the free zone unless a local distributor is appointed.
• Offshore: Intended for international business outside the UAE; not commonly used for contracting businesses.

For a more detailed comparison, read our guide on Mainland vs Free Zone: Where to Open Your Commercial Register in Dubai.

Detailed Cost Breakdown for Contracting Business Setup UAE

Here’s a comprehensive look at the main costs involved in setting up a contracting company in the UAE.

1. Trade Name Reservation

Cost: AED 620 – AED 720

This is the first step in your company formation process. The name must be unique and comply with the UAE’s naming regulations.

2. Initial Approval

Cost: Approx. AED 120

The Department of Economic Development (DED) issues this approval allowing you to move forward with the business setup process in UAE.

3. Memorandum of Association (MoA)

Cost: AED 1,500 – AED 2,000

This legal document outlines the ownership, responsibilities, and operational structure of your company. It must be notarized.

4. License Fee

Cost: AED 10,000 – AED 15,000+

One of the most significant costs, this fee depends on the business activity. Contracting licenses are typically more expensive given their scope of work. Also, note that license renewal is an annual expense.

Learn more about licensing at the UAE Government Portal.

5. Office Space Rental

Cost: AED 15,000 – AED 60,000 annually

Mainland companies must have a physical office space. Costs vary widely based on location, size, and facilities.

6. Local Sponsor Fees (Mainland Companies Only)

Cost: AED 8,000 – AED 20,000 annually

A local Emirati sponsor is required to hold 51% of shares in a mainland company. Although recent regulations allow for 100% foreign ownership in select activities, contracting licenses generally still require a sponsor.

7. Civil Engineer/Technical Staff Registration

Cost: AED 2,000 – AED 5,000 per staff member

The DED mandates that companies register qualified technical staff or engineers with relevant authorities like the Dubai Municipality.

8. Visa and Immigration Costs

Cost: AED 3,500 – AED 7,000 per visa

Includes application, medical tests, Emirates ID, and stamping. You’ll also need labor and immigration files set up (around AED 2,000).

9. Bank Account Opening

Cost: Generally free or with a minimum balance requirement (AED 10,000 – AED 50,000)

While the process itself isn’t expensive, maintaining balances or facing charges for falling below minimum thresholds is something to plan for.

10. Insurance and Additional Permits

Cost: Varies

Depending on your scope, commercial insurance and special activity permits (e.g. scaffolding, excavation) may be required. Pricing can vary from AED 3,000 upward.

Total Estimated Cost for Business Setup UAE (Contracting Company)

Based on the above elements, the estimated startup budget can range from AED 50,000 to AED 150,000+ depending on the scale, location (mainland or free zone), staff, and other variables.

Ongoing Annual Costs

• License renewal: AED 10,000 – AED 15,000
• Office lease renewal
• Visa renewals
• Sponsor fees (if applicable)

How to Reduce Setup Costs

• Opt for shared office spaces
• Use local service agents
• Consider a free zone if your activities allow
• Hire experienced consultants to avoid unnecessary fines

Read our breakdown of How Much It Costs to Open a Company in Dubai for more insights specific to the region.

Important Considerations for Contracting Business Setup UAE

Before choosing between mainland and free zone jurisdictions, take note of project scope, target market, and location flexibility. Many government and infrastructure contracts are only awarded to mainland-registered companies.

Additionally, contracting businesses are closely monitored in terms of safety, certification, and staff qualifications. Ensure that your engineers or project managers have the required local certifications.

Key Takeaways

• The UAE is a lucrative market for contracting businesses with high infrastructure demand
• Setup costs vary based on jurisdiction, office size, licensing, and staff count
• Plan for AED 50,000 – 150,000+ as your initial investment
• Proper planning can significantly reduce unnecessary expenditure

For expert assistance and a smooth setup experience, consult professionals familiar with UAE’s contracting business landscape.

Also explore our guide on Best Locations for Establishing a Contracting Company in Dubai to find the right spot for your business.