The Cost of Doing Business in Dubai for a Small Company
Although Dubai is renowned for being one of the best places to do business worldwide, it also has a reputation for being outwardly lavish and extravagant. If you are researching the feasibility of doing business in Dubai, then read on as we discuss the cost of doing business in Dubai for a small company.
Why do business in Dubai?
According to the World Bank Doing Business 2020 report, the cost of doing business in the MENA region has decreased from around 52% of Gross National Income per capita to about 17% between 2008 and 2020.
In the same report, the UAE was ranked the 16th easiest country to do business in globally. The UAE has proven itself to be a highly conducive environment for entrepreneurs time and time again. Click on the following link to read our blog titled "Is UAE A Good Place to do Business."
The cost of doing business in Dubai for a small company
It costs between $260,198 to $372,716 (USD) to run a small business in Dubai on a fully serviced 200 square foot office space, with three employees (who receive a benefits package), with telephone and internet expenses paid, and a mainland license registered.
It's important to note that this calculation is an approximate and generic, with costs varying from one industry to another.
The cost of office rent in Dubai: ($14,400 - $36,612)
A 200 squared foot serviced office space (the smallest space that can be found) will cost around $400 to $1,767 monthly per person in 2022. Annually that would cost between $4,800 to $12,204 for one individual.
Serviced office spaces include business-ready facilities cleaned and serviced by a facilities company. They also have kitchens, networking spaces, and often a staffed reception desk.
The cost of labour in Dubai: ($160,138 - $214, 744)
Salaries can cost anywhere from $1,188 to an average of $5,326 and can be as high as $24,483 per individual monthly. The large variance is because different industries pay different salaries and different seniority levels receive higher, better-paying packages.
Note: In the UAE, employers must keep 12.5% of an employee's salary as social security, so we've included that in our aggregate calculation.
Employee Benefits Budget: ($49,900 - $65,600)
Employers that want to retain their employees better should offer attractive benefits programs. Although benefits programs can include many things such as educational allowances for employees' children, housing, and health insurance, we will calculate only a housing benefit here.
It is assumed that there are four individuals in each expatriate household (expatriates make up 90% of the UAEs population). A three-bedroom apartment will usually suffice for such a family. In Dubai, generally, that costs $11,400 to $27,100 annually for mid-range to upper mid-range level apartments.
Internet and telephone costs: ($20,760)
According to KPMG data, utilising a 40mps broadband, UAE companies pay $230 for internet per month.
Assuming that the average employee makes 100 local calls and ten international calls per month, the annual telephone fee will be around $500 per employee.
Electricity and water costs: ($324)
Considering that we are calculating our projected annual cost of doing business in Dubai with the assumption that a serviced office space will be utilised, electricity and water fees are redundant since they are part and parcel of serviced office fees.
However, we've included it here for those interested in considering a non-serviced office option.
The average expenditure on electricity and water in all the GCC is around 21 kWh and 0.08m3 per square meter per month.
A 200 squared foot office space is about 19 m squared. So that is 399 kWh of electricity and 1.52m3 of water per month.
In monetary terms, that is around $3 per month for water and about $24 for electricity for an office that small. Annually that is $36 and $288, respectively.
Company registration fees: ($15,000 - $35,000)
Finally, registration fees for a UAE mainland LLC company can cost anywhere from $15,00 to $35,00 for the first year of business. The cost reduces drastically after that.
How can PRO Partner Group help?
Establishing a business in the Middle East can be a complex, time consuming and even daunting process. PRO Partner Group is the leading Company Setup, Local Partnership and PRO Service provider in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar, Bahrain and KSA.
If you need guidance on setting up a business in Dubai, or any other related company setup, restructuring, local partner or PRO support matter in Qatar, Abu Dhabi, Dubai, the wider UAE or Oman, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.