Budgeting Twelve Months of Running Costs in Dubai: Setup Fees Against Ongoing Fees

The running cost of a Dubai company is the total of one-off setup fees plus recurring annual charges: license renewal, visa costs, 5% VAT, and 9% corporate tax. Budgeting both categories separately stops founders from underestimating year-two obligations. Setup fees are paid once, at incorporation. Recurring costs never stop.

One-Off Versus Recurring Fees

A two-founder team choosing the 2 Visa Package pays AED 18,200 upfront at Dubai South Business Hub Free Zone. That's the last time they'll see that exact figure. Month 13 brings license renewal, visa renewal for both holders, and any VAT or corporate tax liability accrued during year one.

Founders often budget only for setup. That's the mistake. Recurring fees repeat every twelve months, and they compound if you're also adding headcount or scaling revenue past the corporate tax threshold.

Why Twelve-Month Planning Matters

• Cash flow gaps risk a lapsed trade license.

• Recurring costs include 5% VAT and 9% corporate tax above AED 375,000 net profit.

• Build a buffer for government fee adjustments year to year.

• A consultancy setting aside a monthly reserve avoids scrambling at renewal time.

One-Off Setup Fees at Dubai South Business Hub Free Zone

Dubai South Business Hub Free Zone offers three standard packages: 0 Visa at AED 12,500, 1 Visa at AED 16,350, and 2 Visa at AED 18,200. These cover the trade license plus applicable visa allocation, paid once at formation. If you want to calculate your business setup cost before committing, run the numbers against your team size first.

Comparing the Three Standard Packages

• 0 Visa Package: AED 12,500. No residency slots included.

• 1 Visa Package: AED 16,350. One visa slot included.

• 2 Visa Package: AED 18,200. Two visa slots included.

A solo consultant might pick the 0 Visa Package. A two-founder venture typically needs the 2 Visa Package instead.

What the Setup Fee Covers

The fee covers trade license issuance under DET-aligned free zone rules and company registration paperwork. It also includes visa allocation slots, not the visa processing fee itself.

Founders often assume the visa is fully bundled. It isn't. Only the allocation slot is included, not stamping or medical fees. Those arrive separately, and we'll cover them in the exclusions section below.

Recurring Fees You Must Budget for Every Year

Recurring annual costs include trade license renewal, visa renewal per holder, 5% VAT on qualifying supplies, and 9% corporate tax on net profit above AED 375,000 (Ministry of Finance, 2024). These repeat every twelve months, regardless of which setup package you chose.

License Renewal and Visa Renewal

• Trade license renews annually at the free zone's standard rate.

• Each visa holder needs renewal fees plus medical and Emirates ID costs.

• Missed renewal deadlines risk fines and status complications.

A company with two visa holders budgets renewal for the license and both individual visas, every single year.

VAT and Corporate Tax Obligations

Federal Decree-Law No. 8 of 2017 sets the 5% VAT rate on qualifying supplies (Federal Tax Authority, 2024). Corporate tax under Federal Decree-Law No. 47 of 2022 applies 9% above AED 375,000 net profit. Dubai South Business Hub Free Zone is not a designated zone for VAT purposes, so standard VAT rules apply to most transactions.

A trading firm with AED 500,000 net profit pays 9% corporate tax on the AED 125,000 above the threshold, which works out to AED 11,250.

Office and Utility Overheads

• Flexi-desk or office space costs scale with team size.

• Utilities and connectivity add monthly overhead beyond rent.

• Business support services like PRO assistance add incremental annual cost.

A services company adds PRO support for government transactions rather than handling paperwork in-house. It costs more upfront but saves hours of admin every month.

Five Steps to Building Your Twelve-Month Cost Budget

Building a twelve-month Dubai company budget takes five steps: confirm your package, list visa renewal costs, estimate VAT and corporate tax liability, add office overheads, then build a monthly reserve. Skip a step and you'll underfund something.

Step 1: Confirm Your Setup Package

Choose between the 0, 1, or 2 Visa Package based on team size. Lock in the exact standard fee, not a promotional rate that might expire. A founder expecting to sponsor a second hire within the year should budget the 2 Visa Package upfront rather than upgrade later.

Step 2: List Visa Renewal Costs

• Add the renewal fee per visa holder.

• Include medical testing and Emirates ID costs.

• Check renewal timing against your license anniversary date.

Step 3: Estimate VAT and Corporate Tax

• Apply 5% VAT to qualifying supplies of goods and services.

• Apply 9% corporate tax above AED 375,000 net profit.

• Set aside quarterly reserves rather than one lump sum.

Step 4: Add Office and Support Overheads

• Include flexi-desk or office rent in your annual total.

• Factor in PRO and support service fees for government transactions.

• Review overhead every quarter, not just at renewal.

Is a Twelve-Month Reserve Worth It for a Dubai Free Zone Company?

Yes. Setting aside monthly reserves prevents a cash crunch at renewal. Founders who reserve early avoid scrambling for VAT, corporate tax, and visa renewal funds all at once.

What's Not Included in Your First-Year Budget

First-year setup fees exclude visa stamping and medical costs, office rent beyond a flexi-desk allocation, VAT registration for qualifying businesses, corporate tax filing support, and bonded warehousing. Goods in the free zone are duty-suspended, not duty-exempt.

One-Off Setup Fees Versus Recurring Annual Costs

Costs Outside the Package Fee

• Visa stamping, medical, and Emirates ID processing are separate.

• VAT registration applies once turnover crosses the mandatory threshold.

• Corporate tax filing may require external accounting support.

A retailer importing goods through the free zone benefits from duty suspension, not duty exemption, on stored inventory. That distinction matters when goods eventually move into mainland UAE.

Common Misconceptions About Bundled Fees

The setup fee isn't a tax-free guarantee. It never was. Duty suspension isn't the same as duty exemption, and DET-aligned licensing doesn't remove your VAT or corporate tax liability. Founders who assume otherwise get caught out at year-end.

One-Off Versus Recurring Fees at a Glance

Separating one-off setup fees from recurring annual charges is the fastest way to see the true running cost of a Dubai company. The table above places package fees against VAT, corporate tax, and renewal costs side by side. The one-off column shows package fees only.

Reading the Cost Table

A founder comparing the 1 Visa and 2 Visa Package sees an AED 1,850 gap upfront, alongside matching recurring visa renewal costs on the right column. Use the table to model your year-two spending before you sign anything.

Important Considerations

• The running cost of a Dubai company rises with headcount.

• Reserve funds monthly, not annually.

• Review your DSBH package annually against actual visa usage.

Before you finalize a package, it helps to check your business name availability and confirm your activity fits under Dubai South business activities. Both steps take minutes and prevent delays once you've committed to a fee structure.

Understanding the running cost of a Dubai company means separating the one-off package fee from recurring VAT, corporate tax, and renewal obligations across all twelve months. Get that separation right on day one, and renewal season stops feeling like a surprise.

Use the cost calculator to model your own package before you commit to a formation date, and if you're ready to move, you can start your business in Dubai with a clear twelve-month budget already in hand.

References

1. Ministry of Finance

2. Federal Tax Authority