Annual License Renewal - General Process, Requirements and Fees

It is not only the cost of registering a company that everyone wishes to know before starting a business, it is sometimes more important to understand the fees associated with annual renewal to plan your budget accordingly. Do you need to pay less next year, same amount as when registering a company or more? Let’s look at all expenses you will need to account for annually from the second year onwards. Additionally, we will look at the requirements for renewal and other aspects, associated with the process.

First we will look at the renewal process of the local/ mainland company. As much it is difficult to determine the exact Economic Department’s set-up fees in the first year, registration renewal charges of the Economic Department are also revealed on the renewal date. Registration authority first needs to see, if you still occupy the same office space or you moved to a smaller or a bigger one, as the renewal charges will be recalculated accordingly to include 5% of current annual rent amount. Additionally, if any corporate amendments took place, this may also have effect on the final total fee for renewal. In general, final fee of Economic Department is usually slightly higher from the 2^nd year onwards, due to certain adjustments of various government fees included in the renewal costs.

Before you initiate the renewal process, you will first need to take care of your office and renew the rent. This needs to be completed 3 to 4 weeks in advance to allow you to apply for your company’s license renewal in a timely manner. Additionally, if a business activity you conduct required a Non-Objection Certificate from a certain authority at the time of registration, you will most probably also need to obtain a current-dated NOC. The fee for issuing the NOC would be the same, as what you would pay in the first year, when registering your company. Finally, if you are renewing a branch, subsidiary or a representative office, you will need to provide a copy of the current-dated license or a certificate of good standing of the parent company, which shall be legalized, if issued outside of the UAE.

Every year renewal process for local/mainland companies becomes more and more hassle-free. As of now, Dubai Economic Department offers you to renew your company’s license online, offline and even via a text message.

For online renewal you will be able to use Dubai Economic Department’s e-Services web-page, where you will first need to create an account. Alternatively, you can do so via a “Business in Dubai” App, that you can find on iOS and Android.

If you still think that online renewal takes much of your time, try a text message option, which was recently introduced by the Dubai Economic Department. You just need to send a text message with your license number to 6969 and you will immediately receive a mobile renewal voucher that you can pay online or offline. Once paid, your renewed license will be sent via text message and you will also receive it to your registered email address.

Finally, if you feel that you are more comfortable renewing your license offline, you can visit authorized service centers listed on the web-site of economic department.

Remember to renew the license of your local company before its expiry date, otherwise, a penalty of AED 200 per month will apply after registration renewal due date. Additionally, do not forget to complete the audit and submit the same timely.

Now that we covered local companies, it is time to discuss the renewal process for companies registered in the free zones. As you may remember from the previous chapters, when you register a company in a free zone, most free zone registration authorities offer you packaged solutions, where the total costs for registration are quoted. This helps a businessman to understand the total costs involved in incorporation process. Later, once you pay the invoice for incorporation you see that set-up costs are broken down into registration fees, license fees and flexi-desk charges. Sometime establishment card fee is also included in the breakdown. When you renew your company in the following year most of the time registration fee is deducted from the total, as such your registration renewal costs become AED 2,000, AED 3,000 or sometimes even AED 9,000 less expensive. However, there are also free zones that do not discount the cost of renewal and you will be paying same amount year after year. Therefore, you should already at the time of company set-up enquire about renewal fees, whether they will stay the same or the amount will be reduced form the second year onwards because of one-time registration fee that is paid in the first year only.

As in the case with a local company, prior to approaching registration authority you need to ensure that your office lease is renewed (if you are renting an office and you do not have a flexi-desk facility) and relevant NOCs, if required, are obtained. In some Dubai free zones, you may be also requested to arrange for a workmen compensation and office insurances, in case of a standard office rent, in the northern emirates you may also need to renew your P.O. Box. Although there may be certain differences in the process, the renewal requirements for free zone companies are essentially the same: renew the lease for an office or a flexi-desk and make the payment of relevant fees. If the free zone you work from requires annual audit report submission, you shall take care of this aspect as well.

Different free zones have their rules and penalties for not renewing the company timely. Certain free zones give a grace period of one month after expiry date to renew the license without any penalties. Other free zones apply penalties from the first month already and it is not AED 200 but AED 2,000 and more and amount of penalties only increases month after month. It may also happen that after 4 month of non-renewal you will no longer be able to re-activate your company and the registration authority has the right to report you absconded.

Therefore, you need to be extremely careful. Just take it as a rule to initiate your company renewal process a month in advance to have enough time to fulfil any extra requirements that may come up and, in general, to have a room to go through the process with no hassle and hurry.

If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.

Disclaimer: Business Boutique UAE-Consultants.com is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.

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