In today’s market it’s all too common to face high renewal charges for your business license.
But it doesn’t have to be that way, with the correct and accurate guidance you can save yourself a bundle. In some cases, it’s possible to make savings not only on your initial setup, but also cut substantial costs over a three-year period as well.
So where to start?
Let’s look at two different scenarios, focusing on two of the most popular license packages. We have Preeti who instead of renewing set up a brand new 1-visa license and will be saving AED 14,760 over the next three years; and Jimmy who set up a new 2-visa license instead of renewing the old and will be saving AED 29,430 over three years.
If your business could use those kinds of savings, read on to see how Preeti and Jimmy benefited from some clever decision-making.
Preeti’s case: She chose to set up a brand-new e-commerce license instead of renewing her old 1-visa business license.
Here’s how she saved a lot of money.
- Over one year: Preeti selected a new business setup solution (including one visa), instead of renewing her current solution. So rather than paying AED 24,820 renewal fees, she paid AED 24,500 to set up a new license. Preeti’s saving over one year: AED 320.
- Over two years: Instead of renewing her current license for two years at a price of AED 49,640, Preeti got the initial setup of her new license and first renewal for AED 42,100. Preeti’s saving over two years: AED 7,540.
- Over three years: Instead of renewing her current license for three years at AED 74,460, her initial setup of her new license and first and second renewal cost just AED 59,700. Preeti’s saving over three years: AED 14,760.
- Banking: Meanwhile, Preeti spoke to her bank and advised them that she was moving from one jurisdiction to another. Because she already had a history with them, they opened her new account and linked it to her new license before she cancelled her old one. In the end, Preeti encountered zero banking downtime.
Jimmy’s case: He chose to set up a new license instead of renewing a 2-visa business license.
Jimmy needed to renew his 2-visa business license, but found that by taking a different route he was able to make considerable savings. Selecting a new business setup solution, instead of renewing his current solution, was the answer.
- Over one year: Jimmy selected a new a business license, including two visas, instead of renewing his current solution. So rather than paying AED 33,850, he paid AED 32,520. Jimmy’s saving over one year: AED 1,330.
- Over two years: Instead of renewing his current license for two years at a price of AED 67,700, Jimmy got his initial setup of a new license and first renewal at AED 52,320. Jimmy’s saving over two years: AED 15,380.
- Over three years: Instead of renewing his current license for three years at a price of AED 101,550, Jimmy got his initial setup of a new license and first and second renewal at AED 72,120. Jimmy’s saving over three years: AED 29,430.
- Banking: Jimmy selected to change his bank, as he managed to find one offering a better solution for his business. Jimmy started his bank application and linked it to his new license well in advance and so experienced zero downtime.
Multi-year licenses offer further savings
Multi-year license options offer even further savings with discounts as high as 30%:
- 2-year license at 15% discount
- 3-year license at 25% discount
- 5-year license at 30% discount
Favourable banking regulations
Some clients elect to stay with the same bank where they have history, and in such cases work with the bank to close the old account and restart a new account with minimum downtime. Other clients however take the opportunity to negotiate better terms with other providers and open a new account long before they have to consider closing the old account, ensuring zero downtime and even extended overlaps.
The UAE Central Bank mandated all banks to open accounts for SME customers within a maximum timeframe of two days, provided acceptable documentation is in place and that the risk is acceptable in view of the AML and CTF obligations.
Furthermore, the UAE Central Bank also issued new regulations which will limit fees banks charge to their SME customers, and stipulate that banks cannot require larger minimum account balance than AED 10,000.
You can download and view the full circular here.
In most cases it’s absolutely possible to retain your company name when moving from one free zone to another, as long as the same name is still available in the free zone you intend to move to. In other instances where the name is already reserved or used you can even elect to retain most of the same name by simply changing part of it (for instance, adding terms such as “international” or “group” to the end of it). There is no rule or regulation in the UAE that freezes your company name for any duration. You are even allowed to register the same company name in several of the UAE free zones at the same time if you wish, as long as the name is available in the free zone you choose.
Free zone flexibility
So that’s how Preeti and Jimmy saved on their new setup versus renewal. And there’s no reason why you can’t join them and gain similar savings. Keep in mind: most free zone authorities will now let you choose the exact license package (anywhere between one and six visas) as opposed to license bundles, and allow you flexibility to upgrade and downgrade at any time in line with your specific visa requirements. So there is no need to purchase license bundles and pay for visa quotas you simply do not need.