Jessica Ashford, Deputy CEO of PRO Partner Group offers a detailed insight into the key questions pertaining to Abu Dhabi’s recent move to reduce company formation fees.
Following the announcement from Abu Dhabi Government Departments, including the Abu Dhabi Department of Economic Development (ADDED) and the Abu Dhabi Chamber of Commerce and Industry (ADCCI), on 27th July that they would reduce new business setup costs and license renewal fees to 1,000 Dirhams.
The move is part of a strategic move to promote new business formations and reduce costs for existing businesses, the Abu Dhabi Government has issued a blanket reduction in new business license setup fees and license renewal fees to AED 1,000 – a reduction of more than 90%.
We have been able to answer the following key question on the fee reduction:
What is the new government costs for the issuance of a new Trade Licence in Abu Dhabi?
The total cost of issuing a trade license to engage in economic activities in Abu Dhabi is now AED 1,000.
This amount covers the fees required by all local entities concerned with the commercial licensing process, which includes AED 110 for the Department of Economic Development Abu Dhabi, AED 100 for external local entities, and AED 790 for economic activities.
What is the new cost of Trade Licence renewal in Abu Dhabi?
The total cost for renewing a trade license is AED 1,000. This amount covers the fees required by all local authorities concerned with the licensing process, which includes AED 10 for the Department of Economic Development Abu Dhabi, AED 890 for the regulation of activities, and AED 100 for other external local entities.
What is the new cost of trade name reservations in Abu Dhabi?
The trade name reservation cost is AED 50, the cost of the ICA pre-approval process is now AED 15.14, and the cost of the electronic payment service is AED 3.
Are there any additional fees required for exceptional names?
There are no additional fees required for exceptional or foreign trade names.
What is the validity period for the reservation of a trade name?
The validity of the reservation period for a trade name is now one year, this is increased from three months as it was before.
What is included in the new cost AED 1,000 for the issuance of a trade license?
The new cost includes the fees required by all local authorities concerned with the licensing process.
Does the initiative include all types of commercial and industrial licenses in Abu Dhabi?
Yes, it includes all types of licenses in mainland Abu Dhabi – Commercial, Professional and Industrial. Note that this does not include the Freezones in Abu Dhabi, this is only relevant for mainland DED licenses.
What are the new fees for amendments to AD DED trade licenses?
Trade Licence amendment fees have also been reduced to AED 10 for each amendment, and AED 100 for every new commercial activity added to the license.
If a trade license renewal application is submitted for more than one year, how will the fees be calculated?
It is possible to renew for more than 1 year now. The new government fees for this are simply AED 100 per year – so AED 1,000 for one year, AED 2,000 for two years and AED 3,000 for three years.
What other services within Abu Dhabi DED have been reduced to AED 10?
Services that have also been significantly reduced in price to AED 10 include – DED newspaper advertisement, license cancellations, branches cancellations and registration of liquidations for LLC companies
If the applications for trade name reservation, license issuance, renewal, or amendment are in progress and the fees have not been paid yet will the fees be automatically updated or should the application be cancelled and resubmitted in order to calculate the new fees?
If the application has not reached the payment step yet, the new fee structure will be applied automatically. If the application has reached the payment step but the payment transaction has not been completed, the transaction can be cancelled and removed from the system so that investors can benefit from the new fee structure. Investors must re-submit the payment. If the application has been partially paid then the old fee structure will be applied.
Is a 5% fee on Tawtheeq value for the lease contracts still applicable?
No, only AED 50 will be applied for Tawtheeq for commercial and industrial lease contracts from now on as part of these further fee reductions.
If the trade license was renewed before the decision has been implemented, can we cancel the request and collect a refund to benefit from the initiative?
No, amounts paid prior to the implementation of the initiative will not be refunded.
When do these new reduced fees come into effect?
Effective from 27th July 2021.
Which government entities have cancelled their fees completely?
Abu Dhabi Centre for Waste Management has fully cancelled its fees under this initiative.
Note that these fee reductions relate to Government entities in Abu Dhabi – such as DED and ADCCI, they do not relate to Federal Government fees that may still apply to the trade license. So additional fees may still apply from Federal departments such as The Ministry of Economy, depending on the activities of the company, any regulatory approvals needed and the structure of the business – LLC or Foreign Branch. There are also fees required within Immigration and Ministry of Labour regarding hiring staff, these are not included in the above company licensing fee reductions.
Together with the recent updates to UAE Commercial Companies Law in Abu Dhabi to allow 100% foreign ownership of companies in the Emirate, we expect to see further growth in companies choosing Abu Dhabi as the place to start up their business. The reduction in annual costs is also being welcomed by companies already set up in Abu Dhabi.
