From salary to self-employed: Weighing up the cost of freelancing in the UAE

Meghna Dixit, a former freelancer in Dubai, warns against the common misconception that freelancing is a "free" way of working. The costs of going self-employed in the UAE can be substantial, ranging from a few thousand dirhams to over Dh40,000 for a full setup with a business license. This covers legal work, permits, visa fees, mandatory insurance, and platform charges.

Visa and license costs come first, with a professional services permit priced at Dh6,500 plus VAT. Additional expenses include municipality fees, unemployment and medical insurance, and platform fees. Those invoicing through their company face a 2.49% processing fee. The expenses do not stop at the permit costs; freelancers must also cover health insurance, marketing, professional development, software subscriptions, equipment, workspace, and accounting.

Shazia Bharuchi, a career coach, emphasizes that freelancers should shift their mindset from receiving take-home pay to accounting for all these additional costs. Keren Bobker, a financial adviser, adds that self-employment affects access to finance, making it harder to obtain credit due to income instability. Health insurance is another significant expense, ranging from Dh1,000 to over Dh20,000 per year, depending on various factors like age, medical history, and chosen deductions.

Emotional costs, such as the pressure to constantly generate work and manage uncertainty, are also crucial considerations. To prepare for the transition, experts advise saving at least six months of essential living expenses and maintaining an emergency fund, ideally in an offshore account, to buffer against potential invoice delays.