The UAE remains one of the best places in the world to start and run a business — no personal income tax, 0–9% corporate tax, a cosmopolitan workforce, and one of the fastest incorporation processes globally. A free zone licence can be set up in as little as 3 working days.
But the options are confusing: more than 45 free zones, two types of mainland structure, offshore companies, and now a new corporate tax regime. This guide cuts through the complexity and tells you exactly what to choose and how to get started.
Your Three Setup Options
Every UAE business falls into one of three categories:
| 🏢 Mainland LLC | 🏭 Freezone Company | 🌐 Offshore Company | |
|---|---|---|---|
| Trade in UAE mainland? | ✓ Yes, freely | ✗ Needs distributor | ✗ No |
| Foreign ownership | 100% (most activities) | 100% | 100% |
| UAE residence visa? | ✓ Yes | ✓ Yes | ✗ No |
| Physical office required? | Yes | Flexi-desk option available | No |
| Corporate tax | 9% above AED 375k | 0% (qualifying income) | Exempt (no UAE activity) |
| Setup cost | AED 15–30k+ | AED 10–25k/year | AED 8–15k/year |
| Best for | Serving UAE clients, retail, F&B | Digital services, consulting, import/export | Holding company, international structuring |
Free Zone Companies: The Popular Choice for Expats
Most expat entrepreneurs choose a free zone because of the speed, simplicity, and historically favourable tax treatment. Over 90% of foreign-owned startups in Dubai use a free zone structure.
Best Free Zones for Different Business Types
| Free Zone | Best For | Starting Cost | Visa Allocation |
|---|---|---|---|
| DMCC (Dubai) | Commodities, trading, blockchain | ~AED 18,000/year | 3+ visas |
| Dubai Internet City (DIC) | Technology, IT, startups | ~AED 22,000/year | 2–6 visas |
| DIFC | Financial services, legal, FinTech | AED 25,000–50,000 | 2+ visas |
| IFZA (Dubai) | General trading, consulting, services | ~AED 12,500/year | 1–6 visas |
| SHAMS (Sharjah) | Media, creative, freelancers | ~AED 11,500/year | 1–3 visas |
| Ajman Free Zone | Small businesses, cost-conscious | AED 6,000–8,000/year | 1–2 visas |
| RAK ICC / RAK FTZ | Offshore, international holding | AED 8,000–12,000/year | Offshore: none |
Mainland LLC: When You Need Direct UAE Customers
If you want to sell directly to UAE-based businesses and consumers — a restaurant, retail shop, construction company, real estate brokerage — you need a mainland trade licence from the relevant emirate's Department of Economic Development (DED).
Since 2021, foreigners can own 100% of a mainland LLC in most activities without a UAE national partner. The historic 51% local sponsor requirement was abolished for most business activities under Federal Decree-Law No. 26 of 2020.
- Exceptions: banks, insurance, telecommunications, energy, and certain government-adjacent sectors still require UAE involvement
- No minimum share capital requirement since the reform
- A physical office address is mandatory (no flexi-desk option for mainland)
- Faster access to government contracts and tenders
Step-by-Step: Setting Up a Free Zone Company
Choose your free zone and activity
Select based on your business type, budget, and location preference. Use the comparison above. Each free zone has a list of permitted activities — confirm your business activity is allowed.
Choose a company name
Name must be unique in the free zone registry, not offensive, and not include restricted words (bank, royal, etc.). Free zones typically offer a name reservation service. Reserve your name before proceeding.
Choose your package (flexi-desk vs office)
Flexi-desk = shared workspace + postal address. Sufficient for most service businesses and online companies. Private office packages cost more but allow more employee visa allocations.
Submit application and documents
Passport copy, passport photo, and a short business plan (most free zones use a standard form). Processing: 2–5 business days. You'll receive your trade licence and Certificate of Incorporation.
Apply for your UAE residence visa
With your trade licence, apply for your establishment card and investor visa. Process: 7–14 days including medical test and Emirates ID. Costs: AED 3,000–5,000.
Open a corporate bank account
Most UAE banks require: trade licence, MOA, passport + visa, proof of business activity. Emirates NBD, ADCB, RAK Bank, and Wio Business are popular. Timeline: 2–6 weeks (banks do thorough KYC).
Register with FTA (if applicable)
Register for corporate tax with the FTA (mandatory for all). Register for VAT if annual revenue exceeds AED 375,000. Both via the EmaraTax portal at tax.gov.ae.
Realistic Cost Breakdown (Year 1)
| Item | Freezone (e.g. IFZA) | Mainland LLC (Dubai) |
|---|---|---|
| Trade licence fee | AED 8,500 | AED 10,000–15,000 |
| Flexi-desk / office | AED 4,000 (flexi) | AED 25,000–60,000 (physical required) |
| Establishment card | AED 1,200 | AED 1,200 |
| Investor/owner visa | AED 3,500–4,500 | AED 3,500–4,500 |
| Emirates ID | AED 1,200 | AED 1,200 |
| Medical test | AED 300 | AED 300 |
| PRO/typing services | AED 500–1,500 | AED 500–2,000 |
| Total Year 1 (approx.) | AED 19,000–22,000 | AED 42,000–90,000+ |
Annual renewal: Free zone licences renew each year at approximately 70–80% of the initial setup cost. Mainland renewal costs are similar. Health insurance for yourself and any employees is an additional recurring cost.
Corporate Tax & VAT: What You Must Know
- Corporate tax registration: Mandatory for all UAE businesses. Register via EmaraTax before your first tax period filing deadline.
- Small Business Relief: Revenue ≤ AED 3M? You may elect zero taxable income through 2026.
- Free zone qualifying income: If you meet substance requirements and earn qualifying income only, your corporate tax rate is 0%.
- VAT: Mandatory registration if taxable supplies > AED 375,000/year. 5% rate on most goods and services. File quarterly returns with FTA.
Read our full UAE corporate tax guide for detailed rates, exemptions, and filing deadlines.