Business Setup in Dubai: Mainland and Free Zone
Set up your Dubai company with the tax side right from day one
This service is for founders, investors and overseas groups opening a company in Dubai or elsewhere in the UAE. You might be choosing between a mainland licence and a free zone, adding a UAE subsidiary to an existing group, or moving a sole trader into a limited company. Whichever it is, the choices made at incorporation shape your corporate tax position, audit duties and banking for years afterwards.
DirhamWise coordinates the whole setup: jurisdiction and legal form, the licence application, company documents, the bank account file and visas. Because we are an accounting and tax firm, we also complete the registrations and bookkeeping a new company needs before its first deadline arrives. You end up with a company that is ready to trade, invoice and file.
What's included
Mainland, free zone or offshore: where should you incorporate?
Jurisdiction comes first because it decides who licenses you, where you may trade and how corporate tax applies. We start from how the business will earn money: who your customers are, whether you need premises or staff on the ground, and whether the company will trade or simply hold assets.
| Point | Mainland | Free zone | Offshore |
|---|---|---|---|
| Licensed by | Dubai Department of Economy and Tourism (DET) | The free zone’s own authority | An offshore registry operated within a UAE free zone |
| Where you can trade | Anywhere in the UAE and overseas | Within the zone and internationally; Dubai mainland trade needs a DET licence or permit | Not an onshore trading vehicle; used mainly to hold assets and for business outside the UAE |
| Foreign ownership | Up to 100% for most activities; strategic impact activities follow separate licensing rules | Up to 100% | Up to 100% |
| Premises | A physical office with a tenancy contract registered in Ejari | From a flexi-desk to a warehouse, depending on the zone and package | A registered address through the registry’s agent; no operating office |
| Corporate tax | 0% on taxable income up to AED 375,000 and 9% above that | 0% on qualifying income only if every Qualifying Free Zone Person condition is met; 9% on non-qualifying income | Incorporated under UAE legislation, so it is a resident person for corporate tax and must register |
Mainland foreign ownership is now open for most activities. The exceptions are activities with a strategic impact, such as security and defence, banking, exchange houses, finance, insurance and telecommunications. Foreign investors can take part in these only through the relevant regulator’s approval and at the percentages it sets, and services related to fisheries are reserved for UAE nationals. We check your activity against the list before you apply.
Free zone companies that also want mainland customers
A free zone licence does not by itself allow trading on the Dubai mainland. Dubai Executive Council Resolution No. 11 of 2025 allows free zone companies to operate in the emirate outside their zone once they hold a licence or permit from DET. The Free Zone Mainland Operating Permit, launched in October 2025, costs AED 5,000 for six months and can be renewed for the same fee. It is open to free zone companies that hold a Dubai Unified Licence, and at launch it covered non-regulated activities such as technology, consultancy, design, professional services and trading. The official announcement says permit holders must keep separate financial records in line with FTA requirements and that the related revenue is subject to 9% corporate tax. If most of your customers will be onshore, a mainland licence is often the simpler route, and we model both before you commit.
The free zone 0% rate is conditional
A Qualifying Free Zone Person pays 0% only on qualifying income. It must keep non-qualifying revenue within the de minimis limit of 5% of total revenue or AED 5 million, whichever is lower, and it must prepare audited financial statements whatever its size. It also cannot elect Small Business Relief. Our guide to UAE corporate tax exemptions covers the conditions in more detail.
Legal forms and licence types
Once the jurisdiction is settled, you choose a legal form and a licence type. On the mainland, legal forms are set by Federal Decree-Law No. 32 of 2021 on Commercial Companies. Free zones use their own equivalents, usually a free zone establishment or free zone company, and the names vary from zone to zone.
| Structure | Usually suits | Points to know |
|---|---|---|
| Limited Liability Company (LLC) | Most trading and service businesses | Between 2 and 50 partners, or a single owner. Each partner’s liability is limited to their share of the capital. |
| Branch of a foreign or UAE company | Groups that want a Dubai presence under the parent’s name | Not a separate legal person, so the parent carries the liability, and the branch carries on the parent’s activities |
| Private Joint Stock Company | Larger ventures with several investors | Shares are held privately and not offered to the public |
| Public Joint Stock Company | Companies raising capital from the public | The only form that may carry on banking and insurance, unless the laws for those sectors say otherwise |
| General or Limited Partnership | Family and professional partnerships | General partners are natural persons who are jointly liable for the company’s debts with all their own property |
| Sole establishment | Individual professionals and small traders | No separate legal personality, so the owner is personally liable |
Structure also drives your audit and tax work. The Commercial Companies Law requires every LLC and joint stock company to have its accounts audited each year, and each legal person incorporated in the UAE registers for corporate tax in its own name. A branch of a foreign company is generally taxed on the income attributable to its UAE permanent establishment, which needs careful records from the start.
Licence types
The licence type follows from your business activities. The main categories are:
- Commercial for trading, import and export, general trading and e-commerce.
- Professional for consultancy, IT services, design, marketing and other services based on skills.
- Industrial for manufacturing, assembly and processing.
- Tourism for travel agencies, tour operators and hospitality.
- Agricultural and occupational for farming-related and craft-based activities.
Related activities can usually sit on one licence. Some activities also need approval from a sector regulator before the licence is issued, such as education, healthcare, food and real estate brokerage. We identify these at the start so they do not hold up the application halfway through.
How company formation in Dubai works, step by step
The order below is typical for a Dubai mainland LLC. Free zones follow a similar path on their own portals, and mainland trade licence requests are submitted through DET’s Invest in Dubai platform.
- Activity and structure review. We match what you plan to do with the official activity list, flag any that need outside approval, and agree the shareholding, capital and management structure.
- Trade name reservation and initial approval. Names are checked against UAE naming rules. For example, a personal first name can generally be used only if it belongs to one of the shareholders, and names that are offensive or refer to religions or political organisations are refused.
- Company documents. We coordinate a memorandum of association that matches the agreed ownership, profit-sharing and manager powers, then arrange signing, and notarisation where the authority requires it.
- Premises. Mainland companies need a tenancy contract registered in Ejari. Free zones lease space or desks directly.
- Licence issue. Once fees are paid, the trade licence is issued. Dubai businesses, whether mainland or free zone, also receive a Dubai Unified Licence number that links their records across government services.
- Immigration and labour. Establishment card, labour registration and residence visas. Medical tests and biometrics are done in person.
- Bank account. This is covered in the next section.
- Tax and compliance registrations. Corporate tax, the beneficial owner register and, when due, VAT.
Documents we usually need
Individual shareholder
- Passport copy and photograph
- UAE visa and Emirates ID, if resident
- Proof of home address
- CV or business profile for regulated activities
Corporate shareholder
- Certificate of incorporation and constitutional documents
- Board resolution approving the UAE company and appointing its manager or signatory
- Certificate of good standing or incumbency
- Power of attorney for the person signing in the UAE
Documents issued abroad normally have to be legalised in the home country and attested in the UAE before an authority will accept them. We also collect details of every individual who ultimately owns or controls the company. Under the beneficial owner rules, that means anyone holding 25% or more of the capital or voting rights, directly or through other companies, or otherwise exercising ultimate control.
Opening a corporate bank account
A licence without a bank account cannot trade. UAE banks apply their own know-your-customer checks, and the decision on whether to open an account is theirs alone. What we control is the quality of the file you present. Accounts are refused or delayed most often because of gaps: an unclear source of funds, an ownership chain the bank cannot follow to the individuals at the top, or projected activity that does not match the licence.
Before you meet the bank, we prepare:
- a short business profile covering activities, main suppliers and customers, and the countries you will deal with
- projected monthly turnover and transaction volumes that are consistent with the licence activities
- an ownership chart down to each beneficial owner, with supporting documents
- a source-of-funds and source-of-wealth explanation for the shareholders
- certified copies of the licence, memorandum, tenancy contract and signatories’ passports and visas
We also tell you which account types usually suit your profile, including the minimum balance expectations to ask about, and we stay available to answer the bank’s compliance questions after the meeting.
Registrations and deadlines a new company faces from day one
Many setup providers stop at the licence. For an accounting firm, this is where the work that protects the company starts. These obligations begin at incorporation or soon after, and several carry fixed penalties.
| Obligation | Who it applies to | Deadline | Penalty if missed |
|---|---|---|---|
| Beneficial owner register | Mainland and non-financial free zone companies | Created within 60 days of incorporation; changes recorded within 15 days of becoming aware of them | Administrative fines |
| Corporate tax registration | Every company incorporated on or after 1 March 2024, including free zone companies and those expecting to pay 0% | Within 3 months of incorporation | AED 10,000; under a current FTA initiative this is waived if the first return is filed within 7 months of the end of the first tax period |
| VAT registration | Taxable supplies and imports above AED 375,000 in the past 12 months, or expected to exceed it in the next 30 days | When the threshold is met | AED 10,000 for late registration |
| Voluntary VAT registration | Supplies, imports or taxable expenses above AED 187,500 | Optional | None |
| VAT returns | Every VAT-registered company | Within 28 days of the end of each tax period, which is quarterly as standard | AED 1,000, or AED 2,000 if repeated within 24 months |
| First corporate tax return | Every registered company | Filed, and any tax paid, within 9 months after the end of the first tax period | AED 500 a month for the first 12 months, then AED 1,000 a month |
| Accounting records | Every company | Kept for 7 years after the tax period they relate to | AED 10,000, or AED 20,000 if repeated within 24 months |
| E-invoicing | B2B and B2G transactions by anyone doing business in the UAE, whether or not VAT-registered | Revenue below AED 50 million: appoint an accredited service provider by 31 March 2027 and go live by 1 July 2027 | AED 5,000 a month for failing to implement the system or appoint a provider |
Audit and Small Business Relief
The Commercial Companies Law requires LLCs and joint stock companies to have their accounts audited every year. For corporate tax, audited financial statements are also required for every Qualifying Free Zone Person and for any company with revenue above AED 50 million. See our audit and assurance services.
A resident company with revenue of AED 3 million or less in the current period and every earlier period can elect Small Business Relief for tax periods ending on or before 31 December 2029. It must still register and file a simplified return on time. Once revenue passes AED 3 million in any period, the company cannot elect the relief again, so we plan the first years with that in mind. Note that the AED 3 million test is on revenue, while the AED 375,000 band is on taxable income: a company above the relief threshold still pays 0% on its first AED 375,000 of taxable income.
If you will employ staff, salaries on the mainland run through the Wage Protection System. Our payroll team sets that up. Activities such as real estate brokerage or dealing in precious metals also carry anti-money laundering duties from the day you are licensed, which we cover under AML compliance.
Setting up the books before the first invoice
The first year’s accounts are the easiest to get right and the most expensive to rebuild later. While the licence is in progress, we set up:
- Financial year and first tax period. We choose a year end that suits your trading cycle and group reporting, and record it with the FTA at registration.
- Accounting framework. IFRS is the default for corporate tax. Companies with revenue of AED 50 million or less may use IFRS for SMEs, and those at AED 3 million or less may use the cash basis.
- Software and chart of accounts. Configured for VAT from the start and chosen with e-invoicing in mind, so you do not have to change systems in 2027.
- Opening entries. Share capital, founder loans, pre-incorporation expenses and licence costs recorded with the evidence the FTA and your auditor will ask for.
- Related-party records. Where a parent company or shareholder charges fees or lends money, the terms are documented from the first transaction.
Once you are trading, our monthly accounting packages are priced at AED 950, AED 1,650 and AED 2,150 a month. See pricing for what each includes. Growing companies can add CFO services for budgets, cash flow and investor reporting.
What we handle, and what stays with you
We coordinate the setup from first review to first filing. That covers jurisdiction analysis, activity selection, name and initial approval, document drafting and signing arrangements, the licence application, immigration and labour files, the bank account file, corporate tax and VAT registrations, the beneficial owner register and your bookkeeping setup. You get one point of contact and a written plan showing each step, who is responsible and what documents are outstanding.
A few things only you can do: sign company documents, attend the medical test and biometrics for your visa, meet the bank where it asks to, and give truthful ownership and source-of-funds information. Licences, visas and bank accounts are decided by the relevant authority or bank. We prepare your application to give it the best footing, but we do not promise any outcome or timescale on their behalf.
Our quote lists our fee separately from government, free zone and visa charges, so you can see which money goes to the authorities and which is for our work.
Frequently asked questions
How much does business setup in Dubai cost?
It depends on the jurisdiction, the activities, the number of visas and the type of premises. Mainland licences add office rent, while free zone packages often bundle a desk and a set number of visas. We quote our fee in writing and list authority charges separately. After setup, our monthly accounting packages are AED 950, AED 1,650 or AED 2,150. Ask for a quote with your activities and visa needs.
Can a foreigner own 100% of a mainland company in Dubai?
Yes, for most activities. Foreign investors can own up to 100% of a mainland company. Activities with a strategic impact, such as security and defence, banking, exchange houses, finance, insurance and telecommunications, need the relevant regulator’s approval and follow the ownership percentages it sets. Services related to fisheries are reserved for UAE nationals.
Is a free zone company tax-free?
Not automatically. A free zone company pays 0% corporate tax only on qualifying income, and only if it meets every Qualifying Free Zone Person condition. That includes keeping non-qualifying revenue within 5% of total revenue or AED 5 million, whichever is lower, and preparing audited financial statements. Other taxable income is taxed at 9%. Every free zone company must still register for corporate tax. See our exemptions guide.
Can a free zone company trade with customers on the Dubai mainland?
Only with authorisation from DET. Under Dubai Executive Council Resolution No. 11 of 2025, a free zone company can obtain a DET licence or a Free Zone Mainland Operating Permit. The permit is open to free zone companies holding a Dubai Unified Licence, costs AED 5,000 for six months and is renewable. At launch it covered non-regulated activities such as technology, consultancy, design, professional services and trading, and the related revenue is subject to 9% corporate tax.
When does a new company have to register for corporate tax?
A company incorporated on or after 1 March 2024 must apply within 3 months of incorporation. This applies even if it expects to pay no tax. Late registration carries an AED 10,000 penalty, although a current FTA initiative waives it if the first return is filed within 7 months of the end of the first tax period. More on corporate tax registration.
Does a new company need to register for VAT immediately?
Only when it crosses the threshold. Registration is mandatory once taxable supplies and imports exceed AED 375,000 over the previous 12 months, or are expected to exceed it in the next 30 days. You can register voluntarily above AED 187,500, and taxable expenses also count towards that figure, which can let you recover VAT on business costs. More on VAT registration.
Can I set up a company in Dubai without visiting?
Much of the application work can be done remotely through the authorities’ online portals, with documents signed and attested abroad. You will need to be in the UAE for the medical test and biometrics if you want a residence visa, and many banks ask to meet signatories before they open an account.
How long does company formation in Dubai take?
It depends on the jurisdiction, whether any activity needs approval from a sector regulator, how quickly documents from abroad can be legalised, and the bank’s review. We give you a written plan with the order of steps and what each depends on. We do not quote authority or bank processing times, because we do not control them.
Get a written plan and quote for your Dubai company
Tell us your activities, where your customers are and how many visas you need. We will recommend a jurisdiction and structure, set out every step through to your first tax registration, and quote our fee separately from authority charges.
+971 56 500 6694 · info@dirhamwise.com · Contact form
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