UAE Free Zone Company Setup

Free zone or mainland

• Free zone — full foreign ownership, simplified setup, but no direct mainland trading
• Mainland — may trade anywhere in the UAE and bid for government contracts
• Mainland now permits full foreign ownership for most activities, narrowing the historic advantage of free zones
• Free zones remain attractive on cost, speed and the packaged nature of the offering
• The choice should follow where your customers actually are

Choosing the zone

There are dozens of free zones, and they are not interchangeable. Each has its own permitted activity list, licence categories, office and warehouse options and fee structure.

Some are oriented to trading, others to media, technology, healthcare or logistics. Choosing on headline cost alone frequently leads to a zone that does not permit the activity you actually intend, which cannot be fixed without relocating the licence.

Visas follow the office

The number of residence visas a company can sponsor is tied to the licence type and the office space taken. A flexi-desk arrangement supports a small number; a physical office supports more, scaling with area.

Founders who plan to relocate staff should establish the visa allocation before committing to a package, because increasing it later means taking larger premises rather than simply paying a fee.

Corporate tax has changed the calculation

The UAE introduced a federal corporate tax, with a zero rate available to qualifying free zone persons on qualifying income and a standard rate above a threshold on other income.

Qualifying for the zero rate depends on satisfying substance requirements and on the nature of the income. The historic assumption that a free zone company is simply tax-free no longer holds, and any structure should be planned against the current rules rather than reputation.

How we handle it

1. 1 Selecting the zone We match your intended activity, visa needs and budget to a zone that actually permits what you plan to do.
2. 2 Name and initial approval The name is reserved and initial approval obtained from the zone authority.
3. 3 Documentation Shareholder documents are attested where required and the incorporation set prepared.
4. 4 Licence and establishment card The trade licence is issued along with the establishment card.
5. 5 Visas and banking Residence visa processing is initiated and bank account opening supported.
6. 6 Indian reporting The overseas investment is reported to the Reserve Bank and flagged for Schedule FA disclosure.

Frequently asked questions