Free zone company setup in the UAE

A free zone company is registered by a free zone authority under that zone’s own regulations, not by the emirate’s economic department. u.ae puts the consequence plainly: free zone companies “are considered outside the UAE mainland jurisdiction.” That one sentence explains nearly everything below — the full foreign ownership, the customs treatment, the visa quota attached to a desk, and the trading restriction that most setup pages skip past.

There are more than 40 free zones in the UAE, according to the Ministry of Economy and Tourism. They compete on price, activity list, location and reputation, and they are not interchangeable.

What a free zone company legally is

The legal forms u.ae lists for free zones are a private limited liability company, a Free Zone Company (FZ Co.), a Free Zone Establishment (FZE), a public limited liability company, and a branch of a local or international company. Not every zone registers every form. FZE and FZ Co. differ on how many shareholders there are and whether a shareholder is a person or a company, and the exact definition is set by each zone, so confirm it with the zone rather than assuming.

Ownership is the simple part. A free zone company can be 100 per cent foreign-owned, for every activity the zone licenses. There is no local partner and no local service agent. That is no longer the sharp difference from mainland company formation that it was before 2021, but it still holds without the restricted-activity carve-outs that apply onshore.

Can a free zone company trade anywhere in the UAE?

No. This is the single most damaging myth in the category, and it is worth quoting the government wording in full. u.ae states: “While they can trade freely within the free zone and internationally, access to the UAE mainland market is regulated. To sell goods or services locally, a free zone company must either work through a licensed mainland distributor or establish a mainland branch or company. Direct sales in the mainland are generally not permitted unless the company obtains the required mainland licences or approvals.”

So the picture is: international trade, unrestricted. Trade inside your zone and with other free zone companies, unrestricted. Selling to a customer in mainland Dubai, Abu Dhabi or Sharjah, restricted.

Customs follows the same logic. The same page states there is 0 per cent customs duty on goods imported into a free zone and no duty on goods stored for re-export, and that goods “only become subject to the UAE customs duty if moved into the mainland market.”

The March 2025 Dubai route almost nobody writes about

Dubai now publishes a legal way through. Executive Council Resolution No. 11 of 2025, issued 3 March 2025, lets a free zone establishment conduct activities outside the free zone within the emirate through one of three routes granted by the Department of Economy and Tourism: a licence for a branch established within the emirate; a licence for a branch operating out of the free zone, where the company stays physically in the zone but is licensed to work in mainland Dubai; or a permit for specific activities, valid for a period not exceeding six months. The two licences run for one year and are renewable.

Article 12 sets the fees: AED 10,000 a year to issue or renew the licence for a branch operating out of the free zone, and AED 5,000 for the temporary permit. Article 8 lets the company keep its existing free zone workforce and its free zone employment privileges, so you are not forced to build a parallel MOHRE payroll. Article 3(b) requires separate financial records for the activity conducted outside the zone, which matters for tax and not only for bookkeeping.

Visas, and why they follow the desk you rent

There is no federal free zone visa quota. u.ae states that “the number of visas that a business can get depends on various factors such as the package they have signed up for” and directs you to the free zone authority. That is the whole published rule.

What the quota does follow is your facility, and every zone requires one. DMCC answers it flatly in its own FAQs: “Can I take a license without renting any facility? No, you cannot.” Its published options are a flexi desk, a serviced office, a physical office to lease or buy, and retail space to lease or buy — and the premises must be inside the zone itself, in DMCC’s case in JLT, not elsewhere in the UAE.

Ratios such as three visas per flexi desk, or one visa per nine square metres, circulate everywhere. We could not verify any of them on a free zone authority’s own published page, so this page does not print them. Ask your zone for the quota in writing before you pay, because discovering that a fourth visa needs a facility upgrade is the most expensive surprise in a free zone budget.

Two procedural points that competitor pages get wrong. First, the immigration establishment card: ICP states that for companies operating under a free zone authority, the request must be submitted through that authority rather than direct to ICP. Second, nothing is stamped in your passport. ICP suspended the residence sticker in April 2022 and replaced it with the new-generation Emirates ID, which carries the residence details. Any page still telling you about visa stamping has not been updated in four years.

What free zone company setup actually costs

Free zone licences are sold on a headline “from” price — the kind of “from AED 5,750” figure you see in every advertisement. Treat it as the price of the narrowest possible case: one activity, no visa, the smallest desk, paid in full for a year, before anything the immigration system charges.

What a headline free zone package price commonly excludes

• The immigration establishment card — AED 2,300 in ICP fees in the first year, once the AED 2,000 electronic system subscription is included
• The entry permit, the medical fitness test and the Emirates ID for each person
• An in-country status amendment if you are switching from another visa rather than leaving and re-entering — AED 500 plus fees in Dubai
• Refundable deposits held by the zone
• A facility upgrade if you need more visas than the base desk carries
• Legalising documents issued abroad — AED 2,000 per commercial document at MoFAIC alone, before the embassy and home-country steps
• The annual audit, which a Qualifying Free Zone Person needs regardless of revenue

The government fees on this page are published and dated. The zone’s own fees are not comparable between zones and change without notice, so we do not publish a table of them and you should be sceptical of anyone who does without a date next to each figure. What you can do is insist on an itemised quote covering every line in the list above, then compare two zones on the same basis. The full cost breakdown sets out every sourced government fee across all three jurisdictions.

The documents, and which of them need attestation

For an individual shareholder the paperwork is light: a valid passport copy for every shareholder, director, manager and secretary, a passport photograph, proof of residential address such as a utility bill or bank statement, and for UAE residents the Emirates ID and current visa page. None of that normally needs legalisation.

For a corporate shareholder the picture changes completely, and this is where the real money sits. The zone will want a certified certificate of incorporation or registration, the memorandum and articles, a current certificate of incumbency or registry extract, a current certificate of good standing, the passport of the corporate signatory, the names of ultimate beneficial owners, and a corporate resolution approving the incorporation. DMCC’s own guidance requires a parent-company board resolution to be notarised and legalised, requires a certificate of incumbency issued not more than one year ago, and requires the registry extract to be notarised and legalised too.

Each of those, once it reaches the UAE, is a commercial document at MoFAIC — AED 2,000 each. Four to six of them is AED 8,000 to AED 12,000 at the MoFAIC step alone, before the UAE embassy’s own fee abroad, before the home-country notary and authentication, before courier and before translation. That can exceed the entire licence fee of a cheap free zone package, and it appears in no package price anywhere. The full chain and the exceptions are set out in documents required for UAE business setup and in commercial document attestation.

An apostille is never the finish line. The UAE is not a party to the Hague Apostille Convention, so an apostille alone is not accepted. In apostille countries it is simply the first half — after it you still need UAE embassy attestation in the country of issue and then MoFAIC attestation inside the UAE. One genuine free zone advantage: free zones generally work in English. RAK ICC’s regulations require certified English translations and DMCC operates in English, whereas mainland filings, the notary and the courts effectively force Arabic translation by a Ministry of Justice-licensed translator. That is a real recurring cost difference nobody prices.

Free zones are not interchangeable

Fees are the dimension everyone compares and the one nobody can compare honestly, because zones do not publish fee schedules in a common format and change them without notice. The dimensions below are published by the zones themselves and are what actually bites after year one.

“Free zone means 0 per cent tax” is only half a sentence

Corporate tax is 0 per cent on taxable income up to AED 375,000 and 9 per cent above it, for everyone. The free zone 0 per cent rate is different: it is Qualifying Free Zone Person status, and it has to be earned every year.

The conditions include adequate substance in the zone — core income-generating activity, assets, qualified full-time employees and operating expenditure there — income from a qualifying activity, no election for the standard rates, arm’s-length pricing with transfer pricing documentation, the de minimis test, and audited financial statements. The de minimis test is worth reading twice: non-qualifying revenue must not exceed 5 per cent of total revenue or AED 5,000,000, whichever is lower. Many summaries state it the other way round.

Two consequences to plan for. Under Ministerial Decision No. 229 of 2025, losing Qualifying Free Zone Person status costs you the relevant tax period and the four following tax periods — a five-year penalty for one bad year. And under Ministerial Decision No. 84 of 2025, every Qualifying Free Zone Person needs audited financial statements regardless of revenue, so a company on a cheap package claiming 0 per cent is still paying for an audit. A free zone company claiming that status also cannot claim Small Business Relief, which is otherwise available to a resident company under AED 3,000,000 of revenue.

The mainland route under Resolution 11 of 2025 interacts with all of this. Mainland-sourced income is generally not qualifying income, and Article 3(b) separately requires separate financial records for out-of-zone activity — so before you buy the AED 10,000 out-of-zone branch licence, model what it does to your tax position with an adviser.

Two dates for the diary. Corporate tax registration is due within three months of incorporation for a UAE-incorporated company, including a Free Zone Person — not three months after your first year end, which is the version most pages print. And the UBO and shareholder registers must be created and filed with your Registrar within 60 days of licensing, with any change notified within 15 days. Economic Substance reporting, by contrast, ended for financial years ending after 31 December 2022, so a company formed today has no ESR obligation at all, whatever an older checklist tells you.

Where the residence permit fits into all this is covered on the investor visa page.