Company formation in the UAE

A UAE company can take three legal forms: a free zone company, a mainland LLC (from roughly AED 15,000 plus an office) or an offshore company (from about AED 8,000). Free zones suit international services and holding structures and offer 0% corporate tax on qualifying income. The mainland is required for trade with UAE consumers and for government tenders. An offshore company is a holding vehicle that does not trade in the UAE. For one founder with one visa, a budget free zone company typically costs AED 13,000–15,000 in the first year and a Dubai zone company AED 20,000–24,000.

Free zone, mainland and offshore companies

A free zone company (FZCO or FZE) is the usual choice for international services, e-commerce, consulting and holding structures. It is 100% foreign-owned, quick to set up, and can pay 0% corporate tax on qualifying income while it keeps QFZP status. Licence fees vary widely, from the budget zones of Sharjah, Ajman and Ras Al Khaimah to DMCC, whose Basic Biz package is AED 35,484 and whose sector packages for crypto, gaming and AI companies are AED 31,000. Our Free Zone Index sets out all 45 zones, and company formation in Dubai covers the Dubai zones and mainland.

A mainland LLC is licensed by the economic department of the emirate (in Dubai, the Department of Economy and Tourism, DET). It is the route when your customers are inside the UAE: retail, government tenders, clinics, restaurants and on-site services. Since the 2021 reform, most commercial and industrial activities allow 100% foreign ownership, so the old rule of a local sponsor holding 51% no longer applies to most of them.

An offshore company (RAK ICC or JAFZA Offshore) is a vehicle for holding assets and for international structuring. It has no visas, office or local trade, follows common-law company rules and costs a fraction of a licence. Both registries accept applications only through a registered agent they have approved, so we prepare the file and coordinate with the agent. Some structures use two entities: an offshore holding company above an operating free zone company.

Choosing a route by where your customers are

Start with one question: who invoices whom, and where are they based? If your revenue comes from clients outside the UAE, or from UAE companies that can receive an international invoice, a free zone is usually cheaper and simpler. If you sell to UAE consumers, need retail premises or bid for government work, the mainland is the only correct route.

A free zone company can still reach the UAE market through a mainland distributor, or within the de minimis limit described below. An onshore business run on free zone workarounds usually spends its savings on agents and NOCs within a year. If you are unsure, read mainland vs free zone before you commit.

The four cost blocks of every setup

Every UAE setup comes down to four line items. The licence: the fee depends on the zone or emirate and on the tier, and the Free Zone Index shows each zone’s published tariff or our marked estimate. The establishment card (the company’s immigration file): about AED 2,000, and required before you can apply for any visa. Each residence visa: roughly AED 5,500 all-in, covering the entry permit, medical test, Emirates ID and change of status. The office: no separate cost in free zones whose package includes a flexi‑desk, and from about AED 15,000 a year for a small mainland office with an Ejari lease.

For one founder with one visa, a realistic first year costs about AED 13,000–15,000 in a budget free zone and AED 20,000–24,000 in a Dubai zone. A mainland LLC with a small office costs around AED 25,000–40,000. Model your own combination in the cost breakdown instead of relying on a “from AED 999” headline, which simply leaves most of these lines out.

How we work

Before you commit, you get an itemised quote in AED: the licence, the establishment card, each visa and each government fee on its own line. Our zone recommendations are based on the same Index data we show you, so you can check the reasoning yourself.

Setups usually go wrong in three places: licence activities that do not match your invoices (a banking problem later), a visa allocation bought too small (upgrade fees), and cheap packages whose renewal price rises sharply in year two. All three show up in advance once the numbers are written down.

Corporate tax and VAT after you incorporate

UAE corporate tax applies to tax periods starting on or after 1 June 2023: 0% on taxable income up to AED 375,000 and 9% above that. A free zone company that is a Qualifying Free Zone Person (QFZP) pays 0% on qualifying income and 9% on all its other taxable income, with no AED 375,000 band. To qualify, it needs substance in the zone, audited accounts and transfer-pricing compliance, and non-qualifying revenue within the de minimis limit (the lower of 5% of revenue or AED 5 million). Small Business Relief lets a company with revenue of AED 3 million or less in each tax period be treated as having no taxable income, for tax periods ending on or before 31 December 2029; a QFZP cannot claim it. We model your case on the corporate tax pages before you choose a structure.

VAT is separate. Registration is mandatory once taxable supplies and imports exceed AED 375,000 over 12 months, and voluntary from AED 187,500; the standard rate is 5%. E‑invoicing becomes mandatory on 1 January 2027 for businesses with revenue of AED 50 million or more and on 1 July 2027 for the rest, each with an earlier deadline to appoint an Accredited Service Provider. We set up your bookkeeping for e‑invoicing from the start.

Visas, timelines and bank accounts

Once the establishment card is issued, each shareholder or employee visa follows the same steps: entry permit, change of status, medical test, Emirates ID and residence visa. Allow about a week to ten days per person once the file is open. Visa allocations in free zones depend on the zone and the package, starting from zero-visa entry tiers; on the mainland they follow the size of the office. Investors who buy property worth AED 2 million or more can apply for a Golden Visa in parallel (10 years in Dubai under GDRFA rules; check the issuing emirate).

A free zone licence is typically issued in 3–10 working days, depending on the zone. A mainland licence takes 2–3 weeks, and an offshore company about a week. The bank account is usually the slowest step: allow 2–6 weeks depending on your profile and activity, and read opening a UAE bank account before you promise anyone a payment date.

Typical costs and timelines

Frequently asked questions

This is general information on UAE rules. It is not legal, tax or immigration advice for your situation. Rules and government fees change; we confirm the position for your facts in writing before you act.