Dubai Free Zone Company Setup: Complete Guide (2026)

Free Zone Companies

Free zone companies operate within a designated economic zone with their own regulations and licensing authority. Key advantages include 0% corporate tax on qualifying free zone income (subject to UAE CT law conditions), 100% foreign ownership, simplified setup process, and no currency restrictions.

The main limitation is that free zone companies cannot directly sell goods or services to customers within the UAE mainland without a local distributor or service agent. However, for digital businesses, SaaS companies, and service businesses with international clients, this restriction is rarely an issue.

Mainland Companies

Mainland companies are licensed by the Department of Economy and Tourism (DET) and can operate anywhere in the UAE and trade directly with any customer. Since 2020, most business activities allow 100% foreign ownership on the mainland as well.

Mainland companies are subject to the standard 9% UAE corporate tax on profits exceeding AED 375,000 (approximately $102,000). They require a physical office, making them more expensive to maintain.

Which Should You Choose?

If your business is primarily digital, serves international clients, or operates in consulting, e-commerce, or SaaS — a free zone company is almost always the better choice. You get lower costs, simpler setup, and potential tax benefits.

If you need to sell physical goods within the UAE, operate retail locations, or bid on government contracts — you need a mainland company.

DMCC (Dubai Multi Commodities Centre)

Best for: Trading, consulting, technology, and professional services.

DMCC is one of the largest and most established free zones, located in JLT (Jumeirah Lakes Towers). It offers flexi-desk options starting from approximately AED 15,000/year ($4,100) and full desk packages from AED 25,000/year ($6,800). DMCC consistently ranks among the world's top free zones and provides strong banking relationships.

License cost: AED 12,000–15,000/year depending on activity. Visa allocation: 3–6 visas depending on office type.

IFZA (International Free Zone Authority)

Best for: Startups, freelancers, and small digital businesses seeking the lowest entry cost.

IFZA has positioned itself as a startup-friendly free zone with competitive pricing. Flexi-desk packages start from around AED 11,500/year ($3,130). It's located in Fujairah (with a Dubai representative office option).

License cost: From AED 11,500/year including facility. Visa allocation: Dependent on package selected.

Dubai Silicon Oasis (DSO)

Best for: Technology companies, R&D, and IT services.

DSO is purpose-built for technology businesses and offers a tech-focused ecosystem. Costs are moderate, with flexi-desk options from approximately AED 15,000/year. DSO also offers incubation programs for early-stage startups.

License cost: AED 10,000–20,000/year depending on activity. Visa allocation: Based on office space.

DIFC (Dubai International Financial Centre)

Best for: Financial services, fintech, wealth management, and funds.

DIFC operates under its own legal system (common law based on English law) and regulatory framework. It's significantly more expensive than other free zones but offers unmatched credibility in financial services. License costs start from approximately $12,000/year, with office space being the major additional expense.

License cost: From $12,000/year. Visa allocation: Based on office space and license type.

Year 1 Setup Costs (Typical DMCC Example)

Trade license and registration: AED 12,000–15,000 ($3,300–4,100) Flexi-desk or office: AED 15,000–25,000 ($4,100–6,800) Establishment card: AED 2,000 ($545) Visa costs (per person): AED 5,000–7,000 ($1,360–1,900) Emirates ID: AED 370 ($100) Medical fitness test: AED 500 ($136) Bank account opening (may require minimum deposit): AED 0–50,000 PRO services (government liaison): AED 3,000–5,000 ($820–1,360)

Total Year 1 estimate: $10,000–15,000 for a single founder with one visa.

Vector's setup fee starts at $7,500, which covers our coordination and execution. Government and third-party fees listed above are paid directly by the client.

Annual Renewal Costs

License renewal: AED 12,000–15,000 ($3,300–4,100) Office/desk renewal: AED 15,000–25,000 ($4,100–6,800) Visa renewal (every 2–3 years): AED 3,000–5,000 Establishment card renewal: AED 2,000

Ongoing annual costs typically run $7,000–11,000 depending on office type and visa count.

Step 1: Choose Your Activity and Free Zone (Week 1)

Select the business activity that matches your operations. Each free zone has a specific list of licensed activities. For digital businesses, common choices include "IT consultancy," "software development," "e-commerce," or "management consulting." The activity you choose affects your license type (service, trading, or industrial) and costs.

Step 2: Reserve Your Company Name (Week 1)

Submit your preferred company name for approval. Names must comply with UAE naming conventions: no offensive terms, no names that imply government affiliation, and typically must end with your chosen legal suffix (e.g., "DMCC" for DMCC companies). Have 2–3 alternatives ready.

Step 3: Submit Application and Documents (Week 1–2)

Required documents typically include: passport copies of all shareholders, proof of residential address, bank reference letter or statement, CV/resume of the manager, completed application forms, and a business plan (for some activities).

All documents need to be attested or apostilled depending on your country of origin.

Step 4: Sign License Agreement and Pay Fees (Week 2)

Once approved, you'll receive a license agreement to sign. Payment of the license fee and initial office rental triggers the issuance of your trade license. This is when your company officially exists.

Step 5: Apply for Visas (Week 2–3)

With the license issued, you can apply for residence visas. The process involves: entry permit, status change (if already in UAE on a visit visa), medical fitness test, Emirates ID biometrics, and visa stamping. Each visa takes approximately 5–10 business days once initiated.

Step 6: Open a Bank Account (Week 3–4+)

Banking is often the most unpredictable step. UAE banks have strict compliance requirements and may take 2–6 weeks to process an application. You'll need to visit the bank in person, present your license, shareholder documents, a business plan, and proof of expected transactions.

Some popular options for new businesses include Mashreq Neo, Emirates NBD, and ADCB. Fintech options like Wio Bank are also available for faster onboarding.

Choosing the Wrong Free Zone to Save $500

The cheapest free zone is rarely the best choice. Factors like banking relationships, visa allocation, office quality, and reputation matter far more than a small difference in license fees. A free zone with poor banking connections can cost you months of delays.

Ignoring Substance Requirements

Setting up a company on paper while living elsewhere full-time creates both tax and immigration risks. The UAE is increasingly enforcing substance requirements. You need genuine presence, a real office (even if flexi-desk), and operational activity in the UAE.

Underestimating Banking Timelines

Budget 4–8 weeks for banking from application to full account access. Have your business plan, expected transaction volumes, and proof of business activity ready. Banks will ask detailed questions about your business model, clients, and revenue sources.

Not Planning for Tax Residency Certificate

If you need a UAE tax residency certificate (TRC) to claim treaty benefits, you must have spent at least 183 days in the UAE in the relevant year and maintain genuine economic activity. Plan your travel and residency accordingly.