Business Setup
Mainland vs free zone, VAT, corporate tax, licences.
Signed by: Sarah Al Qasimi (Lead Editor). Fact-checked by the full editorial team.
Should I set up a mainland or free zone company in Dubai?
Mainland allows you to trade freely anywhere in the UAE and with government entities; 100% foreign ownership is now allowed in most activities since 2021 reforms. Free zones offer simplified setup, tax incentives, and 0% corporate tax on qualifying income, but restrict UAE market trading. Choose mainland for UAE client-facing businesses; free zone for export, consulting, or tech.
What is the cheapest free zone licence in Dubai?
IFZA (International Free Zone Authority) starts from AED 5,750 per year for a single-activity licence with no physical desk. Meydan Free Zone starts from AED 6,000. Renewals are typically slightly higher. These prices may exclude visa allocation — add AED 3,000–5,000 per visa. Budget-friendly zones suit remote/digital businesses with no UAE footprint needed.
What is the corporate tax rate in Dubai?
9% on taxable profit exceeding AED 375,000 per year, effective from June 2023. Profits below AED 375,000 are taxed at 0%. Qualifying Free Zone Persons (QFZP) pay 0% on qualifying income from outside the UAE. Corporate tax registration is mandatory for all UAE businesses regardless of profit level. File via FTA's EmaraTax portal.
Source: FTA Corporate TaxWhen does VAT apply to my business in Dubai?
Mandatory VAT registration applies when your taxable supplies and imports exceed AED 375,000 in the previous 12 months. Voluntary registration is available from AED 187,500. The standard VAT rate is 5%. File quarterly or monthly returns via FTA EmaraTax. Zero-rated exports and some healthcare/education categories have 0% VAT.
Source: FTA VATHow many visas can I get on a free zone licence?
Typically 1–3 visas on a flexi-desk or virtual office package, and 3–6+ on a physical office. The exact allocation depends on the free zone and office type. Some zones allow additional visas for an extra fee per visa. The investor or owner visa plus 1 employee is the standard starter package for solopreneurs.
How hard is it to open a UAE business bank account?
Very challenging — UAE banks have strict KYC and AML requirements. Rejection rates are high for crypto, forex, MSB, or high-risk sectors. Standard accounts take 4–8 weeks. Prepare audited accounts or bank statements from home country, proof of business activity, shareholder IDs, and a detailed business plan. Neo-banks like Wio and Zand are faster for eligible businesses.
Do I need a physical office to set up a business in Dubai?
Post-2024, most commercial activities allow a virtual office or flexi-desk for licence purposes. Activities requiring client visits, warehouse operations, restaurants, or medical services need a physical premises. DED Mainland requires a physical office for some activities. Always check specific activity requirements before choosing your office type.
What is the UBO declaration and is it mandatory?
Ultimate Beneficial Owner (UBO) declaration identifies all individuals owning 25%+ of a company or exercising significant control. Mandatory for all UAE-licensed entities under Cabinet Resolution 58 of 2020. Must be submitted to your licensing authority within 60 days of incorporation and updated within 15 days of any change. Non-compliance fines start at AED 50,000.
Source: UAE UBO RegisterHow long does it take to get a business licence in Dubai?
Free zone licences: 3–10 working days with all documents in order. Mainland DED licences: 2–4 weeks depending on activity approvals needed from regulatory bodies (health, education, financial activities take longer). Express services in most free zones process in 24–48 hours for an extra fee of AED 500–2,000.
Can my spouse be a partner on my business licence?
Yes — 100% foreign-owned companies allow you and your spouse to be 50/50 shareholders since 2021 reforms. Both must meet the same residency or visa requirements. Joint ownership also counts toward residency visa sponsorship thresholds. Free zones generally allow any foreign nationals as shareholders regardless of UAE residency status.
Do economic substance rules apply to my Dubai business?
UAE Economic Substance Regulations apply to companies performing 'relevant activities' such as banking, insurance, IP holding, fund management, headquarters, shipping, and holding companies. If applicable, you must demonstrate adequate UAE substance (employees, premises, management). Annual notification is required for all entities; a full report if you conduct relevant activities.
Source: FTA Economic SubstanceHow do I close or deregister a business in Dubai?
Process: cancel the trade licence → settle all FTA obligations (VAT/corporate tax de-registration) → clear any customs accounts → pay employee end-of-service gratuity and cancel all employee visas → apply for establishment closure with the licensing authority. Full deregistration typically takes 30–90 days. Outstanding debts or fines will block the process.