How to set up a free zone company in the UAE

Setting up a free zone company means choosing a free zone that licenses the activity, picking a legal form such as a free zone establishment (FZE) or free zone company (FZCO), choosing a trade name and applying online to the zone’s authority. The UAE government portal says the licence is issued within 14 working days of approval. Premises, the establishment card, visas and a bank account complete the setup.

Key takeaways

• Each free zone is run by a free zone authority under its own rules and list of activities, and Dubai alone has more than 20 free zones.
• Free zone companies can be fully foreign owned, and goods imported into a zone pay 0% customs duty until they move into the mainland.
• A free zone company is usually an FZE, FZCO, LLC, public company or branch, and the UAE government portal says its licence is issued within 14 working days after review and approval.
• Selling into the mainland needs a licensed distributor, a mainland branch or company, or a licence or permit, such as Dubai's branch licence and temporary permit.
• Free zone companies register for corporate tax within 3 months of incorporation like any new company, and pay 0% only on qualifying income while they meet the conditions.

On this page 9 sections

How free zones work

A free zone is an area run by a free zone authority, which licenses the companies inside it and sets their rules. The UAE government portal says free zone companies operate under a different legal framework from mainland businesses and are treated as outside the mainland’s jurisdiction. Every emirate has free zones; Invest in Dubai counts more than 20 in Dubai alone, each with its own focus and regulations.

Ownership of a free zone company

100% foreign ownership

Companies in UAE free zones can be fully owned by foreign investors, without the need for a local partner.

Free zone companies can import goods from abroad, export them and re-export them through the UAE. What the goods pay depends on where they end up:

Customs duty on goods in a free zone

0% customs duty in the free zone; duty on entry to the mainland

Free zone companies can import, export and re-export goods, with 0% customs duty on goods imported into the free zone and no customs duty on goods stored there for re-export; goods become subject to UAE customs duty only when moved into the mainland market.

When goods do cross into the mainland, the general rate of customs duty is:

General customs duty

5% of CIF value

The general UAE customs duty on goods imported from outside the GCC is 5% of the CIF value (cost, insurance and freight up to the place of importation); some goods are exempt and some carry higher rates under the GCC common tariff.

Worked example

One shipment, partly re-exported and partly sold on the mainland

The values are illustrations. The goods come from outside the GCC and carry the general rate.

1. Goods with a CIF value of AED 400,000 arrive in the free zone: duty AED 0.
2. Goods with a CIF value of AED 300,000 are re-exported to a buyer abroad: duty AED 0.
3. The rest, with a CIF value of AED 100,000, go to a buyer on the mainland: AED 100,000 × 5% = AED 5,000.

The example covers customs duty only.

Customs duty on the shipment: AED 5,000, all of it on the goods that entered the mainland.

The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) work differently: they are financial free zones, subject to Federal Law No. 8 of 2004. This guide covers the other, commercial free zones.

Choosing a free zone

The activity comes first. The u.ae portal’s order is to pick the sector, then a free zone that licenses it: each zone licenses its own set of activities, and Invest in Dubai notes that each of Dubai’s zones has its own focus. DMCC, for example, covers sectors from gold, diamonds, tea and coffee to energy, tech, gaming, crypto and ecommerce, and Abu Dhabi’s Creative Media Authority licenses media, gaming and esports, broadcasting and publishing activities.

For Dubai, the Free Zones Gateway compares the zones’ provisions and facilities, such as warehousing and plots of land, and filters them by sector on a map. Invest in Dubai adds that free zones issue commercial, service and industrial licences, depending on the zone; trade licence types explains the categories.

The u.ae portal lists the free zones and their authorities in every emirate. Some of them, in the portal’s order and with no ranking:

Legal forms in a free zone

A free zone company usually takes one of five forms, and the choice turns on the shareholders: how many there are, and whether they are individuals or companies.

Legal forms in a free zone

LLC, FZ Co., FZE, PJSC, branch

In a free zone a business can usually be set up as a private limited liability company, a free zone company (FZ Co.), a free zone establishment (FZE), a public limited company, or a branch of a local or foreign company; each free zone authority decides which types it registers.

Invest in Dubai describes the two forms named after free zones, as Dubai’s zones use them:

FZE and FZCO in Dubai

FZE: 1 shareholder; FZCO: 2 or more

Invest in Dubai describes a Free Zone Establishment (FZE) as a legal entity incorporated or registered by a single shareholder and a Free Zone Company (FZCO) as one incorporated or registered with a minimum of two shareholders; in both cases the shareholders can be individuals or corporate entities.

On the same page, a public company is one that can offer its shares to the public, and a branch is an extension of an existing local or foreign company that stays legally dependent on its parent. How these forms compare with mainland ones is covered in company legal forms.

The setup steps

Setup runs through the free zone authority, mostly online. The first five steps follow the UAE government portal:

1. Activity and zone. Choose the sector and a free zone whose list includes the activity.
2. Legal form. Choose one of the forms the zone registers.
3. Trade name. Check with the free zone authority that the name is allowed and not already registered. The general requirements the u.ae portal lists are that the name ends with the legal form (for example LLC or FZE), suits the activity, respects public morals and order, and contains no name of a religion or a governing authority.
4. Application. Apply on the authority’s own website with basic company information and the documents it lists. DMCC, for example, lets applicants apply, pay and sign documents online. Some sectors are also regulated by another body, such as the National Media Authority for media, or a municipality or food safety authority for food and beverage businesses.
5. Licence. The authority reviews the application and issues the licence.

Time to issue a free zone licence

Licence within 14 working days of approval

To start a free zone business, the investor chooses the sector and the free zone, the legal entity type and a trade name, then applies online through the free zone authority's website, in most cases providing basic company information and uploading documents; after review and approval, the licence is issued within 14 working days.

After the licence:

6. Premises. Lease premises in the zone (see the next section). Invest in Dubai lists the lease before the licence, so the order can vary by zone.
7. Establishment card and visas. The company gets an establishment card, which ICP describes as recording its trade name, licence number, partners and activity, and which ICP renews only while the trade licence is valid. Visas follow (see the next section).
8. Bank account. Apply to a bank, which must disclose its minimum document requirements; see opening a business bank account.
9. Tax and beneficial owners. Apply to the Federal Tax Authority for corporate tax registration, and keep a register of the company’s beneficial owners and file it with the registrar.

Bank account opening for a low-risk SME

3 business days (delay up to 2 weeks)

Under the CBUAE SME Customer Protection Regulation (Circular 2/2026, effective 13 September 2026), which applies to banks and finance companies licensed by the Central Bank, a bank must open a low-risk SME customer's account within 3 business days of receiving a complete application; if other valid reasons delay it, the delay may not exceed 2 weeks and the bank must explain it, and it may open the account with limited transactions meanwhile.

Corporate tax registration deadline

3 months from incorporation

A resident juridical person incorporated, established or recognised in the UAE on or after 1 March 2024, including a Free Zone Person, must apply for Corporate Tax registration within three months of the date of incorporation, establishment or recognition.

Beneficial owner register

60 days to create and file; 15 days to update

A company must create a register of its beneficial owners within 60 days of its incorporation (or of the decision's issue for existing companies), update it within 15 days of learning of any change, and file the beneficial owner and partners/shareholders registers with the registrar within 60 days of licensing and registration.

Cabinet Decision No. 109 of 2023 applies the beneficial owner rules to companies in commercial free zones and exempts the financial free zones (Article 3). The registration steps are in corporate tax registration.

Offices, desks and visas

Each free zone authority sets the premises it offers and the number of visas a company can get, and Invest in Dubai notes that setup costs vary by office space and visa needs. Most Dubai zones, it says, offer visa services and flexible office facilities, and the Free Zones Gateway shows which ones have warehousing or plots of land.

The u.ae portal says work permits and residence visas are applied for with the free zone authority, and that the number a company can get depends on factors such as the package it signed up for; whether the quota can be increased is a question for the authority.

Employees in most free zones are covered by the zone’s own employment regulations together with the federal Labour Law, Federal Decree-Law No. 33 of 2021, while the DIFC and ADGM have their own employment laws. The employment and payroll guides cover the federal rules.

Free zone fees and packages are set by each zone, so this guide quotes none. What a licence bill is made of is explained in trade licence costs.

Working with the mainland

A free zone company can trade freely inside its zone and abroad, but selling goods or services on the mainland is regulated. The u.ae portal says it must work through a licensed mainland distributor or set up a mainland branch or company, and that direct mainland sales generally need mainland licences or approvals. Each emirate sets the route for its own territory.

Dubai: working outside the free zone

Branch licence AED 10,000 a year; permit up to 6 months AED 5,000

Under Dubai Executive Council Resolution No. 11 of 2025, a free zone establishment may operate in Dubai outside its free zone with a DET licence for a branch in the emirate, a DET licence for a branch operating out of the free zone (AED 10,000 a year, licences valid one year and renewable), or a temporary DET permit for specific activities valid up to 6 months (AED 5,000), and must keep separate financial records for that activity.

A branch licensed under the Dubai resolution has no separate legal personality, may use the company’s existing free zone staff and needs the free zone authority’s approval first. Work in another emirate needs that emirate’s own licences.

The transfer route comes from Federal Decree-Law No. 20 of 2025, which added Article 15 bis to the Commercial Companies Law. A company can move its registration from a free zone to the mainland authority, or the reverse, by special resolution of its general assembly or with the approval of an absolute majority of its partners. Both authorities must approve, both registers must allow the move, nothing entered against the company in the register may stand in the way, and the decision is published. A company that moves to the mainland must then bring its affairs into line with the mainland rules. Moves into or out of a financial free zone are left to controls the Cabinet is to issue.

Whether a free zone or the mainland suits a business in the first place is covered in mainland or free zone, and mainland registration in mainland company setup. Other topics are listed under Company setup guides.

Corporate tax in brief

Free zone companies are within corporate tax and register on the same timeline as any new company. Those that meet the conditions of a qualifying free zone person are taxed as follows:

Corporate tax for a qualifying free zone person

0% on Qualifying Income; 9% on other Taxable Income

A Qualifying Free Zone Person pays Corporate Tax at 0% on its Qualifying Income and at 9% on Taxable Income that is not Qualifying Income, provided it keeps meeting all the conditions (adequate substance, Qualifying Income, no election into the standard regime, transfer pricing compliance, audited financial statements, de minimis test).

The 0% rate comes with the company’s tax status, not with its licence, and the status has duties of its own: under Ministerial Decision No. 82 of 2023, every qualifying free zone person must prepare and maintain audited financial statements, whatever its revenue. The conditions, the qualifying activities and the de minimis test are explained in corporate tax in free zones.