Introduction
Dubai is one of the most dynamic business hubs in the world. With its strategic location, zero income tax, state-of-the-art infrastructure, and business-friendly environment, it attracts thousands of foreign entrepreneurs each year.
Whether you’re starting a tech startup, trading company, consulting agency, or freelance venture, Dubai offers multiple business structures and jurisdictions suited to your needs.
1. Why Set Up a Company in Dubai?
✅ Strategic Location
Located at the crossroads of Europe, Asia, and Africa, Dubai is a global business gateway with excellent logistics and air connectivity.
✅ Tax Advantages
- 0% personal income tax
- 0% corporate tax (for most Free Zone companies)
- No capital gains tax
- 9% corporate tax applies to mainland companies with income above AED 375,000 starting from June 2023
✅ 100% Foreign Ownership
As of 2021, foreigners can own 100% of most businesses in mainland UAE, in addition to existing 100% ownership in Free Zones.
✅ World-Class Infrastructure
Dubai offers high-tech office spaces, coworking hubs, business parks, seaports, and airports.
✅ Ease of Doing Business
- Online licensing and registration
- Modern legal system
- Quick setup timelines (as fast as 3 days)
2. Types of Jurisdictions in Dubai
There are three main jurisdictions where you can register a company:
1. Mainland
- Operates anywhere in UAE and globally
- Requires license from Department of Economy and Tourism (DET)
- 100% foreign ownership allowed in most sectors
- Subject to UAE corporate tax (9% on profits above AED 375,000)
- Ideal for businesses targeting the UAE market
2. Free Zone
- 45+ Free Zones, each with its own authority
- 100% foreign ownership
- Tax-free (until corporate tax applicability if profits exceed limit)
- Cannot directly trade in the UAE mainland without a distributor
- Ideal for exporters, IT firms, consultancies, and startups
3. Offshore
- Mainly used for holding companies, international trade, asset protection
- No physical office or business within UAE
- 100% tax exemption
- Not eligible for UAE residency visa
- Jurisdictions: JAFZA Offshore, RAK ICC
3. Common Legal Structures
| Business Type | Description |
|---|---|
| Sole Establishment | Owned by one individual (UAE resident or citizen only) |
| LLC (Limited Liability Company) | 1-50 shareholders; most common for mainland and Free Zone |
| Free Zone Company (FZCO / FZE) | For Free Zones; FZE = 1 owner, FZCO = 2+ owners |
| Branch Office | Extension of an existing company |
| Civil Company | For professionals (doctors, lawyers, consultants) |
4. Step-by-Step Guide to Registering a Company in Dubai
Step 1: Choose Jurisdiction
Decide if your business is best suited for:
- Mainland (local market access)
- Free Zone (tax benefits, low costs)
- Offshore (international presence, holding assets)
Step 2: Select Business Activity
Choose from over 2,000+ activities listed by DET or the respective Free Zone. Examples include:
- Trading
- Consulting
- E-commerce
- Logistics
- Tech services
Some activities require special approvals (e.g., healthcare, finance).
Step 3: Choose Company Name
- Must comply with UAE naming rules
- Cannot include offensive terms or references to religion
- Use your own name only if full name is used (e.g., “John Smith Consulting”)
- Free Zones offer a name reservation service
Step 4: Apply for Initial Approval
- Submit passport copies, personal information, and business plan (if needed)
- Receive a pre-approval letter from DET or Free Zone
Step 5: Draft MOA & LSA (if applicable)
- MOA (Memorandum of Association) outlines company rules
- LSA (Local Service Agent) agreement needed if a foreigner sets up a sole establishment in mainland
Step 6: Lease an Office Space
- Required for all company types (virtual or physical)
- Free Zones provide Flexi-desks, shared offices, and warehousing options
- Mainland businesses must rent an office approved by DET
Step 7: Get Final License
- Pay registration and license fees
- Submit final documents and receive trade license
Step 8: Apply for Establishment Card & Visas
- Establishment card from immigration
- You can sponsor residence visas for yourself, employees, and family
5. Costs of Setting Up a Company
| Cost Component | Mainland | Free Zone |
|---|---|---|
| Trade License | AED 10,000 – 25,000 | AED 8,000 – 15,000 |
| Office Rent | AED 15,000+ annually | AED 5,000 – 20,000 |
| MOA Notarization | AED 1,000 – 3,000 | Included |
| Visa (per person) | AED 3,500 – 7,000 | AED 2,000 – 5,000 |
| Company Setup Service | Optional (AED 2,000 – 8,000) | Optional |
Total cost varies from AED 12,000 to AED 40,000 depending on jurisdiction, office type, number of visas, and activity.
6. Taxes and Compliance
✅ Corporate Tax
- 0% for Free Zone companies (subject to conditions)
- 9% for mainland companies with profits > AED 375,000
✅ VAT (Value-Added Tax)
- 5% VAT is applicable if your turnover exceeds AED 375,000/year
- Registration with the Federal Tax Authority (FTA) is required
✅ Annual Renewal
- All businesses must renew trade licenses annually
- Office lease, medical fitness, and Emirates ID renewal are also needed
7. Opening a Bank Account
After getting your license, you can apply for a corporate bank account in Dubai. Common banks:
- Emirates NBD
- Mashreq
- RAKBANK
- ADIB
- International options: HSBC, Standard Chartered
Banks may require:
- Passport and visa copies
- Shareholder details
- Business plan
- Proof of business activity
Approval can take 1–4 weeks.
8. Hiring Employees
- You must first apply for a Quota Approval from the Ministry of Human Resources
- Issue employment visas
- Provide health insurance and employment contract
- Comply with UAE Labour Law
9. Pros & Cons
✅ Pros
- Full foreign ownership (now allowed in most sectors)
- No personal income tax
- Stable legal system
- Business-friendly policies
- Global reputation
❌ Cons
- Banking can be strict for new businesses
- Costly compared to some other countries
- Some industries need extra approvals or licenses
10. Best Free Zones in Dubai (2025)
| Free Zone | Focus Area | Key Benefits |
|---|---|---|
| Dubai Multi Commodities Centre (DMCC) | Trading, Crypto, Commodities | Global reputation, 0% tax, premium location |
| IFZA (International Free Zone Authority) | General Business | Low cost, flexible packages |
| Dubai Internet City | IT & Software | Tech-focused, MNC hub |
| Dubai Silicon Oasis (DSO) | Tech, Startups | Smart city infrastructure |
| Meydan Free Zone | General Trading, Media | Remote setup, e-commerce friendly |
Conclusion
Setting up a company in Dubai is a smart move for entrepreneurs looking for:
- A strategic base in the Middle East
- 100% ownership
- Low taxation
- Global access
By choosing the right jurisdiction (mainland vs Free Zone), understanding licensing procedures, and complying with the law, you can build and scale a successful business in one of the world’s most thriving economies.