Crowe offers expert corporate support services across the UAE
The UAE is a premier destination for entrepreneurs and businesses seeking a strong international presence. With 0% corporate tax in Free Zones, no capital gains tax, and no personal income tax, setting up a company in the UAE is an excellent way to optimize profits while benefiting from a well-regulated and business-friendly environment.
Why Choose the UAE for Company Formation?
- Strategic Location: Positioned between Europe, Asia, and Africa, providing unmatched global connectivity.
- Global Business Hub: Well-regulated jurisdictions with access to international markets.
- Tax Advantages: No personal income tax, no capital gains tax, and 0% corporate tax in Free Zones (subject to conditions), while Mainland companies are taxed at only 9%.
- 100% Foreign Ownership: Available in Free Zones and certain Mainland sectors.
- Ease of Doing Business: A liberal regulatory framework with investor-friendly policies.
- Ideal for Holding and Investment Companies: Many businesses set up holding structures in the UAE for efficient asset management and long-term financial planning.
Selecting the Right Jurisdiction
The three types of jurisdictions have their differences along with their own benefits and drawbacks; it's important to understand the main attributes of each to gather a proper understanding of registering your business.
- Mainland: Mainland companies benefit by having access to the local market and outside the UAE. To get registered as a Mainland LLC company, you must obtain a licence by the Department of Economic Development (DED) of the respective emirate.
- Free Zone: UAE accommodates more than 40 free zones to accelerate economic growth, and these unique jurisdictions pose their own regulations and governing bodies. Generally, you are only able to engage in business activities inside the Free Zone and outside of UAE. Enjoy 100% repatriation profits and 0% customs duty.
- Offshore: The company is located in an international location in another country with a different set of regulations and conduct of business than that of the UAE. Even though offshore companies operate outside of UAE, the company has the obligation of being a shareholder of a free zone or mainland business.
UAE mainland allows full business freedom across the UAE ideal for all company sizes with access to government contracts and a key regional location.
UAE’s 40+ free zones offer 100% foreign ownership, tax perks & ease of setup—ideal for trade, tech, finance & more.
UAE offshore companies offer tax benefits and privacy for global trade, but can't operate within the UAE.
Mainland, Free zone & Offshore companies: what’s the difference?
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Criteria |
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Ownership |
100% foreign ownership allowed in most sectors (some activities may require a UAE national as a local partner holding 51.0% ownership) |
100% foreign ownership allowed |
100% foreign ownership allowed |
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License Issuance |
Issued by the Department of Economic Development (DED) of the respective emirate |
Issued by the Free Zone Authority of the chosen Free Zone |
Issued by Offshore Authorities (JAFZA, RAK ICC, Ajman Offshore, etc.) |
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Application Process |
Shareholder presence required for signing the Memorandum of Association (MOA). Possible to appoint a Power of Attorney (POA) holder, but the POA must be notarized and legalized |
Shareholder presence often not required. Most free zones allow for remote incorporation |
Shareholder presence often not required and can be incorporated remotely through registered agents |
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Business Scope |
Can conduct business within the UAE, Free Zones, and internationally |
Can do business within the Free Zone and internationally; Mainland trade requires a distributor or a permit |
Restricted to international trade and holding activities; cannot operate within the UAE |
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Business Activities |
Suitable for retail, trading, services, industrial, professional, and consulting businesses |
Ideal for e-commerce, technology, media, logistics, consultancy, and trading with international clients |
Primarily used for holding companies, asset protection, investment structuring, and international business |
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Business Suitability |
Best for companies that need full access to the UAE market and deal with government or large corporations |
Ideal for startups, international trading, tech firms, and service-based businesses that don’t need Mainland access |
Best for asset protection, wealth management, and international trade |
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Cost Considerations |
Higher setup and operational costs. Also, obtaining the initial approvals and permits can be a strenuous process |
Moderate costs, depending on Free Zone; varies by activity and visa needs |
Lowest cost option, with minimal operational expenses |
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Taxation |
9% corporate tax (if annual net profit exceeds AED 375,000) |
0% corporate tax (subject to meeting Free Zone qualifying conditions), VAT applies if registered |
0% corporate tax, but Economic Substance Regulations (ESR) may apply |
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VAT Registration |
Mandatory if revenue exceeds AED 375,000 per year |
Mandatory if revenue exceeds AED 375,000 per year |
Not required, as offshore companies cannot conduct business in the UAE |
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Office Requirement |
Mandatory physical office (size depends on business activity and visa requirements) |
Office space required within the Free Zone (can range from flexi-desk to full office) |
No physical office required |
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Visa Eligibility |
Eligible for UAE residency visas; number of visas depends on office space |
Eligible for UAE residency visas; number of visas depends on Free Zone policy |
Not eligible for UAE residency visas |
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Bank Account Opening |
Easier to open corporate and personal UAE bank accounts |
Bank account opening depends on Free Zone policies and compliance requirements |
Bank account opening is more challenging and subject to compliance checks |
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Regulatory Compliance |
Must comply with the regulations established by multiple authorities, including DED and the Ministry of Labour |
Follows Free Zone Authority regulations, fewer restrictions than Mainland |
Minimal compliance requirements, but must meet UAE’s ESR, AML, and UBO regulations |
Step-by-Step Process to Set Up a New Business in UAE
Setting up a business in the UAE requires following a structured process, which varies based on whether you choose to establish your company in a Free Zone, Mainland, or Offshore jurisdiction. Each option has its own regulatory requirements and approvals. Below is a step-by-step guide to help you navigate the process efficiently.
Determine business activity
Selecting the right business activity is crucial, as it determines your license type, jurisdiction suitability, and regulatory requirements. Each jurisdiction has its own rules on the number and types of activities allowed per license.
Decide on a company structure and name
Choose a legal structure that aligns with your business model, such as:
- Sole Proprietorship
- Limited Liability Company (LLC)
- Partnership
- Free Zone Establishment (FZE) or Free Zone Company (FZC)
Your trade name must comply with UAE regulations and avoid restricted words, religious references, and offensive language.
Obtain Initial approvals and permits
- For Mainland businesses, approvals must be obtained from the Department of Economic Development (DED) and other relevant government entities.
- Free Zone businesses must coordinate with the specific Free Zone authority.
- Offshore companies need approvals from the respective offshore jurisdiction.
- Some business activities require additional regulatory approvals from sector-specific authorities (e.g., healthcare, finance, or education).
Calculate business setup costs
A clear understanding of costs helps with financial planning. Common expenses include:
- Business license fees
- Office space (physical or virtual)
- Visa fees for business owners and employees
- Bank account setup charges
- Government and administrative fees
Apply for a business license
Depending on your chosen jurisdiction, you will need to apply for one of the following licenses:
- Trade License – Suitable for import/export, wholesale, and retail businesses.
- Service License – Ideal for consultancy, freelancing, and other professional services.
- Industrial License – Required for manufacturing and industrial operations.
License fees vary based on jurisdiction and the number of business activities included.
Register the business and obtain final approvals
Submit the required documents, including:
- Business plan (if applicable)
- Passport copies of shareholders
- Memorandum & Articles of Association (MOA/AOA)
- Memorandum & Articles of Association (MOA/AOA)
- Lease agreement (if applicable)
Finalize all necessary payments to obtain the trade license and commence operations.
Open a business bank account and register for corporate tax & VAT
- Choose a corporate bank that aligns with your business needs.
- Businesses with revenue exceeding AED 375,000 must register for VAT as per UAE tax regulations.
- Businesses are required to submit the Corporate Tax registration application within 3 months from the date of incorporation in the UAE.
By following these steps, setting up a business in the UAE becomes a streamlined and efficient process, allowing entrepreneurs to focus on growth and expansion in one of the world's most dynamic business hubs.
Our Service Leaders
Crowe UAE – Guiding smart decisions today, building lasting value for tomorrow.
Ilhaam Maniar
Practice Manager