Dubai’s free zones have attracted over 60,000 companies, from solo consultants to Fortune 500 subsidiaries. The appeal is straightforward: full foreign ownership, tax advantages, and a registration process that can wrap up in days.
This guide walks you through how free zone companies work, the different structures available, what you’ll need to register, and how costs compare across popular zones.
What is a Dubai free zone company?
A free zone company is a legal entity registered within one of the UAE’s designated economic zones. Each zone operates under an independent Free Zone Authority rather than standard UAE commercial companies law. This setup offers foreign investors 100% ownership, potential corporate tax exemptions, and full repatriation of profits and capital.
Dubai currently hosts over 30 free zones, and each one caters to specific industries. A tech startup might register in Dubai Internet City, while a trading firm would likely choose DMCC or JAFZA. The free zone you pick determines your licensing options, office requirements, and the business activities you can legally perform.
Benefits of setting up a free zone company in Dubai
– Full foreign ownership without a local sponsor
In a free zone, you retain complete ownership of the business. Unlike older mainland structures that once required a UAE national partner holding 51% equity, free zone companies allow you to maintain full control. You make the decisions, keep the profits, and direct the company’s future without sharing equity.
– Zero corporate and personal income tax
Free zone companies can qualify for corporate tax exemptions under UAE regulations. The specifics depend on your free zone’s rules and whether your business meets the criteria. On top of that, the UAE has no personal income tax, which makes relocating here financially viable for entrepreneurs.
– Complete repatriation of profits and capital
You can transfer earnings and capital back to your home country without restrictions. The UAE government doesn’t impose any currency control, so moving funds internationally remains straightforward. For foreign investors, this flexibility often ranks among the top reasons for choosing Dubai.
– Simplified customs and import export procedures
Free zones function as duty-free areas. Goods imported for re-export typically incur no customs duties, which benefits trading and logistics businesses serving regional and global markets. This also reduces paperwork and speeds up shipments.
– Modern infrastructure and business support services
Most free zones provide ready-made offices, warehousing, and co-working spaces. Options range from flexi-desk arrangements (a shared workspace with a registered address) to large industrial plots. Many zones also offer administrative support, helping with visa processing and document attestation.
– Access to a diverse talent pool
Free zone companies can sponsor residence visas for shareholders, directors, and employees. Dubai’s international workforce makes recruiting skilled professionals relatively easy, whether you’re hiring locally or bringing in talent from abroad.
Types of free zone company structures in the UAE
Free Zone Establishment (FZE)
An FZE accommodates a single shareholder, either an individual or a corporate entity. This structure works well for solo entrepreneurs or parent companies setting up a subsidiary.
The FZE operates as a limited liability company, meaning your personal assets stay protected from business debts.
Free Zone Company (FZCO)
An FZCO allows multiple shareholders, anywhere from two to fifty. Shareholders can be individuals, corporations, or a mix of both. Partnerships, joint ventures, and businesses with several investors typically choose this structure. Like the FZE, it offers limited liability protection.
Branch office of a foreign or local company
Existing companies can extend operations into Dubai without creating a new legal entity. A branch operates under the parent company’s name and liability. This option suits businesses testing the market or serving regional clients before committing to a full subsidiary.
| Structure | Shareholders | Best suited for |
| FZE | Single | Solo founders, subsidiaries |
| FZCO | Multiple (2-50) | Partnerships, joint ventures |
| Branch | Parent company | Market testing, regional expansion |
Requirements for Dubai free zone company formation
– Shareholder and director eligibility
Shareholders can be individuals or corporate bodies from any nationality. Directors generally need to be at least 18 years old and provide valid identification. Some free zones require at least one director to hold UAE residency, though this varies by zone.
– Business activity selection and licensing
Each free zone offers specific activity categories: trading, professional services, industrial, media, and so on.
Your licence type depends on the activities you select from a predefined list during registration. Picking the right free zone for your business activity is one of the first and most important decisions you’ll make.
– Minimum share capital requirements
Share capital requirements differ by free zone and company structure. Some zones have removed minimum capital requirements entirely, while others ask for a nominal amount. In many cases, you don’t need to deposit the capital upfront.
– Documents required for registration
Gathering your documents early speeds up the process considerably. Here’s what most free zones ask for:
- Passport copies of all shareholders and directors
- Proof of residential address (utility bill or bank statement)
- Business plan or activity description
- Bank reference letter (where applicable)
- Corporate documents if a shareholder is a company (the certificate of incorporation in UAE, board resolution, memorandum of association)
– Office space and physical presence requirements
Free zones offer various workspace options. A flexi-desk gives you a registered address and limited desk access at a lower cost. Dedicated offices provide private workspace. Certain activities, particularly industrial or trading operations, require physical premises with specific square footage.
Steps to set up a free zone company in Dubai
1. Choose the right free zone for your business activity
Start by matching your industry with a free zone that supports your specific activities.
A consultancy might consider Dubai Internet City, while a commodities trader would look at DMCC. Each zone has its own fee structure, facilities, and licensing options, so comparing a few makes sense.
2. Select your legal structure and trade name
Decide between an FZE, FZCO, or branch office based on your ownership structure and goals.
You’ll also propose a trade name that complies with UAE naming conventions. Names cannot include offensive terms, religious references, or words too similar to existing businesses.
3. Submit your application and supporting documents
Most free zones accept online applications through their portals.
You’ll upload documents, complete application forms, and provide details about your proposed business activities. Some zones offer same-day initial approval for straightforward applications.
4. Pay licensing and registration fees
Once your application receives preliminary approval, you’ll pay the licensing and registration fees. This payment triggers formal processing of your company formation. Fees vary by free zone, licence type, and visa allocation.
5. Collect your trade licence and establishment card
After processing, you’ll receive your trade licence, the official document proving your business registration. You’ll also get an establishment card in UAE, which you’ll use for various administrative processes including visa applications.
6. Apply for visas and open a corporate bank account
With your licence in hand, you can apply for investor and employee visas. Opening a business bank account in Dubai requires your trade licence, shareholder documents, and a business plan. Bank account opening often takes longer than expected, so starting early helps.
Tip: Begin the bank account process immediately after receiving your licence. Timelines vary by bank, and delays are common.
Popular free zones in Dubai for business setup
– Dubai Multi Commodities Centre (DMCC)
DMCC has earned recognition as one of the world’s leading free zones. It suits trading companies, commodities businesses, and professional services firms. The zone sits in Jumeirah Lakes Towers, offering excellent networking opportunities and a central location.
– Jebel Ali Free Zone (JAFZA)
JAFZA ranks among the largest free zones in the region, hosting over 9,000 companies. It’s particularly strong for manufacturing, logistics, and large-scale trading operations. Direct access to Jebel Ali Port makes it ideal for import/export businesses.
– Dubai Internet City and Dubai Media City
These neighbouring zones cater to technology, media, and creative industries. Major global tech companies have set up regional headquarters here, creating a vibrant ecosystem for startups and established businesses alike.
– Dubai International Financial Centre (DIFC)
DIFC operates under its own legal framework based on common law, making it unique among UAE free zones. Banking, insurance, wealth management, and financial services firms prefer DIFC for its recognised regulatory environment.
– Meydan Free Zone
Meydan offers a digital-first approach with competitive pricing. Startups and SMEs often choose Meydan for quick registration and cost-effective packages, especially when physical office space isn’t a priority.
– Dubai Airport Free Zone (DAFZA)
Located next to Dubai International Airport, DAFZA suits aviation, logistics, and import/export businesses. The proximity to air cargo facilities makes it practical for time-sensitive trading operations.
Cost of Dubai free zone company setup
– Licence and registration fees
Licence fees form the primary cost and vary by free zone and business activity. A professional services licence typically costs less than a trading or industrial licence. Annual fees range from a few thousand dirhams to considerably more for specialised activities.
– Visa and establishment card costs
Each residence visa incurs government fees plus free zone processing charges. The number of visas you can sponsor depends on your office space type and size. Budget for medical testing, Emirates ID, and visa stamping costs per person.
– Office space and flexi desk options
Workspace costs range from affordable flexi-desk arrangements to premium dedicated offices. A flexi-desk might cost a few thousand dirhams annually, while a private office could run into tens of thousands depending on size and location.
– Annual renewal and compliance fees
Licences require annual renewal, with fees similar to initial registration costs. Budget for visa renewals, audit requirements (where applicable), and any regulatory compliance costs specific to your industry.
| Cost category | What it covers | Frequency |
| Licence fee | Business registration and activity permit | Annual |
| Visa fees | Residency permits for shareholders/employees | Per visa |
| Office space | Physical or virtual workspace | Annual |
| Renewal fees | Licence and visa renewals | Annual |
Difference between free zone and mainland company setup in Dubai
Difference between free zone and mainland company setup in Dubai
The choice between free zone and mainland depends on your target market and how you plan to operate. Here’s a quick comparison:
| Factor | Free zone company | Mainland company |
| Foreign ownership | Full ownership permitted | Full ownership now permitted in most activities |
| Trading scope | Within free zone and internationally | Anywhere in UAE and internationally |
| Office requirement | Flexi desk options available | Physical office typically required |
| Local sponsor | Not required | Not required for most activities |
| Regulatory authority | Free Zone Authority | Department of Economic Development |
Free zones work well for businesses focused on international trade or specific industries. Mainland companies suit those wanting to trade directly with UAE consumers or bid on government contracts. Some businesses establish both structures to maximise flexibility.
Start your Dubai free zone company with Commitbiz LLC
Setting up a free zone company involves comparing zone options, preparing documentation, and coordinating with multiple authorities. With over 18 years of experience in UAE company formation, Commitbiz handles the entire process for business setup in Dubai, from initial free zone selection through to bank account opening and visa processing.
You receive transparent pricing, dedicated support, and practical guidance based on thousands of successful client engagements.
