The United Arab Emirates (UAE) has long been a magnet for entrepreneurs, global investors, and digital nomads seeking a business-friendly environment, world-class infrastructure, and favorable tax policies.
As of 2025, the UAE remains one of the most dynamic and accessible jurisdictions for setting up a company, although recent tax reforms and regulatory updates mean that the process requires more strategic planning than before.
This comprehensive guide will walk you through everything you need to know about setting up a company in the UAE—from choosing the right jurisdiction and legal structure to understanding tax implications and licensing requirements.
Whether you’re a startup founder, a seasoned investor, or a global entrepreneur, this guide will help you navigate the UAE’s business landscape with confidence.
Why Start a Company in the UAE?
The UAE offers a unique combination of advantages that make it one of the world’s top destinations for business formation.
Strategically located at the crossroads of Europe, Asia, and Africa, the country serves as a global hub for trade, logistics, and finance.
Its modern infrastructure, political stability, and business-friendly regulatory framework have attracted companies from over 200 countries.
One of the most appealing aspects of the UAE has traditionally been its zero-tax policy. However, back in 2023, the UAE introduced a 9% corporate tax on profits exceeding AED 375,000 (approximately USD 102,000), aligning itself with international tax standards.
Despite this change, the UAE still offers one of the most competitive tax regimes globally, especially for businesses operating within free zones that meet specific criteria for zero-tax status.
Types of Jurisdictions: Mainland, Free Zone, and Offshore
Before setting up your company, you need to decide where to establish it. The UAE offers three main types of jurisdictions, each with its own rules, benefits, and limitations:
- Mainland
Mainland companies are licensed by the Department of Economic Development (DED) of the respective emirate.
These companies can operate anywhere in the UAE and are allowed to do business directly with the local market.
As of recent reforms, 100% foreign ownership is now permitted for most business activities, eliminating the previous requirement for a local Emirati partner.
- Free Zone
Free zones are special economic areas offering 100% foreign ownership, full repatriation of profits, and, in many cases, zero corporate tax—provided the company meets certain conditions.
There are over 40 free zones in the UAE, each catering to specific industries such as technology, media, finance, and logistics.
Examples include Dubai Multi Commodities Centre (DMCC), Jebel Ali Free Zone (JAFZA), and Abu Dhabi Global Market (ADGM).
Despite the implementation of the 9% corporate tax, the UAE still has special economical areas known as “Free Zone”, where companies which meet specific criteria are exempted from corporate tax policy.
- Offshore
Offshore companies are typically used for holding assets, international trading, or as part of tax planning structures.
They aren’t allowed to conduct business within the UAE but can own property in designated areas and open bank accounts.
Offshore companies are usually registered in jurisdictions like Ras Al Khaimah International Corporate Centre (RAK ICC) or JAFZA Offshore.
Step-by-Step Process to Set Up a UAE Company
1. Identify Your Business Activity
Your business activity determines the type of license you’ll need and the regulatory body you’ll deal with.
The UAE offers over 2,000 business activities categorized into six license types: commercial, industrial, professional, tourism, agricultural, and occupational.
2. Choose the Right Legal Structure
The legal structure of your company should align with your business goals and operational needs. Common structures include:
- Limited Liability Company (LLC)
- Sole Establishment
- Civil Company
- Branch of a Foreign Company
- Free Zone Company (FZC or FZE)
- Holding Company
Each structure has different requirements for ownership, liability, and capital.
For example, an LLC is ideal for businesses targeting the local UAE market, while a Free Zone Establishment (FZE) is better suited for international trade.
3. Select a Trade Name
Your trade name must comply with UAE naming conventions.
It should reflect your business activity, avoid offensive or religious terms, and not duplicate existing names. The name must also include the legal structure abbreviation (e.g., LLC, FZE).
4. Obtain Initial Approval
Initial approval from the relevant authority (DED or Free Zone Authority) indicates that the government has no objection to your business.
This step allows you to proceed with the rest of the setup process, including signing contracts and securing office space.
5. Draft the Memorandum of Association (MoA)
For certain legal structures like LLCs and joint-stock companies, you’ll need to draft and notarize a Memorandum of Association.
This document outlines the company’s ownership structure, capital contribution, and operational guidelines.
Only UAE-based law firms, courts, and notary publics are authorized to prepare and attest these documents.
6. Choose a Business Location
Every UAE company must have a physical office address. This can range from a flexi-desk in a free zone to a full-fledged commercial space.
The lease agreement must be submitted as part of your license application and, in some emirates, must be notarized .
7. Apply for Additional Approvals
Depending on your business activity, you may need approvals from other government entities. For example:
- Ministry of Health for medical services
- Ministry of Justice for legal services
- Telecommunications and Digital Government Regulatory Authority (TDRA) for IT and telecom businesses
- Real Estate Regulatory Agency (RERA) for property-related activities
These approvals are mandatory and must be obtained before your final license is issued .
8. Collect Your Business License
Once all documents are submitted and approvals obtained, you can collect your business license from the relevant authority. This license is your official permit to operate legally in the UAE.
You must pay the license fee—typically between AED 20,000 and AED 30,000 (USD 5,450–8,200)—within 30 days of issuance. Failure to do so will void your application .
Investors looking to obtain residency in the UAE may consider setting up a company, which would allow them to apply for residency as long as the company is still active.
9. Open a Corporate Bank Account
After obtaining your license, the next step is to open a corporate bank account.
The UAE has a robust banking sector with both local and international banks. Requirements vary by bank but generally include your trade license, MoA, passport copies, and proof of address.
Some banks may also request a business plan or reference letters.
Corporate Tax in the UAE: What to Know
Back in 2023, the UAE introduced a 9% corporate tax on profits exceeding AED 375,000. However, companies operating in free zones can still enjoy a 0% tax rate if they meet certain conditions, such as:
- Earning qualifying income from specific activities
- Maintaining adequate economic substance in the UAE
- Not conducting business with the UAE mainland
The rules for qualifying income are complex and subject to change, so it’s advisable to consult a tax advisor or legal expert to ensure compliance.
In addition to corporate tax, the UAE imposes a 5% Value Added Tax (VAT) on most goods and services. Businesses with annual revenues exceeding AED 375,000 must register for VAT.
There is no personal income tax, capital gains tax, or withholding tax in the UAE, making it an attractive jurisdiction for wealth preservation.
UAE Residence by Company Ownership
Setting up a company in the UAE can also serve as a pathway to obtaining a UAE residence visa.
Company owners, directors, and employees are eligible for residency, which allows them to live, work, and open bank accounts in the UAE.
Residency is typically valid for two years and renewable as long as the company remains active.
UAE Virtual Company Options
The UAE has embraced digital transformation with initiatives like the Dubai Virtual Commercial City Program and the Abu Dhabi Basher Service.
These platforms allow investors to set up virtual companies without physically residing in the UAE.
While these options are convenient, they may not qualify for zero-tax status unless specific substance requirements are met.
Risks, Challenges, and Considerations
While the UAE remains a top destination for company formation, it’s not without its complexities.
The introduction of corporate tax, evolving compliance requirements, and the need for local substance mean that setting up a company here is no longer a plug-and-play solution.
If your primary goal is tax minimization without relocating to the UAE, other jurisdictions like Cyprus, Malta, or Ireland may offer more straightforward solutions.
However, if you plan to live in the UAE and build a business presence, the benefits can still far outweigh the challenges.
Should You Start a UAE Business?
Setting up a company in the UAE in 2025 is still an excellent option for entrepreneurs and investors looking to tap into a dynamic, globally connected market.
With careful planning, the right legal structure, and compliance with new tax regulations, you can still enjoy many of the benefits that have made the UAE a global business hub.
Whether you’re launching a startup, expanding internationally, or seeking residency through investment, the UAE offers a wealth of opportunities—provided you approach it with the right strategy and expert guidance.
If you’re ready to take the next step, consider working with experienced advisors who can help you navigate the legal, tax, and operational landscape of doing business in the UAE.
After all, success in the Emirates isn’t just about where you set up—it’s about how you set up.
FAQs: Setting Up a UAE Company
Why Should I Consider Starting a Company in the UAE?
The UAE offers 100% foreign ownership, modern infrastructure, and a strategic location between Europe, Asia, and Africa. It also has no personal income tax and competitive corporate tax policies.
What Types of Companies are Available?
You can choose from Mainland, Free Zone, or Offshore jurisdictions. Free Zones offer tax benefits and full foreign ownership, while Mainland companies can trade directly in the UAE market.
What’s the Basic Process to Set Up a UAE Business?
The exact process depends on the type of company you're setting up. Generally, the steps include choosing your business activity, selecting a legal structure, reserving a trade name, getting initial approval, securing office space, and applying for the license.
What are the Tax Rules for Companies in the UAE?
A 9% corporate tax applies to profits over AED 375,000, but Free Zone companies may still qualify for a 0% rate if they meet certain conditions. VAT is 5%, with no personal income or capital gains tax.
