Business and Company Formation in the United Arab Emirates 2025

Did you know you can own 100% of your business in the United Arab Emirates free zones and benefit from full tax exemptions? Discover practical steps and cost insights to help you plan and launch your company efficiently in 2025’s dynamic and competitive market.

Understanding Company Formation and Business Setup Options in the UAE

The UAE offers multiple business jurisdiction options to foreign investors and entrepreneurs, primarily:

Free Zone Companies: Established within designated economic zones offering benefits like 100% foreign ownership, potential tax advantages, and simplified licensing.
Mainland Companies: Licensed by the Department of Economic Development (DED), allowing broader market access but often requiring a local sponsor for specific business activities.
Offshore Companies: Mainly for international business and asset protection, offering zero taxes but limiting local operational activities.
Company Branches: Allow foreign companies to set up operational branches in free zones or mainland with full ownership and repatriation of profits.

Free Zone Companies: Key Features

Enable 100% foreign ownership without needing a UAE national partner.
Provide various tax advantages depending on the free zone jurisdiction.
Focus on serving international and regional markets rather than direct UAE local trade.
Each free zone specializes in distinct industries, such as technology, media, commodities, healthcare, or logistics.
Companies in free zones must comply with their specific jurisdictional authority, which governs licensing, visas, and compliance requirements.

Foreign Company Registration and Branches

Foreign companies can register branches within UAE free zones, maintaining full ownership and benefiting from streamlined regulatory requirements. Offshore companies registered in jurisdictions like Jebel Ali Free Zone Authority or Ras Al Khaimah International Corporate Centre may support tax planning and international trade with confidentiality and asset protection features.

Types of Company Structures Available in UAE Free Zones

In free zones, the common company forms include:

Free Zone Establishment (FZE): A single shareholder company.
Free Zone Company (FZC): A multi-shareholder company.
Branch of a Foreign Company: Extension of an existing international company, not a separate legal entity but permitted to operate in the free zone.
Sole Proprietorship and Civil (Professional) Companies: Suitable for freelancers and service providers in certain zones.

Your choice should match your ownership structure, business activity, and the number of shareholders. Not every free zone supports all entity types.

Process to Register a Company in the UAE Free Zones in 2025

Determine Your Business Activity: Choose from over 2,000 activities registered with the DED or free zone authorities relevant to your business model.
Choose the Appropriate Free Zone: Review free zones aligned with your industry since free zones are industry-specific.
Select a Legal Structure: Choose FZE, FZC, branch, or other legal forms as per your requirements.
Choose and Reserve a Trade Name: Confirm the uniqueness and compliance of your company name with the free zone authorities or DED.
Obtain Initial Approval: Submit preliminary documents for approval from the chosen free zone authority to proceed with registration.
Prepare Required Documentation: Includes passport copies, business plan, Memorandum of Association (MOA), and lease agreement.
Pay Registration and License Fees: Fee amounts depend on your free zone, type of license, office space, and visa quotas.
Obtain the Business License: This permits you to conduct operations legally.
Apply for Visas: Company size and visa quotas determine visa eligibility for owners, employees, and dependents.
Open Corporate Bank Account: Required for company financial transactions.

This process timeline ranges from a few hours (online) to several days for in-person submissions, depending on the free zone and circumstances.

Licensing and Office Space Requirements

Business License Types in UAE Free Zones

Commercial License: For trading activities.
Service License: For consultancy and professional services.
Industrial License: For manufacturing activities.

License fees vary by business activity and typically include registration and annual renewal fees.

Office Space Options

Most free zones have physical office space requirements but offer flexible options:

Flexi Desk or Shared Office: Suitable for freelancers and startups, occupying 20 to 30 square meters, fulfilling legal requirements at potentially lower costs.
Executive Offices or Private Suites: Larger spaces for established companies.
Virtual Offices: Available in certain free zones, allowing remote operation without physical office presence.

Costs vary based on office size, location, and free zone. For example:

Dubai Multi Commodities Centre (DMCC) offers flexi desk options around 20-30 sqm.
Dubai Airport Free Zone provides “Smart Desk” and “Executive Office” packages.
Hamriyah Free Zone offers executive suites from 15 to 42 sqm with supporting facilities.

Estimated Company Formation and License Costs in UAE Free Zones

Typical company formation costs range AED 12,500 to AED 25,000 depending on the free zone, business activity, and package inclusions such as visas and office space.
Free zones like the International Freezone Authority (IFZA) offer more affordable packages.
Premium free zones such as DMCC generally have higher capital and license fees, including a minimum share capital of AED 50,000 and costs associated with general trading licenses.
Minimum share capital requirements vary widely:
- Dubai Airport Free Zone: AED 1,000 per share.
- Hamriyah Free Zone: AED 150,000 for forming an FZE.
- Some free zones like twofour54 have no minimum capital requirements.

Home Business License and Flexi Desk Options

Home-based business setups have become more common, especially for freelancers and small startups. Free zones provide:

Flexi Desk or Virtual Office Packages: Business setup solutions offering a designated workspace without a full office lease.
Virtual Commercial City License: Enables global investors to establish virtual companies in the UAE without physical presence, facilitating remote operations.

These options can help reduce costs and simplify compliance for smaller entrepreneurs.

Visa and Work Permit Considerations

Visa allocations are linked to your license type and office space size.
Free zones often offer visa packages for owners, employees, and dependents.
Visa application involves standard medical checks, biometrics, and approval by immigration authorities.
10-year investor and entrepreneur visas may be available for qualifying investments (AED 500,000 and above).
Freelancer permits and entrepreneur visas provide tailored options for SMEs and individuals.

Foreign Ownership and Sponsorship in the UAE 2025

The UAE permits 100% foreign ownership in free zones and many mainland sectors following recent legal reforms.
Mainland companies may require a local partner for certain restricted activities, though such requirements have been reduced.
Branches of foreign companies maintain full ownership and profit repatriation rights.

Overview of Expected Costs for Different Company Types

Setup Type	Estimated Cost Range (AED)	Notes
Small Free Zone Company	12,500 - 25,000	Includes license, registration, visas, flexi desk (varies by free zone)
Premium Free Zone Company	Higher costs depending on share capital and license fees	DMCC and general trading licenses typically cost more
Foreign Company Branch	Costs vary; generally comparable to free zone fees depending on structure	Retains full ownership with specific compliance requirements
Home Business License & Flexi Desk	Typically lower; varies by free zone	Virtual company options may reduce physical office costs
Ajman Free Zone Licenses	Contact Ajman Free Zone Authority for precise fees	Fees vary and are subject to confirmation

Tips for Planning Your Business Setup in the UAE in 2025

Verify free zone-specific rules as entity types and business activities accepted may vary.
Seek advice from business setup consultants or legal advisors to tailor solutions to your circumstances.
Understand your visa allocations and labor quotas before finalizing office space decisions.
Consider tax and compliance obligations upon registration.
Use official free zone authority websites and the Department of Economic Development for updated information and trade name approval.
Account for any additional government approvals for specialized business activities (e.g., food, healthcare).

Careful research and planning can support your effort to set up a business that fits your objectives within the UAE’s regulatory framework in 2025.

Sources

Disclaimer: All content, including text, graphics, images and information, contained on or available through this web site is for general information purposes only. The information and materials contained in these pages and the terms, conditions and descriptions that appear, are subject to change without notice.

Lifestyle