How to Set Up a Company in the UAE in 2027 and 2028: Mainland, Free Zone or Offshore

The United Arab Emirates attracts founders from all over the world with full foreign ownership in many sectors, a large network of free zones, a competitive tax system and residence visas linked to company ownership. But "setting up in the UAE" can mean three very different structures, licensed by dozens of different authorities, and the right choice depends on who your customers are and where you'll actually work. This guide explains how to set up a company in the UAE step by step, and how to keep it compliant afterwards.

This guide explains how to set up a company in the UAE in 2027 and 2028: mainland, free zone and offshore companies compared, the licensing process, ownership rules, corporate tax and VAT, beneficial ownership (UBO) requirements, visas and banking. If you need to check an existing company, see our guide on how to look up a UAE company.

This guide is general information, not legal or tax advice. UAE rules, fees and free zone packages change frequently. Check the official authority's website and take local advice before you commit.

Three ways to set up

Step 1: Decide where you'll do business

Ask three questions:

1. Who are your customers? Mostly in the UAE (mainland) or abroad (free zone)?
2. Do you need residence visas for yourself and staff? Mainland and free zones issue them; offshore companies generally don't.
3. Do you need a physical office? Free zone flexi-desks are cheaper than mainland office leases.

Many service businesses and consultancies serving international clients choose a free zone. Businesses selling directly to UAE consumers or bidding for government work usually need the mainland.

Step 2: Choose the business activity

Every UAE company is licensed for specific activities, chosen from the authority's activity list. Your licence type depends on them:

Some activities need external approvals (for example from health, education or financial regulators). Choose activities carefully, as trading outside them can lead to fines.

Step 3: Choose the legal form

Step 4: Reserve the trade name

The trade name must follow the authority's naming rules: no offensive or religious terms, no names of authorities, and the name often has to reflect the legal form. Apply for initial approval and name reservation through the authority's online portal.

Step 5: Apply for the licence

The process differs by authority, but generally includes:

1. Initial approval for the activity and shareholders.
2. Memorandum of association (mainland) or company documents (free zone).
3. Office lease or flexi-desk agreement (an Ejari-registered lease in Dubai mainland).
4. Shareholder documents: passports, photographs, proof of address and sometimes bank references; corporate shareholders need attested corporate documents.
5. Payment of licence and registration fees.
6. Issue of the trade licence and certificate of incorporation (free zones).

Free zone setups can take days; mainland setups with external approvals can take weeks.

Step 6: Visas and Emirates ID

Once the licence is issued, owners and staff can apply for residence visas, subject to the company's visa quota:

1. Establishment card (immigration file) for the company.
2. Entry permit (if outside the UAE).
3. Medical test and biometrics.
4. Emirates ID and visa stamping.

Investors may also qualify for longer-term options such as the Golden Visa, subject to criteria.

Step 7: Corporate tax and VAT registration

Corporate tax

The UAE introduced federal corporate tax for financial years starting on or after 1 June 2023:

Qualifying Free Zone Persons can benefit from 0% on qualifying income if they meet the conditions, including substance and not electing out. All taxable persons, including free zone companies, generally need to register with the Federal Tax Authority (FTA) through EmaraTax and file annual returns. Check the FTA website for deadlines.

VAT

VAT at 5% applies to most supplies. Registration is mandatory when taxable supplies exceed AED 375,000 in 12 months, and voluntary above AED 187,500.

Step 8: Beneficial ownership (UBO) records

UAE companies must keep a register of ultimate beneficial owners: generally individuals who own or control 25% or more, or otherwise control the company. They must file UBO information with the licensing authority and update it when it changes. Penalties apply for failing to comply.

Step 9: Open a bank account

UAE corporate bank accounts are known for thorough KYC checks. Banks usually ask for:

• trade licence and company documents;
• shareholders' and signatories' passports, visas and Emirates IDs;
• proof of the company's office (lease or flexi-desk agreement);
• a business plan, expected turnover and main counterparties; and
• sometimes a personal meeting with signatories in the UAE.

Having a UAE residence visa makes account opening much easier. Biz E-Formations Inc. supports UAE company setup and business bank account applications.

Ongoing compliance

Economic substance reporting (ESR) was abolished for financial periods ending after 31 December 2022, so it no longer applies to new companies.

Mainland versus free zone: worked examples

A consultancy serving clients in Europe

A consultant chose a free zone with a flexi-desk package, got a professional licence and one residence visa, registered for corporate tax, and invoices international clients. Because it doesn't need to sell to UAE consumers, the free zone kept costs low.

A retail business selling to UAE customers

A retailer set up a Dubai mainland LLC with 100% foreign ownership (its activity wasn't restricted), leased a shop with an Ejari-registered lease, registered for VAT, and sells directly to customers.

An international holding company

A family set up an offshore company to hold shares in operating companies abroad. It doesn't trade in the UAE and doesn't issue visas.

Common mistakes

1. Choosing a free zone but selling directly to mainland customers without the right structure.
2. Picking activities too narrowly, so you can't legally do work you planned.
3. Assuming offshore means no compliance. Offshore companies still have registry and UBO obligations.
4. Not registering for corporate tax, even when expecting 0% tax.
5. Underestimating bank KYC, delaying trading for weeks.
6. Letting the licence expire, which blocks visas and banking.

Step-by-step summary

1. Decide mainland, free zone or offshore.
2. Choose activities and the licence type.
3. Choose the legal form.
4. Reserve the trade name and get initial approval.
5. Arrange the office or flexi-desk.
6. Submit documents and pay fees; receive the licence.
7. Apply for visas and Emirates IDs.
8. Register for corporate tax (and VAT if needed).
9. File UBO information.
10. Open a bank account.

Checklist

How to set up a company in the UAE: choosing a free zone

There are dozens of UAE free zones, each with its own packages, activities and rules. Compare:

Well-known free zones include DMCC (commodities and general trading in Dubai), JAFZA (logistics near Jebel Ali port), DAFZA (near Dubai airport), IFZA and Meydan (cost-effective service businesses), RAKEZ (Ras Al Khaimah) and SPC (Sharjah Publishing City). Our guide on how to look up a UAE company lists the main authorities by emirate.

Mainland setup in more detail

For a Dubai mainland company, the process is run by the Department of Economy and Tourism (DET). In outline:

1. Initial approval for the activity and shareholders.
2. Trade name reservation.
3. Memorandum of association, notarised where required.
4. Office lease registered through Ejari.
5. External approvals for regulated activities.
6. Licence issue and registration with the immigration and labour authorities so the company can sponsor visas.

Abu Dhabi, Sharjah and the other emirates have equivalent processes through their own economic departments.

Costs to budget for

First-year costs are higher than renewals because of one-off registration and visa fees.

Banking in the UAE in more detail

UAE banks apply strict anti-money laundering checks. To improve your chances:

• have your residence visa and Emirates ID before applying, if possible;
• prepare a short business profile: activities, expected monthly turnover, main countries you'll trade with, and main customers and suppliers;
• provide proof of address and, for corporate shareholders, attested corporate documents;
• be ready to show where your initial funds come from; and
• consider digital business accounts offered by some UAE banks, which can be quicker for small companies.

Practical points for non-resident owners

You can own a UAE company without living there, especially through a free zone or offshore company. But without a residence visa:

• banking is much harder;
• you may not be able to act as the manager or signatory in practice; and
• you may need a local manager or representative for day-to-day matters.

Many founders take the residence visa that comes with their free zone package, which also brings the Emirates ID needed for banking and contracts.

Corporate tax in practice

Every UAE company that's a taxable person should understand a few practical points about corporate tax:

• Registration: register through EmaraTax by the deadline that applies to your company, which depends on when the licence was issued. Late registration attracts a penalty.
• Tax period: usually the company's financial year. Returns are generally due within nine months of the end of the tax period.
• Small business relief: eligible resident businesses with revenue below the threshold can elect to be treated as having no taxable income for certain periods. Check whether it's still available for your period.
• Qualifying Free Zone Persons: to keep the 0% rate on qualifying income, a free zone company must meet conditions including adequate substance in the free zone, earning qualifying income, preparing audited financial statements and not exceeding the limits on non-qualifying income.
• Transfer pricing: transactions with related parties and connected persons must be at arm's length, and documentation may be required.
• Record keeping: keep accounting records for at least seven years.

Penalties apply for late registration, late filing and incorrect returns, so plan your first return with an accountant. The Federal Tax Authority publishes guides for each topic.

VAT in practice

If your company is VAT-registered:

• charge 5% VAT on standard-rated supplies, and 0% on zero-rated supplies such as many exports of goods and services;
• issue tax invoices that meet FTA requirements;
• file VAT returns, usually quarterly, through EmaraTax; and
• keep records that support the VAT you charge and reclaim.

Some free zones are designated zones for VAT, which changes the VAT treatment of some goods movements. Check whether yours is one.

Employing staff

To hire staff on a UAE company, you'll need:

• a labour establishment card with the Ministry of Human Resources and Emiratisation (mainland) or registration with the free zone;
• work permits and residence visas for each employee;
• an employment contract registered with the relevant authority;
• health insurance, which is mandatory in several emirates; and
• salaries paid through the Wage Protection System for mainland companies.

Mainland companies may also have Emiratisation targets depending on their size and sector.

Corporate shareholders and group structures

If the shareholder is a company rather than an individual, expect extra paperwork:

• the parent company's certificate of incorporation, memorandum and articles, register of directors and register of shareholders;
• a board resolution approving the UAE setup and appointing a representative;
• attestation of foreign documents, typically notarisation in the home country, legalisation and attestation by the UAE embassy there, then the UAE Ministry of Foreign Affairs (or an apostille-equivalent process where accepted); and
• UBO details tracing ownership up to the ultimate individual owners.

Attestation can take weeks, so start it early. Group structures can also affect corporate tax (for example tax groups and transfer pricing) and free zone qualifying status.

Questions to ask a setup provider

Many founders use a business setup consultant or the free zone's own team. Before you sign, ask:

1. Which authority will license the company, and why is it the right one for my activities?
2. Is my exact activity on the licence list, and does it need external approval?
3. What's included in the first-year price, and what will renewal cost?
4. How many visas does the package allow, and what does each visa cost?
5. Do I need a physical office, or is a flexi-desk enough?
6. Will you help with corporate tax and VAT registration?
7. Which banks usually accept companies from this authority, and will you introduce me?
8. Are audited accounts required each year?

Clear answers avoid the most common surprise: a cheap first-year package with expensive renewals and visas. Biz E-Formations Inc. can compare options for your activity and help with banking.

Branch or subsidiary?

Foreign companies can enter the UAE with a branch or a new subsidiary company:

A subsidiary is the more common choice because it ring-fences liability and is easier for banks and clients to deal with.

Renewal checklist each year

An expired licence blocks visa renewals, banking and contracts, so keep the renewal date in your calendar.

Key takeaways

• Choose mainland for UAE customers, a free zone for international business, offshore for holding structures.
• Check your activity is on the authority's list before you choose a free zone.
• Register for corporate tax even if you expect to pay 0%, and for VAT once over the threshold.
• Keep the UBO register up to date.
• Get your residence visa and Emirates ID before applying for a bank account.

Before you start: a quick readiness check

Decide your main customers and activities, how many residence visas you need, whether you need a physical office, and your budget for the first year and for renewals. Have clear passport copies, a recent photo and proof of address ready for every shareholder. With those settled, choosing between the mainland, a free zone and an offshore company becomes straightforward.

Related guides

• How to look up a UAE company: mainland vs free zone
• UAE company search: official registries
• How to open a business bank account
• How to form a UK limited company

The bottom line

Choose the mainland if you'll sell to UAE customers, a free zone for international services and trade, or an offshore company for holding structures. Pick the right activities, secure a licence and office, apply for visas, register for corporate tax (and VAT if needed), file UBO information, and prepare carefully for bank KYC. Biz E-Formations Inc. can guide you through UAE company setup and banking.