Introduction: A Streamlined But Highly Regulated Environment
The UAE has made business setup remarkably fast. Many investors can establish an online business in as little as 15 minutes via the federal Basher platform, which connects local and federal licensing authorities across all emirates. Even a conventional UAE mainland company setup through Departments of Economic Development (DEDs) can take around four days, according to the Ministry of Economy, notably faster than the global average for many high‑income jurisdictions.
Speed, however, does not remove the need for careful planning. Before you set up a company in UAE jurisdictions, you must decide between mainland and free zone, select your economic activity and legal form, understand foreign‑ownership rules, and prepare for labour, immigration, tax and anti‑money‑laundering (AML) compliance. This guide walks you through each step so you can approach EGSH or the relevant authority with a clear, structured plan.
Step 1 – Choose Between Mainland And Free Zone
Your first strategic decision in any business setup in the UAE is where your company will be located: onshore (mainland) or in a free zone. This choice affects your regulators, licensing procedures, tax profile and how broadly you can trade.
UAE Mainland: Broad Market Access
“Mainland” refers to any part of an emirate that is not within a recognised free zone. Mainland companies are typically licensed by the emirate’s DED (or equivalent) and governed by the federal Commercial Companies Law (Federal Decree‑Law No. 32 of 2021). A UAE mainland company can conduct business across all emirates and contract directly with federal and local government entities. Following recent legal reforms, it can do so without a local commercial agent or national agent in most sectors.
For many trade, services and industrial activities, investors of all nationalities can now fully own mainland companies, including limited liability companies (LLCs) and branches of foreign companies. Specific activities with a strategic impact remain subject to specific foreign‑ownership limits or special approval, so you must always verify your intended activity with the relevant DED and the Ministry of Economy.
Free Zones And Designated Zones
Free zone companies are established within geographically demarcated areas overseen by their own free zone authorities. These entities use free‑zone‑specific legal forms such as Free Zone Limited Liability Company (FZ‑LLC), Free Zone Company (FZCO/FZC) or Free Zone Establishment (FZE), with detailed rules set by the individual free zone. Typically, UAE free zone company setup offers incentives such as 100% foreign ownership, full repatriation of profits and capital, and customs or local tax benefits, subject to each zone’s regulations and federal law.
From an indirect tax perspective, some free zones are recognised as “Designated Zones” for VAT. Where certain fencing, customs‑control, storage, and procedural conditions are met, some movements of goods within or between these Designated Zones can be treated as taking place outside the UAE for VAT purposes. This does not mean an exemption from UAE VAT generally; it is a technical treatment that can materially affect how you structure supply chains, warehousing and invoicing.
Practical Choice Factors For Investors
When comparing UAE mainland company setup with UAE free zone company setup, first consider your customers and contracts. If you need to trade widely in the local UAE market, serve individual consumers across emirates or contract directly with government bodies, a mainland licence is often more suitable. If your operations are export‑oriented, focused on specific sectors (for example, media, logistics or technology) or require particular infrastructure within a zone, a free zone structure may be more efficient.
Before committing, review each option’s rules with the relevant free zone authority or emirate‑level DED and consult investor guides on the national government portal. Use this stage to clarify any restrictions on your intended economic activities, foreign ownership and the ability of a free zone company to trade “onshore” (often subject to additional arrangements).
| Feature | Mainland (Onshore) | Free Zone |
|---|---|---|
| Main regulator | Emirate DED/municipality | Free zone authority |
| Market access | Across all emirates; direct government contracts | Primarily inside zone and abroad; onshore via conditions |
| Typical ownership | Up to 100% foreign in most non‑strategic activities | Typically 100% foreign |
| Common use cases | Retail, onshore services, government tenders | Export, specialised clusters, logistics, back‑office |
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Step 2 – Define Your Economic Activity, Legal Form And Ownership
Once you know where you will establish your business, the next phase of company formation in the UAE is to define what you will do and how your entity will be structured.
Economic Activities And Licence Categories
The Ministry of Economy indicates there are more than 2,000 distinct economic activities available for licensing in the UAE. On the mainland, these are grouped into six primary trade licence categories: commercial, industrial, professional, agricultural, tourism and occupational. Your chosen economic activity dictates both the licence category and the legal forms that are available to you.
You should search official activity lists on DED portals or, in Dubai, via the “Invest in Dubai” portal, which lets you explore permissible activities, linked legal types and any special approvals. Because activity drives regulation, taking time at this stage avoids costly amendments later and ensures your licence properly reflects what you actually do.
Legal Forms And Full Foreign Ownership
Under the Commercial Companies Law, common mainland legal forms include:
- Limited Liability Company (LLC)
- Public Joint Stock Company (PJSC)
- Private Joint Stock Company
- Partnership and Limited Partnership
- Branch of a foreign company
Following Federal Law No. 26 of 2020 and subsequent Ministry of Economy guidance, investors of all nationalities can, in principle, entirely own companies in all these legal forms, as well as branches, provided the activity is not classified as strategically sensitive. Full foreign ownership now extends across most sectors (industry, agriculture, services and others). However,specific activities may remain subject to local ownership or approval requirements set at the emirate or federal level.
Your legal form influences minimum capital (where prescribed), governance requirements, the ability to raise funds, and how ownership changes are documented. For many small and medium‑sized businesses planning to set up a company in the UAE, the LLC remains the most flexible and familiar choice.
MOA And Other Core Incorporation Documents
For several legal forms—partnership, limited partnership, LLC and private and public joint stock companies—a memorandum of association (MoA) is mandatory. The MoA typically sets out share capital, ownership percentages, management structure, decision‑making rules and profit distribution. It must be notarised or otherwise attested in line with the procedures of the relevant authority.
To support entrepreneurs, the Ministry of Economy’s “Common Contracts” initiative provides standard templates for key documents such as LLC incorporation contracts, shareholders’ agreements and franchise agreements. While these templates are helpful starting points, investors should ensure any customised provisions remain consistent with UAE law and the requirements of the DED or free zone concerned.
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Step 3 – Reserve A Trade Name And Obtain Initial Approvals
Before your UAE company registration guide moves into final licensing, you must secure an acceptable trade name and, where applicable, sectoral approvals. Trade name reservation is compulsory and is handled via the Emirate DED portals or smart applications. In Dubai, the Invest in Dubai portal allows you to search and reserve a business name, which is typically held for a limited period (often around 30 days) while you complete incorporation.
Naming rules, as outlined by the Ministry of Economy and DEDs, are detailed. Your trade name must be unique, not infringe protected or copyrighted names without proof of rights, avoid obscene or misleading terms, and respect restrictions on specific geographic or institutional references. The legal form abbreviation—such as “LLC”—is usually appended to the name. You can use the National Economic Register and DED systems to check existing trade names, licences and registered activities before submitting your reservation.
Certain activities (for example, education, healthcare or financial services) also require prior approval from specialist regulators before the DED or free zone can issue a trade licence. Factor this into your timeline, as these approvals may involve additional documents, fit‑and‑proper checks or technical inspections.
Step 4 – Complete Incorporation And Secure Your Business Address
After reserving your trade name and obtaining any initial approvals, you move to formal incorporation. Depending on your chosen route, you will submit applications through the Basher platform, the relevant DED’s eServices or a free zone’s online system. Most of these portals are integrated with the UAE Pass digital identity, which provides a single secure login for thousands of federal and local government eServices.
All UAE companies must have a physical business address that complies with the DED’s requirements in the emirate and municipal zoning rules. This may be a traditional office lease, a flexi‑desk or serviced office in a business centre, or a dedicated space in a free zone, but it must match the activity and licence type. Authorities commonly request a tenancy contract or equivalent proof of premises as part of the licensing file.
Typical supporting documents at this stage include identification documents for owners and authorised signatories, the signed and notarised Memorandum of Association (MOA), where applicable, trade name reservation certificate, initial approval letters, and proof of address. Because each emirate and free zone sets its own fees and processing times, you should confirm current requirements via official portals rather than relying on generic estimates.
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Step 5 – Prepare For Hiring: Labour And Immigration Compliance
Once your company is licensed and you plan to employ staff, you enter the labour and immigration phase. This area is heavily regulated and requires coordination between the Ministry of Human Resources and Emiratisation (MOHRE), immigration authorities and, in Dubai, the General Directorate of Residency and Foreign Affairs (GDRFA).
MOHRE Establishment File And Work Permits
Private‑sector employers must register an establishment file with the Ministry of Human Resources and Emiratisation (MOHRE). When this is approved, MOHRE issues an Establishment Card that links your company to its systems and is a prerequisite for work‑permit and labour‑card transactions. All establishments of the same owner or service agent must be linked to a single unified personal number in the MOHRE records.
Conditions for obtaining a MOHRE Establishment Card include having a valid trade licence and MOHRE personal identification numbers for owners, partners, service agents and authorised signatories. License holders or service agents generally must be at least 21 years old; minors can participate only through guardianship or court approval. Most applications for establishment files, new work permits, sponsorship transfers and licence updates are submitted electronically via Tasheel, the MOHRE‑linked network of online systems and service centres.
Labour Law And Employment Models
Employment in the private sector is governed by Federal Decree‑Law No. 33 of 2021 on the Regulation of Employment Relationships, as amended by Federal Decree‑Law No. 20 of 2023. This Labour Law applies to most establishments, employers and workers in the private sector, but not to federal and local government employees, armed forces, police, security personnel or domestic workers who are covered by separate regimes. It mandates non‑discrimination based on race, colour, sex, religion, national or social origin or disability. It provides for equal pay for men and women performing the same or equivalent work.
MOHRE recognises several employment models: full‑time, part‑time, temporary, flexible, remote work and job sharing. Companies must use MOHRE‑approved employment contracts, obtain work permits before employees start work, pay wages in line with regulations and renew labour cards and work permits on time. MOHRE also classifies private companies into fee categories; compliant establishments that meet Emiratisation and other criteria may benefit from reduced work‑permit fees, while those with serious violations can be placed in higher‑fee categories.
Immigration, Residence Visas And Investor Pathways
For immigration, every company employing foreign workers in Dubai must obtain a General Directorate of Residency and Foreigners Affairs (GDRFA) establishment card. This records core licence and sponsor data and is necessary for most residence visa transactions in Dubai. The published fee for issuing a Dubai GDRFA establishment card for private‑sector companies is typically AED 200 plus 5% VAT, in addition to standard Knowledge Dirham, Innovation Dirham and any service‑centre charges. In other emirates, residence visas are processed via the Federal Authority for Identity, Citizenship, Customs and Port Security (ICP) eChannels.
Investors may also pursue specific residence options. A Green Visa for investors can offer longer validity than traditional two‑year investor visas, subject to ICP approval, proof of investment and local‑authority consents. The Golden Visa programme provides long‑term (5‑ or 10‑year) residency for qualifying investors, entrepreneurs and highly skilled individuals, without the need for a UAE sponsor. Separately, employers and employees holding valid UAE residence visas may sponsor family members’ residence visas if they meet salary thresholds (for example, at least AED 4,000 per month or AED 3,000 plus accommodation), along with medical and regulatory conditions.
Step 6 – Register For Tax And AML Where Required
Beyond licensing and labour, you must consider federal tax and AML obligations. These are managed primarily by the Federal Tax Authority (FTA) and the Ministry of Economy.
Corporate Tax And Small Business Relief
The UAE corporate tax (CT) regime applies to financial years starting on or after 1 June 2023. It is governed by Federal Decree‑Law No. 47 of 2022 on the Taxation of Corporations and Businesses, as amended by Federal Decree‑Law No. 60 of 2023. For most businesses, the standard CT rates are 0% on taxable income up to AED 375,000 and 9% on taxable income above that threshold, with different rules for certain large multinational groups under the Organisation for Economic Co‑operation and Development (OECD) Pillar Two framework.
Corporate tax generally applies to juridical persons incorporated in the UAE (including mainland and free zone companies), to foreign entities and individuals with a permanent establishment or sufficient nexus in the UAE, and to individuals conducting business activities under a commercial licence once specified revenue thresholds are met. Qualifying free zone persons may benefit from a 0% CT rate on “qualifying income” if they meet all statutory conditions. Some resident taxable persons with revenue not exceeding AED 3 million in the current and all previous tax periods up to 31 December 2026 may elect Small Business Relief, treating their taxable income as zero for CT purposes, subject to FTA conditions.
VAT, Excise And EmaraTax
Value Added Tax (VAT) in the UAE is imposed at a standard rate of 5% on most taxable supplies and imports of goods and services. VAT registration is mandatory when a business’s taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to exceed that threshold within the coming 30 days; voluntary VAT registration in the UAE is permitted when annual supplies or expenses exceed AED 187,500. Excise tax applies to businesses that import, produce or stockpile specified excise goods (such as certain tobacco products, energy drinks and sweetened drinks) or operate excise warehouses.
Businesses register for corporate tax, VAT and excise via the FTA’s EmaraTax online platform, typically logging in through UAE Pass. Once registered, they must file returns and pay tax by statutory deadlines, maintain appropriate records and respond to FTA queries. Because tax rules are detailed and subject to change, investors should consult current FTA guidance for their specific circumstances.
AML Obligations For DNFBPs
Designated Non‑Financial Businesses and Professions (DNFBPs) operating in the UAE have additional regulatory duties under the AML/CFT framework. This group includes, among others, real estate brokers, dealers in precious metals and stones, auditors and trust or company service providers. Such businesses must register on the goAML system (anti‑money‑laundering reporting platform), implemented by the UAE authorities, and report suspicious transactions and activities.
Registration on goAML typically requires an authorisation letter from the firm, passport, residence visa and Emirates ID copies for the authorised person, and a copy of the commercial trade licence. The Ministry of Economy has clarified that Designated Non‑Financial Businesses and Professions (DNFBPs) that fail to register or to comply with AML/Countering the Financing of Terrorism (CFT) obligations can face administrative sanctions, including temporary suspension of operations and further penalties. As part of your initial compliance review, you should assess whether your chosen activity makes your firm a DNFBP and, if so, implement appropriate AML policies and training.
Step 7 – Use National Digital Platforms And Maintain Compliance
The UAE’s digital government infrastructure is designed to support a predominantly online lifecycle for your business, from initial registration to renewals and reporting. The National Economic Register aggregates commercial licence data from all emirate‑level licensing authorities—including the DEDs and key municipalities—allowing investors, authorities and researchers to verify trade names, licence status and registered activities in real time.
UAE Pass is the backbone of many of these services, providing secure single sign‑on to the Ministry of Economy (MOEC) and DED portals, Basher, MOHRE and Tasheel systems, ICP’s identity and residence services, and the FTA’s EmaraTax platform. ICP’s innovative applications and eChannels similarly allow digital submission and tracking of Emirates ID and residence permits (with Dubai using GDRFA‑Dubai systems and Amer centres for local residence processing). These tools make it easier to renew licences, maintain MOHRE‑compliant status, keep establishment cards current and file tax returns on time.
While setting up a company in the UAE can be remarkably rapid, especially through Basher and advanced DED systems, long‑term success depends on ongoing compliance with licensing, labour, immigration, tax and AML requirements. Careful planning of your structure, choice between mainland and free zone, economic activities, employment model and tax profile will help avoid disruptions later. Government‑linked service centres such as EGSH can help you navigate emirate‑specific procedures and point you towards the correct authorities and digital platforms at each stage.
FAQ: Setting Up A Company In The UAE
How Do I Start – Is There A Step‑by‑Step Guide To Setting Up A Company In The UAE?
In practice, the sequence is: (1) decide between mainland and free zone and confirm your regulator; (2) select economic activities from official lists and determine your legal form; (3) reserve a trade name with the DED or free zone; (4) obtain any sectoral initial approvals; (5) sign and notarise the MOA and other incorporation contracts; (6) secure a compliant business address; (7) submit your licence application through Basher, a DED portal or free zone system; and then (8) arrange MOHRE/GDRFA or ICP registrations, tax registration and AML registrations (if applicable). Each authority’s portal provides detailed checklists for its stage.
How Do I Choose Between the UAE Mainland And a Free Zone For My Business?
Consider where your customers are, how you will deliver services and whether you must contract directly with government entities. If your core market is within the UAE and you require broad onshore access, a UAE mainland company setup is often more appropriate. If you are export‑focused, need specialised infrastructure or want to leverage specific free zone incentives, free zone incorporation may suit you better. Always review the rules and limitations of your target free zone or emirate DED before deciding.
Can Foreigners Fully Own A Company In the UAE Mainland?
Yes, following amendments to the Commercial Companies Law, investors of all nationalities can now fully own most mainland legal forms—including LLCs, public and private joint stock companies and branches—provided their activities are not on lists reserved or restricted for strategic reasons. Some sectors still impose foreign‑ownership caps or additional approval requirements, so you must check the latest Ministry of Economy and DED guidance for your specific activity.
What Licences Do I Need To Start A Business In the UAE?
You will need an appropriate trade licence corresponding to your main economic activity. On the mainland, this will fall under one of six categories: commercial, industrial, professional, agricultural, tourism or occupational. Some activities require additional approvals from sector regulators (for example, health, education, and financial services). Free zones issue their own licences, often categorised similarly. Your chosen activity in the official list will indicate the correct licence type and any special conditions.
How Do I Register A Trade Name With DED In the UAE?
You apply through the relevant emirate’s DED portal or mobile app; in Dubai, you can also use the Invest in Dubai portal. First search to ensure your desired name is available and complies with naming rules (no offensive terms, no protected names without authorisation, correct use of legal form such as “LLC”). Once reserved, the trade name is held for a defined period while you complete incorporation. You can cross‑check names and existing licences via the National Economic Register.
What Is A MOHRE Establishment Card, And How Do I Obtain It?
A MOHRE Establishment Card links your company to the Ministry of Human Resources and Emiratisation systems and is mandatory if you plan to hire employees in the private sector. To obtain it, you must have a valid trade licence, register an establishment file with MOHRE, provide owners’ and authorised signatories’ details (including MOHRE personal identification numbers), and meet age and documentation requirements. Applications are usually submitted via Tasheel service centres or online systems.
What Are My Corporate Tax And VAT Obligations As A New UAE Company?
Most UAE‑incorporated companies are subject to corporate tax on net profit at 0% up to AED 375,000 and 9% above that, from financial years starting on or after 1 June 2023, unless they qualify for specific reliefs or special regimes (such as Qualifying Free Zone Persons). You must register for corporate tax through EmaraTax if you fall within the scope. VAT registration becomes mandatory when your taxable supplies and imports exceed AED 375,000 in 12 months (or are expected to do so in the next 30 days), with voluntary registration possible above AED 187,500. Excise registration is required only for businesses dealing in specified excise goods.
Do All Businesses In The UAE Need To Register On goAML?
No, only Designated Non‑Financial Businesses and Professions (DNFBPs)—including real estate brokers, dealers in precious metals and stones, auditors and company service providers—are required to register on goAML and implement AML/CFT measures. However, if your business falls into one of these categories and you fail to register or comply, you risk administrative sanctions such as suspension of activity and financial penalties. When planning how to start a business in the UAE in these sectors, build AML compliance into your initial setup.
Are There Special Rules Or Registrations For Family Businesses In The UAE?
Yes. Family‑owned enterprises can register in the federal Family Business Register maintained by the Ministry of Economy. This formal status supports succession planning, share consolidation and continuity across generations within the UAE legal framework. If you are establishing a family‑controlled structure, you may want to consider registration once your ownership arrangements and governance are clear.
Explained by
Shaimaa Sayed Qasem
Department of Dubai Economic Services at EGSH
Shaimaa Sayed Qasem is a dedicated service provider at the Department of Dubai Economic Services at EGSH, with seven years of experience delivering business services, supporting clients and ensuring compliance with regulatory requirements.
