Company Formation in UAE: Mainland LLC or Free Zone, 9% Tax

The United Arab Emirates is the most-formed jurisdiction in the Middle East and one of the top three globally for non-resident incorporation. Three structures dominate: mainland LLCs (full UAE market access, 100% foreign ownership now permitted in most sectors), free zone companies (50+ free zones, 0% corporate tax for Qualifying Free Zone Persons, no customs duty), and offshore companies (RAK ICC, JAFZA Offshore, used for holdings and international structuring, no UAE operations). The mainland LLC is the limited liability company (LLC) of the Commercial Companies Law; its free zone equivalent is the FZ-LLC. Corporate tax is 9% on profits above AED 375,000, with 0% below. Personal income tax is zero. The Small Business Relief regime (0% corporate tax on profits up to AED 3 million until end-2026) covers most early-stage businesses entirely.

We form UAE companies across all three structures: trade-name reservation, licence application, MoA drafting, Ejari or free-zone lease, FTA registration, residency-visa support, and bank account introduction. Fixed price, dedicated manager, all government and licensing fees included.

Quick facts	Value
Corporate Tax (mainland & non-QFZP free zone)	9% on profits above AED 375,000; 0% below
Local company form	LLC (limited liability company; FZ-LLC in free zones), equivalent of an LLC / private limited company
Free Zone QFZP rate	0% on qualifying income (substance + qualifying activities required)
Small Business Relief	0% CT until 31 Dec 2026 if revenue ≤ AED 3,000,000/year
VAT	5% (registration mandatory above AED 375,000 turnover)
Personal income tax	0%
Withholding tax (dividends, interest, royalties)	0%
Foreign ownership (mainland)	100% in most sectors (since 2021 reforms)
Foreign ownership (free zone)	100% — no local sponsor needed
Standard formation time	5–7 days (free zone), 2–4 weeks (mainland LLC)
Government fees	Included in our packages
Language of filings	Arabic + English
Currency	UAE Dirham (AED)

Why Form a Company in the UAE

Three things drove the UAE to its current scale as a formation hub: tax, market access, and reputation.

Tax remains the headline. Corporate tax was introduced only in June 2023 and is still capped at 9%, with 0% below AED 375,000 in profit. Small Business Relief takes that further — companies earning up to AED 3 million per year pay 0% corporate tax through to the end of 2026. Free zone companies that qualify as QFZPs pay 0% on qualifying income indefinitely (subject to economic substance). There is no personal income tax, no capital gains tax for individuals, no withholding tax on outbound dividends, interest, or royalties. The UAE has more than 140 double-tax treaties.

Market access has changed. The 2021 amendments to the Commercial Companies Law removed the historic requirement for a UAE national to hold 51% of a mainland LLC. Mainland companies in most sectors can now be 100% foreign-owned. This collapsed the historic case for free zones and reopened mainland as a serious option for any business that wants to trade directly with UAE customers.

Reputation as a regional hub. Dubai and Abu Dhabi sit at the centre of every Gulf, Middle East, North Africa, and South Asia trade flow. A UAE company is a recognised counterparty in every market in those regions. Access to Gulf banking, regional logistics infrastructure, and one of the world's busiest air-cargo hubs makes the UAE a natural base for any business operating across MENA, India, and East Africa.

The trade-offs in 2026: the new corporate tax requires real compliance work; economic substance requirements have tightened to qualify for the 0% free-zone rate; the Federal Tax Authority is enforcing the 3-month registration window after licence issuance with penalties; and the new mandatory e-invoicing system rolls out through 2026. None of this is fatal — it's just the price of the UAE growing into a mature corporate jurisdiction.

Company Types Available in the UAE

UAE corporate law gives you four practical structures. Choosing between them is the most important decision in UAE formation.

Mainland LLC (Limited Liability Company)

Licensed by the Department of Economic Development (DED) of an individual emirate (Dubai, Abu Dhabi, Sharjah, etc.). Permits trading throughout the UAE without restriction, including with government, freely with mainland and free-zone counterparties, and across all economic activities except those reserved for nationals (security, certain media, etc.). Since 2021, 100% foreign ownership is permitted in over 1,000 commercial activities. Subject to the 9% corporate tax above AED 375,000.

What does LLC mean?

LLC stands for limited liability company, in Arabic sharikat dhat mas'uliyya mahduda, the form governed by Federal Decree-Law No. 32 of 2021 on Commercial Companies. Liability is limited to the capital contributed, one shareholder is enough, and the licence comes from the emirate's Department of Economic Development. Trading, contracting and services businesses selling into the UAE mainland use it.

Free Zone Company (FZ-LLC or FZ Establishment)

Licensed by one of more than 50 free zone authorities — DMCC, IFZA, Meydan, RAKEZ, JAFZA, ADGM, DIFC, DSO, and many others. Each free zone has its own licensing rules, capital requirements, office options, and visa allocations. 100% foreign ownership is universal across free zones. 0% corporate tax is available for entities qualifying as Qualifying Free Zone Persons (QFZPs) — requires demonstrable economic substance in the free zone, qualifying-income-only revenue (transactions with other free zone entities or specific qualifying activities like manufacturing, logistics, holding, treasury), and no significant mainland UAE business. Restrictions on direct trading with the UAE mainland: free zone companies cannot generally invoice mainland customers directly without a mainland distributor or branch.

Offshore Company (RAK ICC, JAFZA Offshore)

A non-trading vehicle for holding international assets, intellectual property, real estate, or as a personal-asset structure. Cannot conduct business in the UAE. No UAE residency visa attached. Similar role to BVI BCs or Cayman exempted companies — favoured for international structuring and holding purposes. Light reporting, full confidentiality of beneficial owner (kept on register at the offshore authority, not public).

Branch of a Foreign Company

A foreign parent's UAE branch — mainland or free zone version. Not a separate legal entity. The parent's balance sheet faces UAE counterparties. Used when the foreign group needs UAE invoicing or local presence without a separate sub.

Form	Foreign ownership	Corporate tax	UAE market access	Visa eligibility	Common use
Mainland LLC	100% (most sectors)	9% above AED 375k	Full	Yes	Trading, services, retail, contracting
Free Zone (FZ-LLC)	100%	0% if QFZP, else 9%	Limited (free zone or international)	Yes	Trading, holding, services, manufacturing
Offshore	100%	n/a (no UAE income)	None	No	Holdings, IP, asset structuring
Branch	100% (parent's)	9% on UAE income	Per parent licence	Per parent	Foreign group presence

Free zone or mainland: which UAE company suits a non-resident?

Both allow 100% foreign ownership, so customers and visas decide. A free zone company suits a non-resident selling abroad: licence in 5 to 7 working days, flexi-desk lease, a visa quota tied to office size, and 0% tax as a QFZP. A mainland LLC suits trading company formation for UAE customers; industrial company formation usually goes to JAFZA or RAKEZ.

Benefits and drawbacks of each UAE route

Mainland LLC: unlimited UAE customers, government tenders and a visa quota that grows with office space. Against that: 9% corporate tax above AED 375,000, a mandatory Ejari lease and DED renewals with Chamber of Commerce membership. Free zone company: 0% as a QFZP, flexi-desk leases and one-stop licensing. Against that: no direct mainland invoicing, 5% customs duty when goods leave the zone for the mainland, and audited accounts demanded by most zones at renewal. Offshore company at RAK ICC or JAFZA Offshore: the lightest upkeep, and a RAK ICC company can hold Dubai property in designated areas under its arrangement with the Dubai Land Department. Against that: no visa, no UAE trading and the hardest bank onboarding of the three.

Which licence type do I need: commercial, professional or industrial?

Every UAE company is licensed for a defined activity list, and the licence type follows the activity. A commercial licence covers trading, including general trading and e-commerce. A professional licence covers services and consultancy, which is why professional company formation in the UAE is the route for IT, marketing, engineering and advisory firms. An industrial licence covers manufacturing and needs an industrial facility. Free zones add holding, freelance and media permits. We match your activity codes to the licence type before filing, because changing the type later means a new application.

Which business activities are restricted or need extra approval in the UAE?

Seven strategic sectors sit outside the 100% foreign ownership rule under Cabinet Decision No. 55 of 2021: security and defence, banking and money exchange with finance companies and insurance, currency printing, telecommunications, Hajj and Umrah services, Quran memorisation centres and fisheries services. The relevant federal regulator sets the ownership level, and an Emirati partner is usually required.

A second layer is regulatory approval before the licence issues. Financial services go through the Central Bank, the Securities and Commodities Authority, the DFSA in DIFC or the FSRA in ADGM. Virtual asset businesses in Dubai need a VARA licence. Healthcare needs DHA or DoH approval, real estate brokerage needs RERA, schools need KHDA and legal consultancy needs the Dubai Legal Affairs Department. Every licence lists its activity codes, and trading outside them is a violation at renewal.

Step-by-Step Formation Process

Timing varies materially between mainland LLCs and free zone companies. The free-zone process is faster because everything happens within one authority. Mainland LLCs require coordination between the DED, the Federal Tax Authority, GDRFA (immigration), and Ministry of Labour. As your formation agent in the UAE, we file every step below on your behalf. The registry differs by route. The emirate's Department of Economic Development keeps the mainland commercial register, and each free zone authority keeps its own company register. The Ministry of Economy's National Economic Register lists every licensed company nationwide.

Free Zone Company

Free zone selection. We recommend the right free zone based on your activity, visa needs, office requirements, and budget. DMCC for commodities, services, and crypto; IFZA for general trading and consultancy at lower cost; Meydan for media and creative; ADGM and DIFC for financial services; JAFZA for industrial and logistics. Freezone company formation, as many clients write it, starts with this choice.

Trade name reservation and initial approval. Submitted to the chosen free zone authority. Approval typically within 1 to 3 working days.

Documentation pack. Memorandum of Association, shareholder and director KYC, business plan summary (some free zones require this for regulated activities), lease agreement (most free zones offer flexi-desk and shared office options that satisfy the lease requirement at low cost).

Licence issuance. Trade licence and Establishment Card issued. Most free zones complete this 5 to 7 working days from a clean filing.

Federal Tax Authority registration. Mandatory within 3 months of licence issuance. We file at incorporation to avoid late penalties.

Visa applications and bank account. Investor visa and any employee visas processed in parallel. Bank account opening starts after Establishment Card issuance and typically takes 2 to 6 weeks.

Mainland LLC

Activity and trade name selection. DED approval of business activity and name (1 to 3 working days).

Memorandum of Association. Drafted and notarised at a UAE notary public. For 100%-foreign-owned mainland LLCs no local sponsor is required for the activities listed in the 2021 reforms.

Ejari registration. Mandatory commercial lease registered with the Real Estate Regulatory Agency. We coordinate with serviced-office providers for cf24 clients who do not need a dedicated office.

Trade licence. Issued by the DED. Typical timing 2 to 4 weeks from a complete file, depending on the activity.

FTA, Chamber of Commerce, and Ministry of Labour. Registrations completed in parallel after licence issuance.

Visa, Emirates ID, and bank. Investor visa, medical, and Emirates ID processed sequentially. Bank account opening begins after Emirates ID issuance for the resident director and takes 2 to 6 weeks.

End-to-end timeline from KYC clearance to operating company with bank account: 2 to 4 weeks for free zone, 5 to 9 weeks for mainland LLC.

How to open a company in the UAE in 2026: is 24 hours realistic?

Partly. IFZA, Meydan, RAKEZ and SHAMS can issue a trade licence within one working day when the founder is an individual, the activity is unregulated and the KYC pack is complete. Three things never fit in 24 hours: the Federal Tax Authority registration, the investor visa with Emirates ID, and the bank account, which takes 2 to 6 weeks. As company formation consultants in the UAE we sequence all four so the licence date is not the only date you plan around.

Required Documents

For each shareholder, director, and authorised signatory:

Passport (clear scan of all relevant pages, including any prior UAE entry stamps)
Most-recent UAE entry stamp or visa page (where applicable)
Recent CV (required by most free zones and by UAE banks)
Proof of residential address dated within three months
Bank reference letter (some free zones and most banks require it)
For corporate shareholders: certificate of incorporation, MoA, register of directors, UBO declaration, bank reference, all attested by the UAE embassy in the country of issuance and Ministry of Foreign Affairs

The MoA must be notarised at a UAE public notary (we handle this remotely under power of attorney for non-resident shareholders).

What are the requirements to set up a company in the UAE?

A licensed activity, a trade name approved by the DED or the free zone authority, and at least one shareholder and one manager of any nationality. Then a registered lease (Ejari on the mainland, a flexi-desk in a free zone) and a notarised Memorandum of Association. Add passport, proof of address and CV per person, then FTA registration within 3 months of the licence.

Costs and Timeline

UAE formation costs vary widely by free zone, by activity, and by whether you need investor visas, office space, and customs codes. The structure is genuinely competitive: IFZA and RAKEZ at the lower end, DMCC and ADGM at the premium end, DIFC and ADGM higher again for financial-services-licensed structures.

Our packages cover full incorporation, all government and licensing fees, MoA notarisation, registered office or flexi-desk for year one, FTA registration, beneficial-owner registration, and a UAE bank account introduction. Investor-visa packages and Emirates ID processing are quoted separately by visa count. Contact us for a fixed-price quote matching your specific structure.

If a low-cost base inside the EU is the alternative on your list, our guide to the cheapest countries to form a company in Europe ranks those options.

Typical timelines:

Structure	Day 1	Day 7	Week 2	Week 4	Week 6–9
Free zone (e.g. IFZA)	KYC submitted	Licence issued	Visa stamped	Bank account opened	Operations begin
Mainland LLC	KYC submitted	DED initial approval	MoA notarised	Trade licence issued	Visa, Emirates ID, bank account

Tax Overview for UAE Companies

The UAE corporate tax landscape changed materially in June 2023 and is still being phased in.

Corporate tax: 9% (rate applicable in 2026) on taxable profits above AED 375,000 per annum. 0% below that threshold. There is no progressive scale: it is a flat 9% on the slice above AED 375,000.

Small Business Relief: 0% CT for any UAE resident person (including most companies) with revenue at or below AED 3,000,000 in the relevant tax period. Available for tax periods ending on or before 31 December 2026. Once you exceed AED 3 million in revenue in any year, you lose Small Business Relief permanently — even if revenue subsequently drops back below the threshold.

Free Zone QFZP regime: 0% CT on Qualifying Income. To qualify, a free zone entity must (a) maintain adequate substance in the UAE — real office, employees, decision-making in the free zone, (b) earn only Qualifying Income — defined by Cabinet Decisions, broadly transactions with other free zone persons or specific qualifying activities like manufacturing, logistics, distribution, holding, treasury, fund management, headquarters services, (c) not generate material non-qualifying income from mainland UAE persons (subject to a de minimis rule). Failure on any test moves the entity to the standard 9% regime for the entire tax period.

VAT: 5% standard rate. Mandatory VAT registration above AED 375,000 in annual taxable supplies. Voluntary registration available above AED 187,500. Zero-rated for exports outside the GCC and for international transport.

No personal income tax. No capital gains tax for individuals. No withholding tax on outbound dividends, interest, or royalties to non-residents, regardless of treaty status. No exchange controls.

Mandatory e-invoicing (the Electronic Invoicing System — EIS) is being rolled out through 2026 for B2B and B2G transactions. We include EIS setup in our accounting packages.

The UAE has more than 140 double-tax treaties, including with most EU member states, the UK, US (limited treaty), India, China, all Gulf states, most of Africa, and most of Latin America.

Banking for UAE Companies

UAE business banking has both the strongest traditional Gulf banks and a growing digital-bank tier. The market is split into three.

Traditional UAE banks include Emirates NBD, First Abu Dhabi Bank (FAB), Abu Dhabi Commercial Bank (ADCB), Mashreq, Dubai Islamic Bank, and Commercial Bank of Dubai. These remain the standard choice for established businesses needing trade finance, letters of credit, working-capital facilities, or escrow services. They typically require an Ejari or free-zone lease, full physical KYC of the resident shareholder/director, an Emirates ID for the principal signatory, and minimum-balance commitments — typically AED 50,000 to AED 200,000 depending on the bank and account type. Account opening takes 2 to 6 weeks.

Wio Business is the leading UAE-based digital bank for new companies. Founded in 2022, supported by ADQ and ADIB. Fully app-based, fast onboarding (often 5 to 10 days), zero-balance accounts available, integrated invoicing and accounting tools. Wio is the right first introduction for most cf24 clients with a free-zone setup and a smaller initial banking footprint.

International EMIs — Wise Business and Karbon — work for some UAE-incorporated companies depending on activity and beneficial-owner profile. Useful as a secondary multi-currency account paired with a UAE primary bank, particularly for cross-border invoicing and FX-sensitive payment flows.

For mainland LLCs needing trade finance or LCs, we lead with FAB or Emirates NBD. For free-zone structures focused on services, SaaS, consulting, or e-commerce, Wio or Mashreq's Neo Biz offering are typically the fastest path to operational banking.

Nominee Director Services in the UAE

The UAE permits nominee directors and shareholders, particularly in offshore structures (RAK ICC and JAFZA Offshore), where confidentiality of the beneficial owner is preserved on the offshore authority's private register. Mainland and free zone structures also allow nominees but with more public-record exposure.

For free zone and mainland UAE companies, nominee arrangements are subject to the UAE's beneficial owner regulations: every UAE company must declare its ultimate beneficial owners to the licensing authority, who maintain a private register. Public commercial registers do not generally show beneficial ownership in the UAE — only the registered shareholders. A nominee shareholder therefore provides operational privacy at the public-register level but does not exempt the structure from internal beneficial-owner disclosure to the authority and the UAE Ministry of Economy.

Nominee structures must be properly documented with declarations of trust, indemnity agreements, and clear principal-agent arrangements. The UAE legal framework for nominees is well-established and routinely used in legitimate international structuring. We provide nominee director and shareholder services where the structure is KYC-compliant, properly disclosed to UAE authorities, and used for legitimate confidentiality or governance purposes — not for evading sanctions, tax obligations, or beneficial-ownership disclosure to regulators.

Compliance and Reporting Obligations

A UAE company answers to two bodies: the licensing authority (DED or free zone) for the licence and beneficial owner register, and the Federal Tax Authority for corporate tax and VAT. The calendar below applies to a standard free zone or mainland company.

Obligation	Deadline or rule
Corporate tax registration	Within 3 months of licence issuance, with administrative penalties for late registration
Corporate tax return and payment	Within 9 months after the end of the tax period
Audited financial statements	Required for every Qualifying Free Zone Person and for taxable persons with revenue above AED 50 million; many free zones require an audit for licence renewal regardless
VAT return	Quarterly for most registrants, by the 28th of the month after the period
Licence renewal	Annually, with a valid Ejari or free zone lease and an updated Establishment Card
Beneficial owner register	Filed with the licensing authority at formation; changes notified within 15 days
Economic Substance Regulations	Abolished for financial years ending after 31 December 2022; substance is now tested under the corporate tax QFZP rules
Transfer pricing	Local file and master file above the Ministry of Finance revenue thresholds; related-party disclosure with the tax return
Payroll	Mainland employers pay wages through the Wage Protection System (WPS)

Missing the licence renewal blocks visa renewals and freezes the bank account; missing the corporate tax deadlines triggers FTA penalties that accrue monthly. Our accounting packages diarise every item above alongside the e-invoicing rollout.

Forming a UAE Company as a Non-Resident

A non-resident can own 100% of a UAE company and act as its sole director, in a free zone or, since the 2021 reforms, in a mainland LLC. No UAE residency visa is required to hold shares or a directorship, and no local sponsor or nominee is needed. Offshore companies at RAK ICC or JAFZA Offshore are non-resident vehicles by design.

A non-resident supplies a passport scan, a recent CV, proof of address dated within three months and, for most free zones and banks, a bank reference letter. Corporate shareholders provide incorporation documents attested by the UAE embassy in the country of issue and by the Ministry of Foreign Affairs. The Memorandum of Association is notarised under power of attorney, so a free zone licence can be issued without any visit.

Banking is where residency starts to matter. Most traditional banks want a signatory with a UAE residency visa and Emirates ID plus a branch visit, and non-resident-controlled accounts take 3 to 8 weeks. Wio Business and Mashreq Neo Biz are the most non-resident-friendly options for free zone companies, which is why many non-resident founders add an investor visa after licensing.

The UAE is not a party to the Hague Apostille Convention, so an apostille alone is never enough. Corporate documents from India, Korea, Kenya, Nigeria or South Africa follow one chain: notary, then the home foreign ministry, then the UAE embassy in that country, then the Ministry of Foreign Affairs in the UAE. Individual founders from those countries usually need only a passport scan and proof of address, which is why company formation in the UAE for African and Asian founders moves faster than the corporate-shareholder route.

Owning a UAE company makes the founder eligible to apply for an investor or partner residence visa, issued through the licensing authority and the immigration authority for two years and tied to the licence and the lease. It is an application with a medical test and Emirates ID, not an automatic right, and the visa quota depends on the office size. The 10-year Golden Visa is a separate track with its own investment thresholds set by the federal ICP. We are formation agents, not immigration advisers, though we file investor visas as part of our packages.

Frequently Asked Questions

What's the difference between mainland and free zone in the UAE?

A mainland LLC is licensed by the Department of Economic Development of an emirate and can trade freely throughout the UAE, including directly with UAE customers, government, and across all sectors. A free zone company is licensed by one of 50+ free zone authorities and benefits from 100% foreign ownership and potential 0% corporate tax (for QFZPs), but cannot generally invoice mainland UAE customers directly without a distributor. Both allow 100% foreign ownership since the 2021 reforms.

How long does it take to form a UAE company?

A free zone company is typically licensed within 5 to 7 working days of a clean filing, with the bank account opening adding another 2 to 6 weeks. A mainland LLC takes 2 to 4 weeks for the trade licence and another 4 to 6 weeks for visa stamping, Emirates ID issuance, and bank account opening. End-to-end, expect 2 to 4 weeks for free zone and 5 to 9 weeks for a mainland LLC.

What is the corporate tax rate in the UAE?

The corporate tax rate is 9% on taxable profits above AED 375,000 per year. Profits below AED 375,000 are taxed at 0%. Small Business Relief provides 0% corporate tax for companies with revenue at or below AED 3 million per year, available through tax periods ending on or before 31 December 2026. Free zone companies qualifying as Qualifying Free Zone Persons (QFZPs) pay 0% on Qualifying Income, subject to economic substance and qualifying-activity tests.

Can a non-resident own 100% of a UAE company?

Yes. Free zone companies have always permitted 100% foreign ownership. Since the 2021 reforms to the Commercial Companies Law, mainland LLCs in over 1,000 commercial activities also permit 100% foreign ownership — no UAE national sponsor required. Some strategic activities (security, certain media, oil and gas) remain restricted.

Do I need a UAE residency visa to form a company?

No. A non-resident can be a shareholder and director of a UAE company without holding a UAE residency visa. However, opening a corporate bank account at most UAE banks is significantly easier when at least one shareholder or authorised signatory holds a UAE residency visa with an Emirates ID. We arrange investor visas where needed — typically 2 to 4 weeks after trade licence issuance.

Can I open a UAE business bank account from abroad?

Some UAE banks open accounts for fully non-resident-controlled companies, but most require at least one signatory with UAE residency. Wio Business and Mashreq Neo Biz are the most non-resident-friendly options for free-zone structures. Traditional banks (FAB, Emirates NBD, ADCB) typically require physical presence of the principal signatory at a UAE branch and an Emirates ID for the account opening. End-to-end timing for non-resident-controlled accounts ranges from 3 to 8 weeks.

What is QFZP status and how do I qualify?

A Qualifying Free Zone Person is a free zone entity that maintains the 0% corporate tax rate on Qualifying Income. Three tests must be met: adequate economic substance in the UAE (real office, employees, decision-making in the free zone), Qualifying Income only — defined by Cabinet Decisions and limited to transactions with other free zone persons or specified qualifying activities, and no significant non-qualifying income from UAE mainland sources beyond a de minimis threshold. Failure on any test moves the entity to the 9% standard rate for the whole tax period.

Get Started — Form Your UAE Company

A fixed-price quote in 60 seconds. Free zone licence in a week, mainland LLC in 3 to 4 weeks. Bank account introduction included. Investor-visa packages quoted by visa count.

Call +48 2222 5 2222 or email info@companyformation24.com to start.

If you need a UAE company faster than a fresh formation timeline, our sister brand offers ready-made UAE companies — already licensed, transferable in days.

Content prepared by Aleksandra Kowalska, Corporate Client Service. Approved by Tomasz Bielski, Managing Director.

Company Formation in United Arab Emirates