Company formation in the UAE

A UAE company can be registered in three legal forms — a free zone company from about AED 5,750, a mainland LLC from roughly AED 15,000 plus office, or an offshore vehicle from about AED 8,000 — and the right one is settled by a single question: where do your customers sit? Free zones suit international services and holdings, with 0% corporate tax on qualifying income; mainland is mandatory for onshore trade and government tenders; offshore is a non-resident holding wrapper. We run our own entity under exactly these rules, so the quote you see is the invoice we ourselves pay.

The three routes

A UAE company comes in three legal shapes, and choosing between them is less about prestige than about one fact: where your customers pay you from. A free zone company (FZCO/FZE) is the default for international services, e-commerce, consulting and holding structures — 100% foreign ownership, fast setup, and 0% corporate tax on qualifying income while you hold QFZP status. Entry runs from about AED 5,750 in Sharjah and Ajman budget zones to AED 21,000+ in DMCC; our Free Zone Index lines up all 45 side by side.

A mainland LLC, licensed by an emirate's Department of Economy, is the route when your customers are inside the UAE — retail, government tenders, clinics, restaurants, on-site services. Since the 2021 reform most commercial and industrial activities allow 100% foreign ownership; the "local sponsor holds 51%" era is over for the bulk of them.

An offshore company (RAK ICC, JAFZA Offshore) is a non-resident vehicle for holding assets and international structuring — no visas, no UAE office, no local trade, but clean common-law-style governance at a fraction of a licence's cost. Many founders end up with two entities: an offshore holding on top of an operating free zone company.

Match the route to your customers

The honest test is a single question, and it beats every brochure: who invoices whom, and where do they sit? If your revenue comes from clients outside the UAE — or from other UAE companies that can receive an international invoice — a free zone is almost always cheaper and lighter. If you sell to UAE consumers, hold retail premises, or bid for government work, the mainland is not the expensive option, it is the only correct one.

A free zone company can still touch the UAE market — through a mainland distributor, or within the de-minimis limits below — but building an onshore business on free-zone workarounds usually spends the "saved" money on agents and NOCs within a year. When in doubt, read mainland vs free zone before you commit.

The four blocks of every setup

Strip the marketing away and every UAE setup is four line items. The licence itself: from AED 5,750 in budget zones to AED 21,000+ in premium ones. The establishment card (immigration file): around AED 2,000, and mandatory before you can apply for a single visa. Each residence visa: roughly AED 5,500 all-in, including entry permit, medical, Emirates ID and status change. Office: zero in remote-friendly free zones, from about AED 15,000 a year for a small mainland Ejari lease.

So a realistic one-founder, one-visa free zone company floors at roughly AED 13,000–20,000 in the first year; a mainland LLC with a small office lands around AED 25,000–40,000. Model your own combination in the cost breakdown rather than trusting a single "from AED 999" headline — that number is arithmetic with the lines removed.

How we work

You get an itemised quote before any commitment — licence, establishment card, each visa, each government fee, line by line, in AED. If one zone pays us a larger referral commission than another, that fact never reaches the recommendation; we pick from the data in the Index and we show you the same data. We run our own entity under exactly these rules, so the invoice we quote is the invoice we ourselves pay.

Where setups quietly go wrong: activities on the licence that don't match the invoices you'll issue (banking pain later), visa quotas bought too small (upgrade fees), and "free" packages whose renewal doubles in year two. All three are visible in advance when the numbers are on the table — which is the whole point of putting them there.

Tax after you incorporate

The UAE has levied a 9% federal corporate tax since 2023, with 0% on the first AED 375,000 of taxable profit. Free zone companies can keep a 0% rate on qualifying income under the QFZP regime, provided they meet substance requirements and stay within the de-minimis limit for non-qualifying revenue — the lower of AED 5 million or 5% of total revenue. Small Business Relief can bring the effective rate to zero for companies with revenue up to AED 3 million, for tax periods ending on or before 31 December 2026. We model your case on the corporate tax pages before you pick a structure.

VAT is separate: registration becomes mandatory once taxable supplies pass AED 375,000 a year, and is voluntary from AED 187,500, at a standard 5% rate. E-invoicing is being introduced in phases from July 2026 — we set your bookkeeping up to be ready rather than retrofitting it later.

Visas, timelines and banking

With the establishment card issued, each shareholder or employee visa follows the same path: entry permit, status change, medical test, Emirates ID and residence stamp — roughly a week to ten days per person once the file is open. Free zone quotas run from 0 to 6 visas on entry tiers; mainland quotas follow office size. Investors who buy AED 2 million of property can pursue a 10-year Golden Visa in parallel.

Licence timelines are honest and short: a free zone licence issues in 3–10 business days, mainland in 2–3 weeks, offshore in about a week. The slowest part is almost always the bank account — plan 2–6 weeks depending on your profile and activity, and read opening a UAE bank account before you promise a supplier a payment date.

Entry points

Straight answers