Doing Business in Dubai Free Zones 

Company Formation in UAE Free Zones – Your Quick Guide

Each free zone operates by its own set of procedures and regulations. Companies registered under a free zone are not allowed to do business on the mainland. The companies are only allowed to cater to customers within the free zone itself or carry out imports or exports. However, certain free zones such as Dubai Multi Commodities Centre (DMCC) allow companies to operate on the mainland through a Dual License. The mainland operations under the Dual License will be subject to DED’s conditions and regulations.

Despite some operational limitations, business setup in Dubai free zones remains a preferred option for foreign investors seeking regulatory ease and 100% ownership.

Looking for more flexibility in trade and office location? Learn about Dubai mainland business setup options ideal for local market access.

Business Setup in UAE Free Zones

Beyond Dubai, the UAE offers more than 45 free zones across all emirates, each with its own benefits for company formation. From Sharjah’s SAIF Zone and Abu Dhabi’s ADGM to Ras Al Khaimah Economic Zone (RAKEZ) and Ajman Free Zone, UAE free zones provide cost-effective, flexible options for startups, SMEs, and international investors. JBC guides you through hassle-free business setup in UAE free zones — helping you choose the best zone matching your industry, budget, and future plans.

From Dubai to the wider UAE free zones, JBC helps you choose the right jurisdiction, register your company, handle compliance, and grow your business with ease. Investors benefit from our in-depth knowledge of UAE-wide free zone rules, whether you choose Dubai, Sharjah, Abu Dhabi, or Ras Al Khaimah. JBC has helped numerous clients with company formation in UAE free zones, guiding them on zone selection, licensing, and compliance.

Industry-Specific Free Zones for Company Formation in Dubai

Most free zones in Dubai are built around a business activity with facilities and licenses to promote the specific industry. For instance, Dubai Multi Commodities Centre (DMCC) is a cluster of companies trading in commodities such as coffee, gold, silver etc. Dubai Silicon Oasis’s (DSO) primary objective is to encourage investments in the tech industry. JAFZA caters to industrial, logistics and manufacturing companies. Similarly, Dubai CommerCity is the first e-commerce free zone in the UAE. Dubai International Financial Centre (DIFC), as the name suggests, focuses on the financial services industry such as banking, insurance, Fintech etc.

Then there is the free zone for media companies called Dubai Media City; a free zone for designers and designing companies called Dubai Design District (D3); and a free zone for tech companies called Dubai Internet City. Dubai Healthcare City issues licenses for healthcare-related businesses, clinics, and doctors. Automotive businesses are supported by Dubai Cars and Automotive Zone (DUCAMZ). However, apart from serving a central focus industry, these free zones also provide licenses for a wide range of other sectors as well. International Free Zone Authority (IFZA) is a general-purpose free zone in Dubai.

Investors should align their activities with the industry focus of each zone to ensure smooth licensing. The choice of the zone can significantly impact the success of your free zone company setup in Dubai.

Understanding the variety of options available is crucial for a successful Dubai free zone company formation.

Types of Company Structures in Dubai Free Zones 

There are more than 30 actively operating free zones in Dubai in which investors can register their companies. Each free zone is regulated by an independent free zone authority that issues the licenses and implements regulations for the companies.

Choosing the right legal structure is a critical part of company formation in Dubai free zones and business setup in UAE free zones, as each free zone authority has different guidelines. The free zones mainly permit the following types of legal structures depending on the number of shareholders:

1. Free Zone Establishment

A Free Zone Establishment (FZE) is a type of legal structure with only a single individual shareholder.

2. Free Zone Company

A Free Zone Company (FZCO) is a type of company structure that can be established with two or more shareholders.

3. Branches of Existing Companies

A company operating in a foreign country or a UAE-based company can establish its branches in a free zone. The branch company should carry out activities that are similar to the parent entity.

Major Business Licenses in Dubai Free Zones 

Obtaining a relevant business license is the cornerstone of business setup in Dubai free zones or company formation in UAE free zones. The following are some of the most popular trade licenses provided by Dubai free zones:

1. E-commerce License
2. General Trading License
3. Trading / Commercial License
4. Service License
5. Industrial License

The list is not an exhaustive list of business licenses issued by Dubai free zones. Many free zones provide certain exclusive licenses based on the activities. Consult with business setup consultants in Dubai who can provide the entrepreneurs with a list of licenses issued by each free zone authority.

Getting the right license is essential for any business setup in Dubai free zones. The assistance of free zone business consultants in Dubai can simplify this process.

Process of Dubai Free Zone Company Formation  

An entity can be incorporated into Dubai Free Zone through a straightforward set of rules. Setting up a company in Dubai free zones involves less stringent rules and the license can be obtained in a few weeks. The following steps are necessary to obtain a Dubai free zone company license:

1. Step 1 — Confirm your primary business activity (why this matters)
   Your chosen activity determines which free zone accepts you and which licence you need. Start by listing the exact activities (trade, services, e-commerce, manufacturing, finance) so you can match them to the correct zone.
2. Step 2 — Choose the best free zone for your activity
   Compare industry focus, licence types, office options and mainland access (some zones offer dual licences). For example, pick a trading-focused zone for commodity trade or a tech hub for software companies to reduce approvals and speed licensing.
3. Step 3 — Decide legal form & shareholding (FZE / FZCO / Branch)
   Select a legal structure that fits ownership and governance needs: single-owner FZE, multi-shareholder FZCO or a branch of a foreign/UAE company. This decision affects document requirements, bank onboarding and visa quotas.
4. Step 4 — Reserve trade name & obtain preliminary approvals
   Apply for name reservation and initial clearance with the free zone authority. Most zones will then issue an initial approval or no-objection certificate allowing you to proceed to documentation and lease selection.
5. Step 5 — Choose office space (flexi-desk, private office, warehouse)
   Select the minimum office solution required by the zone for your licence (flexi-desk for small consultancies, physical unit for trading/manufacturing). Securing the right office early prevents licence delays.
6. Step 6 — Prepare and submit incorporation documents
   Common documents include passport copies of shareholders/directors, business plan or activity statement, proof of address, nomination of manager/director, and signed application forms. The free zone will review and request any additional certified or notarized papers.
7. Step 7 — Pay fees & obtain your trade licence
   Once documents and payments are cleared, the free zone issues the licence. Licence issuance time ranges from a few days to a few weeks depending on the zone and the completeness of documentation.
8. Step 8 — Post-licence steps: visas, bank account, compliance
   After licence issuance, apply for employee/resident visas, open a corporate bank account and register for VAT or ESR if required. Maintain UBO records and annual compliance to keep your free zone company formation in dubai free zones valid and tax-efficient.

Although the steps appear simple, each Dubai free zone company formation requires careful planning, especially in choosing the right business activity, name reservation, and legal approvals. Many entrepreneurs choose free zone company setup in Dubai for its speed and flexibility.

Ready to start your business setup in dubai free zones? Get a free consultation, speak with a specialist today.

Value Added Tax in Dubai Free Zones 

Though the UAE is a no-tax jurisdiction, the government levies Value Added Tax (VAT) on taxable goods and services at a nominal rate of 5%. The Federal Tax Authority (FTA) has classified certain free zones as Designated Zones that are subjected to special VAT rules. The FTA has published a list of Designated Zones and the free zones outside the list are considered non-designated Zones.

The transaction of goods within the Designated Zones is out of the scope of VAT. Similarly, the transaction of goods from one Designated Zone to another Designated Zone is also out of the scope of VAT. However, goods transacted to a Designated Zone from a non-Designated Zone are subject to VAT. Also, goods transacted to a non-Designated Zone from a Designated Zone are subject to VAT. The Designated Zone status is an important parameter when selecting a free zone for forming a company in Dubai.

VAT considerations should not be overlooked when planning free zone company formation in Dubai, especially when trading goods across designated and non-designated zones.

With decades of experience, JBC stands out among free zone business consultants in Dubai. Whether you’re a startup or an international brand, our team can help with business setup in Dubai free zones from start to finish.