Key Highlights:

• 100% foreign ownership and 0% corporate tax on qualifying income make Dubai free zones globally competitive.
• Setup costs range from AED 12,900 to 50,000 with a 3-7 day license issuance for most zones.
• New 2026 Mainland Operating Permit (AED 5,000/6 months) unlocks direct Dubai market access for free zone companies.
• Over 210,000 free zone licenses are now active across the UAE, with Dubai holding a 53% share (112,000+ licenses). 

Dubai hosts over 40 operational free zones, housing more than 210,000 active businesses collectively. Dubai alone accounts for 53% of UAE free zone licenses, with over 112,000 companies. JAFZA supports 11,000+ companies from 100+ countries, while DMCC contributes 15% of all FDI in Dubai, up from 11% in 2023.

Here’s what makes 2026 particularly exciting: The October 2025 launch of the Free Zone Mainland Operating Permit (Executive Council Resolution 11 of 2025) changed everything. You can now maintain your free zone company’s tax advantages while trading directly with Dubai’s mainland market for just AED 5,000 every six months. No expensive distributors. No separate mainland entity.​

This guide walks you through everything about setting up a free zone company in Dubai in 2026. Whether you’re a solopreneur launching your first venture or an established business expanding regionally, you’ll find practical, verified information for confident decisions.

Disclaimer: This guide provides general information and should not be considered legal, financial, or tax advice. Regulations change frequently. Always verify current requirements with official free zone authorities. 

What is a Free Zone Company in Dubai?

A free zone company operates within a designated economic area in the UAE under its own regulatory framework, distinct from the UAE Commercial Companies Law governing mainland businesses. Think of free zones as specialized business parks with their own rules, infrastructure, and authorities designed to attract foreign investment.​

Each free zone operates independently under a Free Zone Authority (FZA) handling licensing, registration, visa processing, and regulatory compliance. You don’t deal with multiple government departments—instead, you work with a single authority managing everything from your trade license to employee visas. This one-stop-shop approach makes free zone setups remarkably faster than mainland alternatives.​

Dubai offers 26-30+ free zones, each specializing in specific industries: DMCC for commodities trading, Dubai Silicon Oasis for technology, Dubai Healthcare City for medical services, DIFC for financial services, and JAFZA for logistics and manufacturing. This specialization means you choose an environment surrounded by industry peers, specialized infrastructure, and relevant support services.​

Since 1985, free zones have served as strategic economic drivers for the UAE’s diversification beyond oil. The 2026 significance extends beyond numbers—enhanced integration with the mainland economy through new operating permits means free zones now offer unprecedented flexibility while maintaining tax advantages.​

Free Zone vs Mainland Company: Key Differences

When to Choose Free Zone vs Mainland

• Free Zone makes sense if you: Focus on international trading and exports. Build e-commerce platforms serving customers outside the UAE. Provide consulting, IT services, or work with international clients. Manufacture products for export. Prioritize cost efficiency and tax optimization. Can use the Mainland Operating Permit when needing local market access.​
• Mainland suits you if: You’re opening retail stores or restaurants targeting UAE residents. Government contracts represent significant opportunities. You require unlimited visa quotas for a large local workforce. Your target market is primarily UAE mainland consumers.​
• The 2026 game-changer: These categories aren’t rigid anymore. With the Free Zone Mainland Operating Permit, you start in a free zone for cost and tax benefits, then add mainland market access when needed, paying 9% tax only on mainland-sourced revenue.​

Top Advantages of Free Zone Business Setup in Dubai 2026

1. 100% Foreign Ownership

Complete ownership and control without UAE national partners. No profit-sharing obligations, no partnership disputes. You make every decision about your company’s direction, financing, and operations. Your intellectual property stays fully protected.​

2. 0% Corporate Tax on Qualifying Income (2026 Update)

Qualifying Free Zone Persons (QFZP) enjoy 0% tax on qualifying income. Qualifying income includes transactions with other free zone entities, international trade income, and specific activities per Cabinet Decision 100 of 2023.​

The 2025 Ministerial Decisions 229 and 230 expanded commodity trading scope (removed “raw form” limitation), clarified treasury and financing services for intra-group activities, and added environmental commodities, including carbon credits, as qualifying.​

Critical de minimis rule: Non-qualifying income must not exceed the lower of 5% of total revenue or AED 5 million. Exceeding triggers loss of QFZP status for the current year plus the next four years—a five-year penalty where all income gets taxed at 9%.​

3. 100% Repatriation of Capital and Profits

Every dirham you earn flows back to your home country. No currency controls, no bureaucratic approvals, no withholding taxes. Profit repatriation, capital returns, investment gains—everything transfers freely.​

4. Exemption from Import and Export Duties

Zero customs duties on goods imported into free zones. Tax-free export from free zone to international markets. Re-export businesses particularly benefit—import raw materials duty-free, add value, and then export without customs charges.​

5. Streamlined and Fast Company Formation

The 2026 setup process is predominantly digital. Average timeline: 3-7 business days for license issuance. One-stop-shop services at most free zones. No physical presence is required for the initial application—handle everything from your home country until banking and visa processing.​

6. No Personal Income Tax

Zero personal income tax in the UAE. Salaries, wages, dividends, and investment returns—all completely tax-free. A consultant earning AED 300,000 annually keeps the full amount versus potentially losing AED 120,000 in taxes elsewhere.​

7. Strategic Geographic Location and Connectivity

Dubai sits at the intersection of Europe, Asia, and Africa. Within a 4-hour flight radius, you reach 2+ billion consumers. Jebel Ali Port ranks as the world’s 9th busiest. Dubai International Airport connects to 260+ destinations. Time zone (GMT+4) overlaps with European mornings and Asian afternoons.​

8. Flexible Office Solutions

Flexi-desk options starting at AED 5,000-15,000 annually. Virtual office addresses are available. You’re not forced into expensive long-term leases. Start with a flexi-desk or virtual office, validate your model, and then upgrade to a private space as you grow.​

9. Simplified Immigration and Visa Procedures

Streamlined visa processing through free zone authorities. Investor visas with 1-3 year validity. Family sponsorship options for spouse, children, and parents under conditions.​

Golden Visa opportunities: Invest AED 2 million in UAE real estate or establish a business with AED 2 million capital for a 10-year renewable visa. Entrepreneurs with innovative projects approved by incubators qualify for a 5-year visa with AED 500,000 capital.

10. Access to Skilled Talent Pool

No Emiratization requirements in free zones. Unlike mainland companies requiring UAE national hiring quotas, free zones let you hire purely based on skills. Access to over 200 nationalities living in the UAE. Flexible hiring and termination compared to mainland labor law.​

11. Legal and Regulatory Certainty

Independent Free Zone Authority governance provides consistency. English is the business language in most free zones. Transparent licensing and fee structures. Some zones, like DIFC operate under common law based on English legal principles.​

Also Read: The Cheapest Free Zones in the UAE for Business Setup in 2026

Comprehensive Cost Breakdown: Free Zone Company Formation in Dubai 2026

First-year costs range from AED 18,000 for basic solo operations to AED 200,000+ for established companies needing substantial space and multiple visas. The variance depends on five factors: which free zone you choose, business activity type, office space requirements, number of visas needed, and DIY versus using agents.​

1. Initial Setup Costs (First Year)

Free Zone Registration and License Fees

• Budget-Friendly Options (Outside Dubai):

Ajman Free Zone: AED 4,888. SRTIP Sharjah: AED 5,500. SHAMS Sharjah: AED 5,750. RAKEZ: AED 6,000.​

• Dubai Free Zones – Mid-Range:

Meydan Free Zone: AED 12,500-27,540. IFZA Dubai: AED 12,000-25,000, with packages starting at AED 12,900 for zero visas, AED 14,900 for one visa, and AED 16,900 for two visas. DWTC: AED 12,300-35,000. Dubai South: AED 12,500 -30,000.​

• Dubai Free Zones – Premium:

DMCC: AED 15,000-50,000+ for the first year, with annual license fees at AED 20,285 and first-year setup totaling AED 30,000-60,000. Minimum capital: AED 50,000 per company plus AED 10,000 per shareholder. General Trading requires AED 1 million minimum capital. DIFC: AED 20,000-40,000+. DAFZA: AED 18,000-35,000.​

• JAFZA Costs:

Trading Type 1 (7 activities): AED 5,500. Trading Type 2 (12 activities): AED 9,000. General Trading: AED 15,000. Registration fee: AED 5,000. Total first year: ~AED 52,636 minimum. Minimum capital: AED 50,000 for FZE, AED 1 million for FZCO.​

2. Office Space Costs (Annual)

3. Visa and Immigration Costs

Investor/Partner Visa: AED 3,500-6,000 per person, covering entry permit, medical test (AED 300-600), Emirates ID (AED 170-390), and visa stamping. Validity: 3 years for investor visa. Processing: 2-3 weeks once in the UAE.​

Employee Visa: AED 4,000-7,000 per person, including entry permit, medical test, Emirates ID, labor card, and visa stamping.​

Family Sponsorship:

• AED 4,000 OR AED 3,000 + accommodation for BOTH spouse AND children
• AED 20,000 OR AED 19,000 + 2-bedroom accommodation for parents

4. Banking and Financial Setup

Corporate bank account opening: AED 0-3,000. Minimum deposit requirements: AED 10,000-50,000 held as minimum balance. Budget banks: AED 5,000-10,000. Mid-tier (Emirates NBD, ADCB): AED 25,000-50,000. Premium: AED 50,000-100,000+. Monthly maintenance: AED 100-500. Processing time: 2-4 weeks with complete documentation, extending to 6-8 weeks for DMCC companies.​

5. Annual Recurring Costs (Year 2 Onwards)

License renewal: AED 8,000-25,000. Office rent renewal: Typically the same as the initial contract. Visa renewals: Same cost every 1-3 years. Establishment card renewal: AED 1,000-2,000. Annual audit (if required): AED 5,000-15,000. Accounting services: AED 15,000-72,000 annually. PRO services if outsourced: AED 3,000-8,000 annually.​

6. Sample Cost Scenarios (2026 Realistic Examples)

Scenario 1: Budget Solo Entrepreneur

• Free Zone: IFZA Business Setup | License: Service | Office: Flexi-desk | Visas: 1 investor
• Total First Year: AED 21,000-25,000
• Breakdown: License AED 12,900 + Flexi desk AED 5,000 + Visa AED 4,500 + Banking AED 3,000​

Scenario 2: Small Trading Startup

• Free Zone: DMCC Company Setup | License: Trading | Office: Shared | Visas: 2 investor + 1 employee
• Total First Year: AED 45,000-55,000
• Breakdown: License AED 20,000 + Office AED 15,000 + Visas (3×AED 4,000) AED 12,000 + Banking AED 5,000​

Scenario 3: Established Service Company

• Free Zone: DIFC | License: Professional | Office: Private 200 sqm | Visas: 3 partner + 5 employee
• Total First Year: AED 85,000-110,000
• Breakdown: License AED 30,000 + Office AED 40,000 + Visas (8 × AED 5,000) AED 40,000 + Audit AED 10,000​

Scenario 4: Manufacturing Business

• Free Zone: JAFZA Company Setup | License: Industrial | Office: Warehouse 500 sqm | Visas: 2 investor + 10 employee
• Total First Year: AED 150,000-200,000+
• Breakdown: License AED 35,000 + Warehouse AED 80,000 + Visas (12×AED 4,000) AED 48,000 + Equipment AED 30,000​

Eligibility Requirements for Company Setup in Free Zone 2026

Dubai’s free zones operate with entrepreneur-friendly eligibility. No minimum capital in most zones, no age restrictions beyond 18+, and open to all nationalities.​

1. Basic Personal Eligibility

Nationality and Residency: All nationalities qualify equally. UAE residency isn’t required to establish your company. You can form the entity remotely from your home country. However, a UAE residency visa is needed for practical bank account opening and operations.​

Age: Minimum 18 years old. No upper age limit.​

Educational Qualifications: Most activities require no specific qualifications. Exceptions: Medical doctors, engineers, architects, and legal consultants must provide relevant degrees and professional licenses. Educational certificates need attestation by the home country and the UAE embassy.​

2. Company-Specific Requirements

Shareholder Structure: Free Zone Establishment (FZE) requires exactly one shareholder. A Free Zone Company (FZCO) requires 2-5 shareholders. Branch Office needs the existing parent company in good standing.​

Minimum Capital: Requirements vary dramatically. Zero minimum: Twofour54 Abu Dhabi and many service zones. Low capital: DAFZA requires AED 1,000. Standard: DMCC demands AED 50,000 per company plus AED 10,000 per shareholder (AED 1 million for General Trading). ​

Important: Traditional minimums were AED 50,000/1M but JAFZA now requires capital ‘sufficient for activities’ without prescribed minimums. 

3. Documentation Requirements (2026 Checklist)

For Individuals: Valid passport (6+ months validity). Passport-size photographs. Proof of address within 3 months. CV for freelancer permits. Educational certificates with attestation for regulated professions. Professional licenses for doctors, engineers, architects, and lawyers.​

For Corporate Shareholders: Certificate of Incorporation. Memorandum and Articles of Association. Current Trade License. Certificate of Good Standing. Board Resolution appointing authorized representative. Notarized Power of Attorney. 6-month bank statements. 1-2 years of audited financial statements. Ultimate Beneficial Owner (UBO) declaration. All documents require notarization by the home country and UAE embassy attestation.​

4. Health and Security Requirements

Medical Fitness Test: Mandatory for all visa applicants. Tests for HIV, Hepatitis B, Hepatitis C, Tuberculosis, and Syphilis. Pregnancy test for females. Cost: AED 250-700 per person depending on service level. Results: 24-48 hours. Validity: Valid for the residence visa duration (2-3 years typically). Failure results in visa rejection and the requirement to leave the UAE. Must repeat at each renewal.​

Security Clearance: Automatic background checks on all applicants. Checks criminal records, visa violations, and security concerns. Processing: 3-7 days, longer for certain nationalities.​

Free Zone Selection Matrix

Step-by-Step Setup Process (2026)

Step 1: Select Business Activity and Free Zone (1-3 days)

List every service or product you plan to offer. Most free zones allow 1-3 activities per license (DMCC permits up to 6). Match activities to free zone specializations. Compare costs across 2-3 suitable options. Consider location, visa needs, office requirements, and future scaling. Define activities broadly for flexibility.​

Step 2: Choose Legal Structure (1 day)

Decide between FZE (single shareholder), FZCO (2-5 shareholders), or Branch Office. FZE offers simpler documentation and lower costs. FZCO suits partnerships.​

Step 3: Reserve Trade Name (1-2 days)

Must be unique within the free zone. Must include legal suffix: “FZE,” “FZ-LLC,” or “FZCO.” Cannot contain religious references, government names, or offensive words. Submit via the free zone portal with 2-3 alternatives. Approval within 24-48 hours. Reservation valid for 6 months (180 days).​

Step 4: Prepare and Submit Documents (2-5 days)

Gather complete documentation (refer to the Eligibility section for a full list). Use high-quality color scans. Verify nothing expired. Attestation for corporate documents: Home country notary → Ministry of Foreign Affairs → UAE Embassy. Professional translation if not English/Arabic. Submit online via the free zone portal.​

Step 5: Receive Initial Approval (1-3 days)

Free zone authority reviews the application, verifies documents, confirms name and activity approvals, and issues the initial approval certificate electronically. Valid for 30-60 days to complete remaining steps.​

Step 6: Select and Secure Office Space (1-2 days)

Choose from flexi-desk, virtual office, serviced office, private office, or warehouse. View options on the free zone website. Sign the lease agreement—digital signatures accepted. Lease required before license issuance. Start small, upgrade later.​

Step 7: Pay Fees and Complete Registration (1 day)

Pay the license fee, registration fee, office lease first payment, and establishment card fee. Payment via credit card, bank transfer, or debit card. Upon payment, registration is confirmed and an establishment card is issued.

Step 8: Receive Trade License (1-2 days)

Digital trade license issues as PDF download. Physical certificate follows. License validity: 1 year, renewable. Immediately legally operational. Certificate needed for banking and visa processing.​

Step 9: Open Corporate Bank Account (2-4 weeks)

Choose from UAE banks (Emirates NBD, FAB, ADCB, Mashreq), international banks (HSBC, Standard Chartered), or digital options (Wise Business). Required documents: Trade license, establishment card, MOA, passport copies, proof of address, business plan, board resolution, 6-month bank statements, and initial deposit (AED 10,000-50,000). 

In-person meeting required—at least one signatory must visit UAE. Approval: 2-4 weeks, up to 6-8 weeks for DMCC. Be prepared to explain the business model clearly with contracts demonstrating legitimacy.​

Step 10: Apply for Visas (3-4 weeks)

Apply for an entry permit through the free zone. Enter UAE, complete a medical fitness test at a government-approved center. Biometrics and Emirates ID application. Visa stamping in passport. Total processing: 3-4 weeks once in the UAE.​

Step 11: Register for Corporate Tax and VAT (1-2 days)

All UAE businesses must register with the Federal Tax Authority within 3 months of license issuance. No revenue threshold—even AED 0 companies must register. Process online via the FTA portal. Even QFZP companies must register, though they are taxed at 0% on qualifying income. VAT registration is mandatory if annual revenue exceeds AED 375,000.​

Step 12: Commence Operations (Immediate)

All legal formalities are complete. Issue invoices, sign contracts, and hire staff. Set up accounting from day 1. Set license renewal reminder 60 days before expiry.​

Optional: Free Zone Mainland Operating Permit (2026 New Option)

Launched October 2025 via Executive Council Resolution 11 of 2025. Allows free zone companies to conduct business directly with Dubai mainland clients. Valid for 6 months, renewable. Application through DET in coordination with free zone authority. Mainland income is taxed at 9%. Cost: AED 5,000 for a 6-month permit. Benefit: Access the mainland market without expensive mainland setup.​

Timeline Summary

• License issuance: 3-7 business days​
• Bank account: 2-4 weeks​
• Visas: 3-4 weeks​
• Overall: 6-8 weeks from start to fully operational​

Corporate Tax Implications for Free Zone Companies 2026

The UAE introduced a 9% federal corporate tax effective June 1, 2023, but Qualifying Free Zone Persons (QFZP) still enjoy 0% tax on qualifying income.​

QFZP Requirements

1. Free Zone Registration: Incorporated in a UAE free zone with a valid license.​
2. Adequate Economic Substance: Core activities conducted within the free zone. Adequate employees (full-time, proportionate to operations, no double-counting). Adequate premises in the free zone (real office, not virtual for shell companies). Operating expenditure is proportionate to business scale.​
3. Qualifying Activities: Manufacturing, holding/exploiting IP developed in free zone, warehousing, logistics, commodity trading (expanded scope including environmental commodities), investment/fund management, aircraft leasing, headquarters/treasury services for intra-group financing.​
4. Qualifying Income: Transactions with other free zone entities, transactions with non-free zone persons for qualifying activities, income from foreign entities (international trade), and income from qualifying IP.​
5. Transfer Pricing Compliance: All related-party transactions at arm’s length.​
6. Audited Financial Statements: Mandatory for ALL QFZPs regardless of revenue. Also required for companies with annual revenue exceeding AED 50 million. Prepared according to IFRS by a licensed UAE auditor.​
7. De Minimis Rule: Non-qualifying income must not exceed the lower of 5% of total revenue OR AED 5 million. Exceeding triggers loss of QFZP status for the current year plus the next 4 years—a 5-year penalty where all income is taxed at 9%.​

Tax Rates Summary

The 2026 Ministerial Decisions 229 and 230 of 2025 expanded commodity trading scope, clarified treasury/financing services, and added environmental commodities as qualifying.​

Compliance requirements: Corporate tax registration (mandatory even for 0% income). Annual tax return filing. Economic substance reporting. Transfer pricing documentation if applicable. Maintain detailed records separating qualifying vs non-qualifying income. Separate accounting for mainland and free zone activities.​

Also Read: Best Free Zone in Dubai for Startups & Small Businesses (Expert Comparison)

Common Mistakes to Avoid

1. Choosing the Wrong Free Zone or Activities: Not matching businesses to specialized zones. Defining activities too narrowly. Solution: Research thoroughly, define broadly, and match industry to zones.​
2. Underestimating Total Costs: Focusing only on the license fee. Not budgeting for recurring costs. Overlooking hidden fees. Solution: Create a comprehensive budget including 6-12 months of operating costs plus a 20-30% buffer.​
3. Incomplete Documentation: Expired documents, unattested corporate documents, poor scans, missing KYC/UBO forms. Solution: Use a checklist, verify expiry dates, get professional attestation, and use high-quality scans.​
4. Ignoring QFZP Requirements: Assuming a free zone equals an automatic 0% tax. Insufficient economic substance. Exceeding the de minimis threshold unknowingly. Solution: Consult a tax advisor early, ensure adequate physical presence, and monitor qualifying vs non-qualifying income monthly.​
5. Not Planning for Visas: Choosing an office too small for needed employees. Not understanding visa quota. Delayed applications are causing entry permit expiry. Solution: Calculate visa needs upfront, choose appropriate office size, and apply promptly after license.​
6. Neglecting Banking Preparation: Underestimating difficulty. Insufficient minimum deposit. Weak business plan. No proof of legitimacy. Solution: Prepare comprehensive documentation, have contracts ready, have a realistic business plan, have sufficient capital, and consider banking consultants.​

Frequently Asked Questions

Q1: What is the minimum cost to set up in 2026?

Minimum ranges from AED 4,888 (Ajman) to AED 12,900 (IFZA Dubai). Adding an investor visa, flexi-desk, and basic services brings a realistic minimum to AED 18,000-25,000 in the first year.​

Q2: How long does setup take?

License: 3-7 business days. Complete process, including banking and visas: 6-8 weeks.​

Q3: Can I set up remotely without visiting Dubai?

Yes for initial formation and license issuance. However, you must visit Dubai for bank account opening, medical tests, and visa stamping.​

Q4: Do I need a local sponsor?

No. Free zones offer 100% foreign ownership with zero sponsor requirements.

Q5: Can free zone companies trade in Dubai mainland?

Yes, as of October 2025, the Free Zone Mainland Operating Permit (Resolution 11 of 2025) allows direct mainland trading for AED 5,000 per 6-month renewable permit. Mainland income is taxed at 9%; free zone income remains 0% for QFZP.​

Q6: Are free zones still tax-free in 2026?

Not automatically. Qualifying Free Zone Persons (QFZP) enjoy 0% tax on qualifying income. Requirements: free zone registration, adequate economic substance, qualifying activities, transfer pricing compliance, audited financials regardless of revenue, and non-qualifying income under 5% or AED 5M. Non-qualifying income is taxed at 9%. Losing QFZP status means all income is taxed at 9% for 5 years.​

Conclusion 

Dubai’s free zones in 2026 remain among the world’s most attractive business jurisdictions, combining tax efficiency, ownership freedom, operational flexibility, and strategic access. With proper planning, compliance focus, and realistic expectations, a free zone company becomes the foundation for successful regional and global business expansion.​

The opportunity is clear. The process is streamlined. The time to act is now.

Book your free consultation call today with the experts of JSB Incorporation to learn more.