Free Zone Formation

A free zone company is a juridical person incorporated, established or registered in a free zone, which the Federal Tax Authority defines as a geographic area within the UAE specified by Cabinet decision. It is licensed by that zone's own authority rather than by an emirate economic department, and the UAE Government portal confirms that free zone companies can be fully owned by foreign investors and operate under a different legal framework from mainland businesses. Each zone has its own regulations, permitted activities and facilities. We are a registered agent in DMCC, RAKEZ, IFZA, Ajman Free Zone, Masdar City and Dubai South, and form companies in the other zones through their authorities directly.

Sources: Federal Tax Authority — Corporate Tax Guide | Free Zone Persons (CTGFZP1, May 2024); UAE Government portal (u.ae) — Running a business in a free zone (accessed 24 October 2026)

The UAE Government portal says you apply online through the free zone authority's website and, after review and approval, receive the licence within 14 working days. Several of the zones we work in publish shorter timelines for straightforward files, and some issue licences within days or even hours, while entities in DIFC and ADGM take longer because of the regulatory review involved. The variable is almost always the documentation: attested corporate documents, UBO declarations and any approvals from external regulators for the chosen activity. We prepare the file to the authority's checklist so that the published timeline is the real one.

Sources: UAE Government portal (u.ae) — Starting a business in a free zone; UAE Government portal (u.ae) — Starting a business in a free zone (accessed 24 October 2026)

Not directly by default. The UAE Government portal states that foreign trade is generally unrestricted as long as goods do not enter the UAE mainland market, that goods attract customs duty only when moved into the mainland, and that direct mainland sales are generally not permitted, so local sales run through a licensed mainland distributor or a mainland branch. In Dubai, Executive Council Resolution No. (11) of 2025, issued on 3 March 2025, lets the Department of Economy and Tourism license a branch of a free zone establishment for AED 10,000 a year, issue a permit for specific activities, or grant a temporary permit of up to six months, with separate financial records kept for the mainland activity. We structure that route alongside the free zone licence.

Sources: UAE Government portal (u.ae) — Running a business in a free zone; Government of Dubai – Executive Council (Dubai Legislation Portal) — Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments' Activities within the Emirate of Dubai (accessed 24 October 2026)

They are within the regime, but a Qualifying Free Zone Person pays 0% on its Qualifying Income and 9% on other taxable income. The Federal Tax Authority's conditions are adequate substance in a free zone, deriving Qualifying Income, no election into the standard rules, arm's length pricing with transfer pricing documentation, audited financial statements, and the de minimis test, under which non-qualifying revenue must not exceed the lower of AED 5,000,000 or 5% of total revenue. A Qualifying Free Zone Person is not entitled to the 0% band on its first AED 375,000 of taxable income, and failing a condition removes the status for that tax period and the four following ones. Every free zone company must still register and file.

Sources: Federal Tax Authority — Corporate Tax Guide | Free Zone Persons (CTGFZP1, May 2024); UAE Ministry of Finance — Ministerial Decision No. 229 of 2025 Regarding Qualifying Activities and Excluded Activities for the Purposes of Federal Decree-Law No. 47 of 2022 (accessed 24 October 2026)

Those listed as Qualifying Activities in Ministerial Decision No. 229 of 2025, issued on 28 August 2025, which repealed Ministerial Decision No. 265 of 2023 and applies from 1 June 2023. The list covers manufacturing and processing of goods, trading of Qualifying Commodities, holding shares and securities for investment, ship ownership and operation, reinsurance, fund, wealth and investment management, headquarter and treasury services to related parties, aircraft financing and leasing, distribution of goods in or from a Designated Zone, logistics, and ancillary activities. Excluded Activities include most dealings with natural persons, banking, insurance, finance and leasing, and immovable property. Under Cabinet Decision No. 100 of 2023 the core income-generating activities must actually be carried on in a free zone or Designated Zone with adequate assets, staff and spending.

Sources: UAE Ministry of Finance — Ministerial Decision No. 229 of 2025 Regarding Qualifying Activities and Excluded Activities for the Purposes of Federal Decree-Law No. 47 of 2022; UAE Cabinet (published by the Ministry of Finance) — Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person (accessed 24 October 2026)

No. Only a Designated Zone is treated as outside the UAE for VAT purposes, and then only for certain supplies of goods. The Federal Tax Authority's guide explains that a Designated Zone must be a specific fenced geographic area with security measures and customs controls, and that a free zone is a Designated Zone only if it has been identified as one by Cabinet decision. Services supplied in a Designated Zone are still treated as supplied within the UAE, and businesses in Designated Zones have the same obligations as other businesses, so they must register, report and account for VAT under the normal rules once they pass the registration threshold. We check the VAT position of the zone before you commit, particularly for goods traders.

Source: Federal Tax Authority — VAT Guide | Designated Zones | VATGDZ1 (Issue 1, July 2018) (accessed 24 October 2026)

Through the free zone authority. The UAE Government portal confirms that you apply for an employee's work permit and residence visa with the respective free zone authority, not with the Ministry of Human Resources, and that the number of visas a business can obtain depends on factors such as the package it has signed up for, which is why visa quotas track the office or flexi desk you lease. Free zone employees are generally governed by the zone's own employment regulations together with Federal Decree-Law No. 33 of 2021, the UAE Labour Law; DIFC and ADGM run their own employment frameworks. We handle establishment-card registration and the visa files once the licence issues.

Sources: UAE Government portal (u.ae) — Recruiting in free zones; UAE Government portal (u.ae) — Recruiting in free zones (accessed 24 October 2026)

Annual licence renewal with the zone, audited financial statements, corporate tax registration and filing, and the zone's own filings on shareholders, UBOs and directors. Audited accounts are not optional for a company relying on the 0% rate: the Federal Tax Authority lists maintaining audited financial statements among the conditions for a Qualifying Free Zone Person, and zones such as RAKEZ require all companies to file audited statements within six months of year-end. The UAE Government portal adds that free zone businesses must comply with federal laws on labour, consumer protection, intellectual property and health and safety as well as the zone's rules. We run the compliance calendar for the companies we administer.

Sources: Federal Tax Authority — Corporate Tax Guide | Free Zone Persons (CTGFZP1, May 2024); Ras Al Khaimah Economic Zone (RAKEZ) — RAKEZ – Frequently Asked Questions (accessed 24 October 2026)