Introduction
The United Arab Emirates (UAE) is one of the world’s most attractive destinations for entrepreneurs and investors. Among the different company formation options available, the Free Zone company setup is the most popular because it offers 100% foreign ownership, tax exemptions, and simplified procedures.
In this guide, we will explain everything you need to know about free zone company setup in UAE, including benefits, costs, documents, and step-by-step process.
What is a Free Zone Company Setup?
A Free Zone is a designated area in the UAE that offers businesses special privileges and incentives. Companies established in Free Zones enjoy:
100% foreign ownership (no local sponsor needed)
Zero corporate and personal income tax (subject to new tax regulations, some exemptions apply)
Full repatriation of profits and capital
Import and export duty exemptions
Simplified company formation process
The UAE has over 40+ Free Zones spread across all emirates, each catering to specific industries like technology, media, trading, healthcare, education, and logistics.
Benefits of Free Zone Company Setup in UAE
Setting up a company in a Free Zone comes with multiple advantages:
Ownership Freedom – Unlike Mainland companies, Free Zone businesses do not require an Emirati partner.
Tax Benefits – Enjoy 0% personal tax and exemptions from import/export duties.
Easy Setup – Quick registration process, often within 5–7 working days.
Industry-Specific Zones – Free Zones tailored for IT, trading, healthcare, finance, media, etc.
Residency Visa – Eligibility for UAE residence visas for investors and employees.
Strategic Location – Access to global markets through world-class airports and seaports.
Business Flexibility – Freedom to repatriate 100% profits and capital.
Popular Free Zones in UAE
Some of the most well-known Free Zones for company setup include:
Dubai Multi Commodities Centre (DMCC) – Popular for trading and commodities businesses.
Jebel Ali Free Zone (JAFZA) – One of the largest Free Zones for logistics and manufacturing.
Dubai Internet City (DIC) – Ideal for IT and technology startups.
Dubai Media City (DMC) – Perfect for media, advertising, and creative companies.
Dubai Silicon Oasis (DSO) – Focused on technology and innovation.
Abu Dhabi Global Market (ADGM) – Financial and investment businesses.
Sharjah Media City (Shams) – Cost-effective Free Zone for startups and freelancers.
Ras Al Khaimah Economic Zone (RAKEZ) – Affordable business setup for trading and SMEs.
Types of Licenses in Free Zones
When setting up a company in a Free Zone, you can apply for different licenses depending on your activity:
Commercial License – For trading and import/export businesses.
Service License – For consultancy, IT services, and professional services.
Industrial License – For manufacturing and industrial activities.
E-commerce License – For online businesses and digital trade.
Freelancer Permit – For individuals working independently in creative or IT sectors.
Step-by-Step Process of Free Zone Company Setup
Step 1: Choose a Free Zone
Select a Free Zone that matches your business activity (e.g., media, IT, trading).
Step 2: Select Business Activity
Each Free Zone has a list of permitted activities. Choose the one relevant to your business.
Step 3: Decide Legal Structure
Free Zone Establishment (FZE) – Single shareholder.
Free Zone Company (FZC) – Multiple shareholders.
Branch of a Foreign Company – Extension of an existing business.
Step 4: Register Trade Name
Submit your business name to the Free Zone authority for approval.
Step 5: Apply for Business License
Submit documents and get your license issued.
Step 6: Choose Office Space
Free Zones offer flexi-desks, virtual offices, and full office spaces depending on your needs.
Step 7: Visa Application & Bank Account
Apply for UAE residence visas (for investors, employees, and family members) and open a corporate bank account.
Cost of Free Zone Company Setup in UAE (2025)
The cost varies depending on Free Zone, business activity, and office requirements. On average:
Free Zone Company License: AED 10,000 – AED 20,000
Visa Cost: AED 3,000 – AED 5,000 per visa
Office Space: AED 5,000 – AED 15,000 (depending on Free Zone)
Some Free Zones offer packages for startups starting from AED 12,000 including license, visa quota, and office desk.
Documents Required for Free Zone Company Setup
Passport copy of shareholder(s) and directors
Passport-size photographs
Proof of residence (utility bill or tenancy contract)
Business plan (for certain Free Zones)
Application form and trade name options
Free Zone vs Mainland Company Setup – Which is Better?
Free Zone: Best for international businesses, startups, freelancers, and e-commerce companies.
Mainland: Best for companies targeting the UAE local market with unlimited expansion and client base.
FAQs – Free Zone Company Setup in UAE
Q1: How long does it take to set up a Free Zone company?
Usually 5–10 working days, depending on approvals.
Q2: Can I operate inside Dubai Mainland with a Free Zone license?
No, Free Zone licenses are limited to Free Zone and international operations. For Mainland operations, you need a Mainland license or a distributor.
Q3: Do I get a visa with a Free Zone company setup?
Yes, Free Zone companies can apply for investor and employee visas.
Q4: Which Free Zone is cheapest for company setup in UAE?
Sharjah Media City (Shams), RAKEZ, and Fujairah Free Zone are among the most cost-effective.
Q5: Can I open a bank account with a Free Zone company?
Yes, Free Zone companies can open corporate bank accounts in UAE banks.
Conclusion
A Free Zone company setup in UAE is one of the most convenient and cost-effective ways for entrepreneurs and investors to enter the UAE market. With benefits like 100% foreign ownership, tax exemptions, quick registration, and access to global markets, Free Zones are ideal for startups, SMEs, and international businesses.
If your goal is to expand globally, enjoy tax benefits, and operate in a flexible environment, choosing a UAE Free Zone company setup is the right decision in 2025.
