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Company Formation in Dubai Free Zone

The establishment of the Jebel Ali Free Zone (JAFZA) in 1985 marked a pivotal moment in the UAE’s history, significantly influencing the attraction of foreign investors. This introduction of free zones transformed the business landscape in Dubai, with over 30 free zones emerging after JAFZA’s inception. The business setup process within Dubai’s free zones created a favorable environment for foreign investors, offering so many advantages. Foreign investors are drawn to establishing businesses in Dubai’s free zones due to the comparatively less stringent regulations compared to the mainland.

Business Operations in Dubai Free Zones

Operating a business in Dubai’s free zones involves following specific regulations, and each zone operates independently. Companies in these zones are limited to activities within the zone or engaging in import/export. Some, like DMCC, can operate on the mainland with a Dual License. Dubai’s free zones are designed for specific industries, such as tech in Dubai Silicon Oasis, industrial in JAFZA, and e-commerce in Dubai CommerCity. Specialized zones like Dubai Media City and Dubai Internet City cater to media, design, and technology. These zones provide tailored licenses and facilities to support growth and collaboration, contributing to Dubai’s global business hub status. Zones like Dubai Healthcare City and DUCAMZ also support the healthcare and automotive sectors.

Types of Company Structures in Dubai Free Zones

Dubai boasts over 30 active free zones where investors can register their companies. Each free zone operates under the governance of an independent authority responsible for issuing licenses and enforcing regulations. The legal structures permitted in these free zones are primarily determined by the number of shareholders involved:

Free Zone Establishment (FZE)

A legal entity incorporated or registered by a single shareholder, who can either be an individual or a corporate entity.

Free Zone Company (FZCO)

A legal entity incorporated or registered with a minimum of two shareholders, who can be either individuals or corporate entities.

Branches of Existing Companies

Companies, whether based in a foreign country or within the UAE, have the opportunity to establish branches in a free zone. These branch entities are required to engage in activities similar to those of the parent company.

Business Setup in Dubai Free Zone: Process

Establishing an entity in the Dubai Free Zone follows a straightforward set of regulations. The process entails less stringent requirements and obtaining the license can typically be accomplished within a few weeks. The key steps for obtaining a Dubai Free Zone company license include:

Identify the Free Zone

We previously highlighted the existence of various free zones in the UAE in general, and specifically in Dubai. These zones differ in terms of available activities and the facilities they provide to investors. Therefore, it is crucial to choose the appropriate free zone based on the company’s goals and identity.

Specify the License Type and Company Activity

Each license encompasses multiple activities. For instance, a commercial license includes activities such as import, export, sales, repackaging, and more. Considering that each zone has its own policy regarding the variety of license activities, it is essential to examine the list of available activities within the chosen license category and then select the most suitable ones.

Choose the Legal Structure of the Company

Consult the management of the free zone to inquire about the available legal structures based on the chosen license type and activities. Some zones may offer a choice between several legal structures, while others may impose a system that is most suitable for your business activity.

Prepare the Required Documents for Company Establishment

Despite the similarity in the list of documents required for establishing a company in Dubai, familiarity with the laws and regulations of the chosen free zone is necessary. This ensures the identification of the necessary documents and their proper authentication from the relevant authorities. Detailed documentation will be further discussed in the next paragraph.

Obtain Preliminary Approval

Preliminary approval for establishing companies in Dubai’s free zones includes obtaining approval for the trade name, license, company activities, proposed legal structure, and the operational system. This approval is not a work permit but is crucial for completing the necessary establishment procedures.

Select the Company Location

All free zones provide multiple options for the company’s location. Once you find the suitable premises, you can draft a lease agreement, starting from a minimum of one year, and authenticate the contract with the relevant authority in the free zone to license the business address.

Signing Legal Documents

After obtaining preliminary approval for establishing a company in the free zone, a signing meeting is scheduled with a representative from the free zone. During this meeting, all legal documents for the company are examined and signed, and external approvals related to the company’s activity and international agreements are secured.

Issue the Work License

Upon completing all the aforementioned steps and settling the administrative fees, commercial licenses, the company’s memorandum of association, and the constitutional documents are approved. You can then proceed to operate your business.

Dubai Free Zone License: Overview

Securing a business license stands as a crucial prerequisite for establishing a company within Dubai’s free zones. The following represent some of the widely sought-after trade licenses offered by the majority of free zones in Dubai:

  • E-commerce License
  • General Trading License
  • Trading / Commercial License
  • Service License
  • Industrial License

Setting up a Company in Dubai Free Zone: Required Documents

  • Copy of the existing trade license or registration certificate.
  • Application form with the trade registry identification code.
  • Colored copies of the investors’ and company director’s passports.
  • Signed form by the shareholders and the director or board member.
  • Letter of intent between the contracting parties.
  • Business plan for a minimum of two years.
  • Company establishment contract according to the zone’s policies.
  • Audited financial report for the company’s budget for the past two years.
  • Ownership deed for the company’s headquarters or a notarized lease agreement.
  • Bank reference letter regarding the company’s capital.
  • Manager’s CV and professional history.
  • Preliminary approval request form.

Dubai's Free Zone Taxation: Value Added

In Dubai, despite being a no-tax jurisdiction, a 5% Value Added Tax (VAT) is imposed by the government on taxable goods and services. Certain free zones are designated as Designated Zones by the Federal Tax Authority (FTA), which have special VAT rules. Transactions within Designated Zones are exempt from VAT, as well as transactions between different Designated Zones. However, goods moving from non-designated Zones to Designated Zones and vice versa are subject to VAT. The Designated Zone status is a crucial factor to consider when choosing a free zone for establishing a company in Dubai.

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      What activities are permitted in the free zone?

      • Educational activities.
      • Aviation and air transport services.
      •  Information technology and communications.
      •  Logistics services.
      • Media services.
      • Tourism and hospitality sectors.
      •  All commercial activities.
      • Additionally, there are some specific manufacturing capabilities.


      The Dubai Airport Free Zone is one of the most renowned free trade zones in the UAE, supporting hundreds of commercial and industrial activities and providing numerous facilities for investors in various fields.

      The authority of Free Zone companies is limited to conducting business within the respective Free Zone itself. Beyond that, transactions are regulated through local agents.

      All Free Zones in the UAE allow 100% ownership for foreigners, within the framework of the zone's policies and specific regulations


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