A foreigner can own 100% of a UAE free zone company — no local partner needed. A realistic first-year budget is AED 12,000–25,000 for a licence, registration, a flexi-desk and one visa, though packages run from about AED 5,500 to AED 50,000 depending on the zone. The part founders most often get wrong in 2026: free zones are not tax-free by default. Since June 2023 they sit inside the federal corporate tax regime — 9% above AED 375,000 — and the 0% rate applies only to qualifying income of a Qualifying Free Zone Person. You must register and file either way.
Can a foreigner own 100% of a UAE company?
Yes. Every free zone allows full foreign ownership, which is historically why founders chose them. Note that this is no longer the free zone's unique selling point: since 2021 mainland companies also permit 100% foreign ownership across most activities. So in 2026 the free-zone-versus-mainland decision turns on where you can sell and how you are taxed — not on ownership.
Free zone or mainland — which do I actually need?
A free zone company is fast to set up, clusters you with similar businesses, and can access the 0% corporate tax rate on qualifying income. Its classic limit is selling directly into the UAE local market, which typically needs a distributor or a mainland presence. A mainland company can trade freely across the UAE and bid for government work, but its profits are taxed at the standard 9% above AED 375,000 with no qualifying-income exemption. Choose on your customers first, then tax.
Zones differ on permitted activities, visa quotas, audit requirements and reputation with banks. Picking the cheapest zone for an activity it does not properly licence is the most common — and most expensive — early mistake, because fixing it usually means re-registering.
How much does it cost to set up in a UAE free zone?
Across the UAE, free zone packages run from roughly AED 5,500 to AED 50,000. A typical year one — trade licence, registration, a basic flexi-desk and one visa — lands around AED 12,000–25,000. Renewal is an annual cost, not a one-off.
| Free zone | Indicative setup |
|---|---|
| Ajman Free Zone | from AED 4,888 (licence only, no visa); from AED 10,800 visa-inclusive |
| IFZA | AED 10,000 – 30,000 |
| JAFZA (Jebel Ali) | AED 15,000 – 40,000 |
| DMCC | AED 18,500 – 50,000 (renewal from AED 18,500) |
Figures are indicative package pricing, not quotes: what you actually pay depends on your activity, the number of visas, whether the zone requires physical office space, and add-ons such as establishment cards and medical/Emirates ID processing.
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Do free zone companies pay UAE corporate tax?
Yes — free zone entities are within the regime. The headline rates, for financial years starting on or after 1 June 2023:
- 0% on taxable income up to AED 375,000, and 9% above it;
- A Qualifying Free Zone Person (QFZP) pays 0% on qualifying income — but 9% on any non-qualifying income, and once QFZP status applies, that non-qualifying income does not get the AED 375,000 allowance.
QFZP status is conditional, not automatic. Broadly you must maintain adequate substance in the zone, earn income that is qualifying under the relevant decisions, pass the de minimis test, not elect mainland taxation, price related-party transactions at arm's length, and keep audited financial statements.
Non-qualifying revenue must stay under 5% of total revenue or AED 5 million — whichever is lower. Breach it and QFZP status can fall away for the period, taking the 0% with it. This is a live compliance question, not a set-and-forget one.
Does Small Business Relief still apply?
It is a transitional measure and it is running out. A UAE tax-resident person with revenue not exceeding AED 3 million in the relevant and previous tax periods may elect to be treated as having no taxable income — but it applies only to tax periods ending on or before 31 December 2026, and it must be actively elected. It does not happen automatically, and it is not the same thing as being exempt from registering or filing.
Figures last verified July 2026 against the sources listed at the end of this guide. Rates, thresholds and free zone package pricing change — confirm your position with the UAE Federal Tax Authority or a UAE tax adviser before you rely on any number here.
What are the setup steps?
- Choose the activity, legal form and zone — in that order;
- Reserve the trade name and obtain initial approval;
- Lease the space the zone requires (flexi-desk or office);
- Receive the licence, then process the establishment card, Emirates ID and visas;
- Register for corporate tax, and for VAT (5%) if you cross the registration threshold — VAT is a separate regime from corporate tax.
Banking and substance: the part that delays founders
Opening a corporate bank account is where timelines slip. Banks want a coherent business plan, evidence of real activity and clarity on your customers and source of funds. That expectation now overlaps with tax: "adequate substance" is a condition of QFZP status, so a shell with a flexi-desk and no real presence risks both a rejected bank account and a lost 0% rate. Build genuine operations, and build in time.
Frequently asked questions
Should I set up in a free zone or on the mainland?
It depends on your customers and activity. Free zones offer streamlined setup, full foreign ownership and sector clustering, but historically limit trading directly in the local UAE market without a distributor. Mainland companies can trade locally and bid for government work, so map your actual customer base before choosing.
Can I own 100% of a UAE free-zone company as a foreigner?
Generally yes — free zones typically allow full foreign ownership, which is one of their main attractions for founders. Your licence type (commercial, professional or industrial) must match your actual activity, and each zone has its own regulator, rules and permitted-activity list, so the details vary from zone to zone.
How much does it cost to set up a free-zone company?
Costs vary widely by zone and headcount. Budget for the licence, registration and mandatory space (a flexi-desk or office), plus per-visa costs, and remember the first-year total differs significantly between zones. Because there is no single figure, a lawyer or formation specialist can give a firm estimate tailored to your activity and staff numbers.
Does setting up a free-zone company get me a residence visa?
Typically the licence comes with an establishment card and a visa allocation, which you process after the licence is issued. The exact number of visas and the steps depend on the zone and the space you lease, so confirm the visa quota and requirements for your chosen zone before committing.
Official sources
Rules, fees and thresholds change. Confirm anything in this guide with the official source before you act.
- Federal Tax Authoritytax authority
- ICPimmigration authority
- Dubai Land Departmentland registry