To start a business in Dubai you make one structural decision and then work through a fixed sequence: choose mainland or free zone, fix your activity list, reserve a trade name, obtain initial approval, sign for premises, and pay for the trade licence. With clean documents and an activity that needs no external regulator, the licence itself is often issued inside one to three weeks. The slower work comes after it, when you apply for visas, open a corporate bank account and register with the Federal Tax Authority.
Key takeaways
- The mainland or free zone choice controls where you are allowed to sell, what premises you must hold and which authority regulates you, so make it first rather than last.
- Federal Decree-Law No. 26 of 2020 amended the Commercial Companies Law and removed the 51 per cent Emirati shareholding requirement for most mainland activities from June 2021, with a reserved list of activities of strategic impact.
- Your activity list, not your business plan, sets the licence category and any external approval you need. Adding an activity afterwards is a paid amendment.
- A UAE company incorporated on or after 1 March 2024 must apply to register for corporate tax within three months of incorporation, and the administrative penalty for missing that window is AED 10,000.
- Plan for the bank account to take longer than the licence. Four to eight weeks is an ordinary timeline for a new company whose shareholders have no UAE trading history.
Mainland or free zone shapes everything downstream
A mainland company is licensed by the Dubai Department of Economy and Tourism. It can sell anywhere in the UAE, take on government contracts, and hire staff on Ministry of Human Resources and Emiratisation contracts. The trade-off is premises: the licence is tied to a real tenancy with a registered Ejari contract, and rent is usually the largest number in a first-year budget.
A free zone company is licensed by the zone’s own authority, which keeps its own registry and rules. The UAE government portal counts about 40 free zones across the country, and packages usually bundle a flexi desk, so entry cost is lower and predictable. The restriction is the market: goods do not enter the UAE mainland market without proper customs clearance, so a free zone entity selling to mainland customers normally works through a distributor, a branch, or a customs-cleared import route.
The practical test is who pays you. A clinic in Jumeirah, a cafe in Al Quoz or a retail unit in a mall has no realistic option other than mainland, because walk-in customers are mainland customers. A consultancy invoicing clients in London and Riyadh is better served by a free zone desk package, and paying mainland rent for that business is money spent on nothing. A trading company moving containers through Jebel Ali sits naturally in JAFZA.
One issue we often see is a founder choosing a zone on price alone, then discovering their customers are UAE retailers. Restructuring afterwards costs more than the difference between the two licences. If you are weighing specific zones, the differences between IFZA in Dubai, Meydan and DMCC sit mostly in activity lists, visa quotas and renewal cost rather than in headline package price.
Fix the activity list before anything else
Dubai’s Department of Economy and Tourism issues four categories of mainland licence: commercial, professional, industrial and tourism. Which one you get is decided by the activities you select, and those activities are chosen from a published list rather than written freehand. Free zones run their own equivalent lists.
Some activities carry an external approval that sits outside the licensing authority. A clinic answers to the Dubai Health Authority, a nursery or school to KHDA, anything preparing or storing food to Dubai Municipality. Security services go through SIRA, and financial services inside DIFC are regulated by the DFSA. These approvals set the real timeline, because the licence cannot issue until they land.
A common mismatch we see is a company licensed for management consultancy that later starts reselling software subscriptions. Consultancy is a professional activity; reselling a product is commercial. Running the second on the first one’s licence means an amendment, a fee, and sometimes a fresh approval. Decide now what you will be selling in eighteen months, and license for it.
Legal form and trade name
On the mainland the usual forms are a sole establishment, a civil company for professionals such as engineers or accountants, and a limited liability company. Free zones offer a free zone establishment, a free zone limited liability company, or a branch of an existing company. The UAE government portal notes that the difference between the free zone types lies in the number of shareholders and whether the shareholder is a natural or a legal person.
Trade names follow published rules. According to the UAE government portal, the name must be followed by the acronym of the legal form such as LLC, EST or PJSC, must not violate the public morals or public order of the country, must be compatible with the required activity and the legal status of the entity, and must not contain the name of any religion or governing authority, nor the name or logo of any external body. Names using a person’s identity need the full name rather than initials.
Reservations expire, so holding a name six months before you are ready to file usually means paying for it twice.
Initial approval, premises and the document pack
Initial approval means the government has no objection to the business being established and lets you proceed to the next steps. It is not permission to trade. The government portal is explicit that initial approval does not grant the authority to run or practise the business activity, and that foreign investors must obtain approval from the General Directorate of Residency and Foreigners Affairs before the initial approval is granted.
For the licence itself, the documents listed for all legal forms are the initial approval receipt together with everything previously submitted, a copy of the lease contract attested by the Real Estate Regulatory Agency in Dubai, and a duly attested Memorandum of Association for company structures. Shareholder passports, visa pages and photographs sit alongside these. Where a shareholder is a foreign company, its corporate documents need attestation up the chain, which adds weeks and is the step most often underestimated.
Mainland files need the Ejari registration before the licence prints. Free zone packages include a desk, but read what that desk entitles you to, because visa quota is tied to the package tier rather than the space.
What the licence actually gives you
For eligible activities, Dubai runs an Instant Licence service that issues a commercial licence in a single step within five minutes on the invest.dubai.ae platform. Dubai Media Office reported in May 2022 that 32,564 instant licences had been issued since the initiative launched in August 2017, split 59 per cent professional and 41 per cent commercial. The same service grants Dubai Chamber membership, an establishment card from the General Directorate of Residency and Foreigners Affairs, and three Ministry of Human Resources and Emiratisation work permits once the trade licence is issued.
That five-minute figure applies to a narrow band of activities with no external approval and no premises inspection. A file with a real office, a regulated activity or a corporate shareholder takes considerably longer.
Once the licence exists the visa sequence starts: establishment card, entry permit, status change, medical fitness test, biometrics and Emirates ID. Investor and employment visas follow the same path with different paperwork.
The bank account stalls more setups than the licence does
UAE banks apply their own compliance checks and are not obliged to explain a decline. A relationship manager will ask for the trade licence, the Memorandum of Association, shareholder passports and residence visas, proof of address, and evidence the business is real: supplier agreements, signed client contracts, invoices, a website and an office lease.
The files that struggle share a pattern: a flexi desk, shareholders resident abroad, no UAE customers yet, and no online presence at all. Having a working website on your own domain and a matching business email before you walk into the bank removes one objection at little cost, and compliance teams do look. Our web design and business email pages cover what a first version needs.
Four to eight weeks is normal. Applying to two banks in parallel is sensible rather than pushy.
Corporate tax and VAT deadlines you cannot miss
Corporate tax is governed by Federal Decree-Law No. 47 of 2022, issued on 9 December 2022 and applying to financial years beginning on or after 1 June 2023. The rate is 0 per cent on taxable income up to AED 375,000 and 9 per cent on taxable income above that figure.
Registration is separate from paying anything. Under Federal Tax Authority Decision No. 3 of 2024, effective 1 March 2024, a juridical person incorporated, established or recognised in the UAE on or after 1 March 2024 must apply to register for corporate tax within three months of that date. Free zone companies are included. Making no profit does not exempt you, and neither does trading below the threshold. The administrative penalty for a late registration application is AED 10,000.
Small Business Relief softens the burden rather than removing the filing. Ministerial Decision No. 73 of 2023 lets a resident taxable person with revenue at or below AED 3 million elect to be treated as having no taxable income for that period. The Ministry of Finance announced on 7 August 2026 that Ministerial Decision No. 131 of 2026 extends the relief to tax periods ending on or before 31 December 2029, keeping the AED 3 million revenue threshold unchanged. You still register, and you still file a return.
VAT is a separate registration with the Federal Tax Authority. The standard rate is 5 per cent, mandatory registration applies once taxable supplies exceed AED 375,000 across a rolling twelve months, and voluntary registration opens at AED 187,500. New companies frequently register voluntarily to reclaim input VAT on setup costs, which is worth modelling rather than assuming.
Figures and deadlines here are indicative and change; this article is general information rather than tax or legal advice, and a specific structure should be checked with a qualified adviser. Our corporate tax and accounting and bookkeeping pages set out what ongoing compliance involves. If you want the free zone angle in more depth, we covered it in corporate tax registration for free zone companies.
Comparing the two routes side by side
| Question | Mainland | Free zone |
|---|---|---|
| Where you can sell | Anywhere in the UAE and abroad | Inside the zone and abroad; mainland sales need customs clearance or a mainland route |
| Premises | Tenancy with registered Ejari before the licence issues | Flexi desk or office included in most packages |
| Visa quota | Linked to office space and MOHRE approvals | Fixed by the package tier you buy |
| Regulator | Department of Economy and Tourism plus activity regulators | The zone authority, plus federal regulators where relevant |
| Ownership | 100 per cent foreign ownership for most activities since June 2021 | 100 per cent foreign ownership |
| Corporate tax | Registers and files | Registers and files; may access the 0 per cent rate as a Qualifying Free Zone Person on qualifying income |
On cost, treat the licence fee as the smallest line rather than the headline. Rent, visas, medical tests, Emirates ID, the establishment card, deposits and the first year of bookkeeping regularly exceed it. Packages advertised as all-inclusive often exclude visa charges, so ask for the total covering one licence, two visas and renewal, in writing. Published fees change, so take them from the authority’s own portal on the day you budget.
The first ninety days after the licence prints
Register for corporate tax inside the three-month window if the company was incorporated on or after 1 March 2024, and keep every contract and invoice from day one, because both the bank and the FTA will eventually ask for them. Appoint a bookkeeper early, even at low volume, since reconstructing a first year from a shoebox of receipts costs more than twelve months of routine work. Publish a real website and move email off free consumer accounts. If you hire on the mainland, budget for MOHRE contracts and the Wages Protection System from the first payroll run.
