Free zone company setup

What a free zone actually is

A free zone is a defined area with its own regulatory authority and rules that sit apart from the UAE's general trade regime. When you incorporate in a free zone, your licence is issued by that zone's authority — your counterparty is the zone, not the mainland licensing department.

In practice that means faster incorporation, less paperwork, and an office requirement most zones will satisfy with a flexi-desk. In return, there is a restriction on selling directly to customers on the UAE mainland; that is usually done through a distributor or a separate mainland licence.

The tax position in 2026

The UAE has had a corporate tax since 2023. A separate regime is preserved for free zone companies:

• A company meeting the Qualifying Free Zone Person (QFZP) conditions pays 0% corporate tax on its qualifying income.
• Non-qualifying income, and companies that lose QFZP status, fall under the general regime: 0% up to AED 375,000 and 9% above it.
• QFZP status is not automatic. Adequate substance, audited financial statements and transfer pricing documentation are among the conditions.
• Corporate tax registration is mandatory even where the rate is 0%.

Which zone?

What we look at when choosing: whether your activity can be licensed in that zone, how many visas you need, the office requirement, how banks view the zone, and total first-year cost. Sector-specific zones (media, technology, commodities, healthcare) also give you proximity to companies in the same field.