Business Setup in UAE Free Zones

In the UAE, there are approximately 40 free zones in operation, with more on the way. Each Free Zone is organized around one or more commercial categories, and only those businesses are eligible for licenses. One of the most appealing aspects in freezone company formation in the UAE is that there are no restrictions on foreign ownership, and companies are governed by an independent Free Zone Authority (FZA), which is in charge of issuing operating licenses and regulating the activities of companies within the Free Zone.

The UAE has evolved into a significant business hub that is excellent for establishing a company or a representative office. With over 40 different “Free Trade Zones” in the UAE, determining the right Free Zone through which to conduct business in the region can be difficult. A widespread misunderstanding is that a Free Zone Firm is the same as an offshore company; nevertheless, despite their similarities, they have significantly different characteristics.

Benefits Of UAE Free Zone Company Formation

Aside from allowing shareholders, directors, and workers to get resident visas in the UAE, a Free Zone offers the following advantages:

  • 100% foreign ownership (no need for a local partner/sponsor); 100% repatriation of capital and profits; 100% exemption from corporate and personal income taxes;
  • There are no currency limits; there are no currency restrictions; there are no currency constraints.
  • A wide range of activities that can be licensed;
  • Abundant and low-cost energy;
  • Communications that are modern and efficient;
  • Efficiencies in logistics related to the business cluster effect;
  • SMEs and start-ups can rent serviced workstations and offices.
  • Excellent customer support.

Requirements For Business Setup in UAE Free Zones

Investors can either create a new firm as a Free Zone Establishment (FZE) or a Free Zone Company (FZC) – a FZE has one shareholder, while a FZC has two or more – or simply open a branch or representative office of their current or parent company in the UAE or elsewhere. An FZE or FZC is a limited-liability company that operates under the rules and regulations of the Free Zone in which it is located. The Commercial Companies Law (CCL) of the UAE does not apply.

We will need the following documentation and due diligence from all shareholders/directors of the proposed new company before we can start the process of UAE Free Zone Company formation:

  • Copy of certified passport and UAE visa/entry stamp (if non-resident)
  • 2 x Address Proofs (dated within 3 months)
  • Letter of recommendation from a bank or a professional
  • Curriculum Vitae (CV) (summary of professional history)
  • Form for Starting a Business (which we will provide) 

Please note that based on the proposed new company’s business activity, some Business Setup in UAE Free Zones may require a detailed business plan. DAMAAR provides a number of templates to help you out.

After establishing a legal presence in a Free Zone, the company will need to lease space or property and get an operational license from the FZA. Different licenses are required for different sorts of free zones. Companies having trade and industrial licenses can only operate within the Free Zone or outside of it. A UAE official agent is required to sell products in the UAE, as well as the formation of a joint venture.


Yes, free zone companies can expand their operations into the UAE mainland by obtaining the necessary licenses and permits from the relevant authorities. They must comply with specific regulations governing mainland business activities.

No, free zone companies enjoy the benefit of 100% foreign ownership and do not require local sponsors or agents to operate within the free zone or engage in mainland business activities.

Visa requirements for employees in free zone companies vary depending on the free zone and the employee’s nationality. Generally, they need a valid employment contract, medical fitness tests, and sponsorship by the company.

Setting up a Free Zone Company typically takes 3 to 6 weeks, including the approval process for licenses, visas, and other necessary permits. However, timelines can vary based on the complexity of the business activity and regulatory compliance.

Yes, all UAE businesses, including those in free zones, must have a lease agreement as it provides a legal basis for occupying physical space. The lease agreement outlines aspects such as rent and duration which ensures clarity and legal compliance for business operations.

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