Setting up a company in the UAE is easier than most founders think. But the options can be overwhelming. Here's your complete guide to getting it right the first time.
Why UAE for Your Startup?
Advantages:
- 0% corporate tax for most startups (conditions apply)
- 100% foreign ownership (no local sponsor needed)
- Access to GCC and MENA markets
- World-class infrastructure
- Growing startup ecosystem
- Visa sponsorship for founders and team
Considerations:
- Higher setup and operating costs than other MENA markets
- Cost of living (especially Dubai)
- Visa requirements and renewal processes
The Big Decision: Mainland vs Free Zone
This is your first and most important choice.
Option 1: Free Zone
What it is:
Special economic zones with their own regulations. Popular ones include:
Dubai:
- DMCC (Dubai Multi Commodities Centre)
- DIFC (Dubai International Financial Centre) - for financial services
- Dubai Silicon Oasis - for tech
- Dubai Internet City - for tech/digital
- IFZA (International Free Zone Authority)
Abu Dhabi:
- Hub71 - for tech startups (with startup program benefits)
- ADGM (Abu Dhabi Global Market) - for financial services
- Masdar City - for clean tech
Advantages:
✅ 100% foreign ownership
✅ 0% corporate tax
✅ 0% personal income tax
✅ No import/export duties
✅ Easy to set up (often 2-3 days)
✅ Can operate from anywhere (flexi-desk options)
Limitations:
❌ Cannot trade directly in UAE mainland without distributor
❌ Limited physical presence options
❌ Must renew license annually
❌ Can be expensive ($5,000-15,000+ setup cost)
Best for:
- SaaS and digital businesses
- Export-focused companies
- Consulting and services
- Early-stage startups
Option 2: Mainland
What it is:
Company registered under UAE federal/emirate laws, can operate anywhere in UAE.
Advantages:
✅ Trade anywhere in UAE
✅ No restrictions on business activities
✅ Can have physical retail/office locations
✅ Better for B2C businesses
✅ 100% foreign ownership now allowed for most activities
Limitations:
❌ More complex setup process
❌ May require physical office
❌ Some activities still require local partner
❌ 9% corporate tax on profits above AED 375,000 (effective 2023)
Best for:
- Retail businesses
- Restaurants and hospitality
- Physical products with local distribution
- Businesses needing UAE mainland access
The Decision Matrix
Choose Free Zone if:
- Building SaaS/digital product
- Serving international clients
- Want fastest, simplest setup
- Early-stage, bootstrap mode
- Don't need UAE mainland customers
Choose Mainland if:
- Selling to UAE consumers
- Physical retail or location
- Need to do business with mainland companies
- Long-term UAE presence planned
Setup Process: Free Zone
Step 1: Choose Your Free Zone
Factors to consider:
- Location: Dubai vs Abu Dhabi vs others
- Cost: Setup fees, annual renewal, visa costs
- Business activity: Some free zones specialize in certain industries
- Facilities: Do you need physical office or just flexi-desk?
- Visa allocation: How many visas do you need?
Popular choices for startups:
- IFZA: Cost-effective, flexible, good for small teams
- DMCC: Prestigious address, good for B2B
- Hub71: Best for venture-backed tech startups (subsidized, support programs)
- Dubai Silicon Oasis: Good middle ground
Step 2: Prepare Documents
For company:
- Passport copies of all shareholders and directors
- Business plan (some free zones require detailed plans)
- Proof of address for shareholders
- Company name options (3-5 alternatives)
For visas:
- Passport copies
- Photos (passport size, white background)
- Educational certificates (attested)
- Marriage certificate (if sponsoring spouse)
Step 3: Reserve Company Name
Submit name options to free zone authority. Usually approved within 1-2 days.
Naming rules:
- Cannot include words like "Royal," "International" without approval
- Cannot be offensive or religious
- Must indicate business activity (e.g., "Tech LLC," "Consulting FZE")
Step 4: Get Initial Approval
Free zone authority reviews your application and issues initial approval.
Step 5: Sign Lease Agreement
Even if you're getting flexi-desk or virtual office, you need a registered address.
Costs:
- Flexi-desk: $2,000-5,000/year
- Small office: $8,000-20,000/year
- Larger office: $20,000+/year
Step 6: Submit License Application
Apply for your trade license with all documents.
License types:
- Commercial: Trading, import/export
- Professional: Consulting, services
- Industrial: Manufacturing
- E-commerce: Online businesses
Step 7: Pay Fees and Get License
Typical costs (IFZA example):
- License fee: $3,000-5,000
- Registration fee: $500-1,000
- Visa allocation: $500 per visa
- Office/flexi-desk: $2,000-5,000
- Total first year: $6,000-12,000 for 1-2 founders
Step 8: Open Corporate Bank Account
This is often the hardest part.
Popular banks for startups:
- Emirates NBD: Most startup-friendly
- Mashreq: Good for tech companies
- RAKBANK: Flexible requirements
- ADCB: Good if you're in Abu Dhabi
Required documents:
- Trade license
- Memorandum of Association
- Passport copies
- Proof of address
- Business plan
- Bank reference letter from home country
Pro tip: Have at least AED 50,000 ($13,600) ready to deposit as initial capital. Some banks require this.
Timeline: Can take 2-6 weeks. Be patient.
Step 9: Apply for Residence Visas
Process:
- Entry permit (allows person to enter UAE)
- Medical test (in UAE)
- Emirates ID application
- Visa stamping
Timeline: 2-4 weeks once in UAE
Cost per person: $2,000-3,000 including medical, Emirates ID, visa fees
Setup Process: Mainland
Step 1: Choose Business Activity and Legal Form
Legal forms:
- LLC (Limited Liability Company): Most common, requires min 2 shareholders
- Sole Establishment: One owner only
- Branch of Foreign Company: If you have entity elsewhere
Step 2: Get Initial Approval from DED
Department of Economic Development (DED) in your emirate.
Step 3: Register Trade Name
Similar to free zone, but through DED.
Step 4: Get External Approvals
Depending on activity, you may need approvals from:
- Ministry of Economy
- Dubai Tourism (for tourism activities)
- DHA (Dubai Health Authority) for health-related
- Other relevant authorities
Step 5: Draft and Notarize MOA
Memorandum of Association must be notarized at notary public.
Step 6: Get Trade License
From DED after all approvals.
Step 7: Physical Location
Mainland companies usually need actual office space (not flexi-desk).
Ejari registration: Tenancy contract must be registered.
Step 8: Bank Account
Same as free zone process.
Step 9: Visas
Same process as free zone.
Typical mainland costs:
- License: $3,000-8,000
- Office space: $10,000-30,000/year minimum
- Total first year: $15,000-40,000+
Abu Dhabi: Hub71 Advantage
If you're a tech startup, Hub71 offers significant benefits:
What you get:
- Subsidized office space (90% off for year 1)
- Free visas for core team
- ADGM license (financial services free zone)
- Access to investors and mentors
- Program support and events
Requirements:
- Tech-enabled business
- Scalable model
- Venture-backed or strong traction
- Application and selection process
Cost: Effectively $5,000-10,000 for first year (vs $15,000-30,000 without Hub71)
Application: hub71.com
Saudi Arabia Quick Comparison
If you're considering Saudi instead of UAE:
Advantages:
- Larger market (35M people vs UAE's 10M)
- Growing ecosystem with government support
- Lower operating costs
- Vision 2030 initiatives
Challenges:
- More complex setup process
- Requires local partner for some activities (changing)
- Saudization requirements (hiring Saudi nationals)
- Less English-friendly business environment
Best for: Companies targeting Saudi market specifically
Egypt: Budget Alternative
Advantages:
- Much lower costs ($2,000-5,000 setup)
- Large market (100M+ people)
- Tech talent pool
Challenges:
- Currency volatility
- Bureaucracy
- Infrastructure challenges
- Harder to access Gulf markets
Best for: Bootstrapped startups, Egyptian founders, cost-sensitive businesses
Post-Setup: What Comes Next
Month 1:
- Open bank account (if not done)
- Set up accounting (hire accountant or use software)
- Register for VAT (if annual revenue will exceed AED 375,000)
- Get business cards and email domain
Month 2-3:
- Process visas for team
- Set up payroll (WPS - Wage Protection System)
- Get health insurance for team (mandatory)
- Set up business processes
Ongoing:
- Annual license renewal (every company, every year)
- Visa renewals (every 2-3 years depending on visa type)
- Accounting and bookkeeping
- VAT filing (quarterly if registered)
- Corporate tax filing (if mainland)
The Hidden Costs
Year 1 realistic budget (free zone, 2 founders):
- Setup and license: $8,000
- Office/flexi-desk: $3,000
- Bank account setup: $500
- Visas (2 people): $5,000
- Medical insurance: $2,000
- Accounting/PRO services: $3,000
- Miscellaneous: $2,000
- Total: $23,500
Annual recurring (Year 2+):
- License renewal: $5,000
- Office: $3,000
- Visa renewals: $2,500 (prorated)
- Medical insurance: $2,000
- Accounting: $3,000
- Total: $15,500/year
Common Mistakes to Avoid
❌ Choosing wrong free zone
Each has different costs and benefits. Research thoroughly.
❌ Underestimating bank account difficulty
Start this process early, have all documents ready.
❌ Not budgeting for visas
Visa costs add up quickly, especially with family sponsorship.
❌ Ignoring activity restrictions
Make sure your license covers all activities you plan to do.
❌ Setting up too early
Wait until you have customers or funding. Operating from outside UAE might be fine initially.
❌ Going too cheap
Very low-cost options often have hidden fees or poor service.
Should You Use a PRO/Setup Company?
PRO (Public Relations Officer) companies handle setup for you.
Advantages:
- Save time
- Navigate bureaucracy
- Handle visa processing
- Ongoing support
Cost: $1,500-5,000 additional
Recommendation: Worth it for first-time founders unfamiliar with UAE processes.
Reputable PRO companies:
- Shuraa
- Connect Group
- Creative Zone
- Fast Track Corporate Services
The Bottom Line
Free zone is best for most startups:
- Faster setup
- Lower cost
- Simpler ongoing compliance
- Suitable for digital businesses
Budget realistically:
- $20,000-30,000 first year for 2-person startup
- $15,000-20,000 annually after that
Start when ready:
- Don't rush setup before validating idea
- But don't wait too long once you have customers
Use Hub71 if eligible:
- Significant cost savings
- Strong ecosystem support
UAE company setup is straightforward once you understand the options. Choose the right structure for your business model, budget appropriately, and you'll be operational within a month.
