UAE Free Zone Company Setup: The Complete, Step-by-Step Playbook

By Tahmidur Remura Wahid (TRW) Law Firm — Cross-border corporate structuring, banking & compliance

Executive summary

UAE free zones offer 100% foreign ownership, fast licensing, multi-currency banking, and preferential customs/VAT treatments. Yet the real edge is not the “license in 48 hours” promise — it’s choosing the right zone and activity, engineering bank account success, and designing compliance (corporate tax, ESR, UBO, VAT, WPS) so you scale without surprises.

This guide gives you a field-tested, step-by-step route to forming a free zone company (FZCO/FZE) and making it fully operational (visas, office, bank, tax). Where rules vary by free zone, we give decision criteria and practical checklists you can use immediately.

1) Free zone vs mainland vs offshore — what’s the difference?

• ■ Free Zone Company (FZCO/FZE): 100% foreign ownership; licensed by a specific free zone authority. You can trade inside the free zone and internationally. To sell on the UAE mainland (outside your zone), you typically appoint a local distributor or open a mainland branch and comply with customs/VAT.
• ■ Mainland LLC: Licensed by an Emirate’s Department of Economy. Can trade across the UAE without restrictions; subject to federal labour/WPS, VAT, and corporate tax rules.
• ■ Offshore (RAK ICC, JAFZA Offshore): No UAE visas, no physical office trading in the UAE. Useful for holding/IP/asset vehicles, but not for on-shore operations.

Bottom line: If your business is export-oriented, services, digital, holding, logistics, e-commerce fulfilment, or manufacturing in a zone, an FZ setup usually gives the best speed/price/benefit ratio.

2) Which free zone should you choose? (Map by purpose)

There are 40+ zones. Think in industry clusters + practical logistics:

• Trading/Distribution & e-commerce: JAFZA (Jebel Ali), DAFZA (Airport), DMCC, KEZAD/AD Ports, RAKEZ, UAQ FTZ, Ajman FZ, Hamriyah/SAIF, Fujairah.
• Services/Consulting/IT/Media: IFZA, Meydan, DMCC, DIC/DMC/DKV (TECOM), SHAMS, SPC Free Zone.
• Manufacturing/Industrial: KEZAD, JAFZA, Hamriyah, RAKEZ, Fujairah, KIZAD Al Ain.
• Finance & Regulated: DIFC (DFSA), ADGM (FSRA) — common-law courts, ideal for funds/fintech/regulated play.
• Specialities: Health, education, media, crypto/web3, precious metals (DMCC), etc.

Decision drivers:

• ■ Your exact activity on the license list.
• ■ Warehouse/port/airport proximity (for traders).
• ■ Office flexibility (flexi-desk vs unit).
• ■ Visa quotas you need now/soon.
• ■ Banking acceptance track record for your profile.
• ■ Annual reporting/audit requirements (varies by zone).
• ■ Speed (some zones can issue in 48–72 hours for simple service activities).

3) Licensing & structures (getting the “paper” right)

• Entity types:
• FZE (single shareholder)
• FZCO (multiple shareholders)
• Branch (of a foreign or UAE company)
• License categories (typical):
• Professional/Service (consulting, IT, marketing, design)
• Commercial/Trading (general trading or specific items)
• Industrial/Manufacturing
• E-commerce/Media/Edu/Health (zone-specific sub-categories)
• Holding/Investment (some zones bundle this into service)
• Share capital: Many zones have no paid-up capital requirement (or nominal, e.g., AED 10,000); some industrial/manufacturing activities need higher.
• Articles/MoA: Standard templates provided by the zone; we often add custom clauses for board powers, share transfers, drag/tag, IP ownership, and dispute resolution (arbitration).

4) Incorporation timeline — the fast, realistic path

Pre-day 0 (TRW planning call, 30–60 min): Pick zone & activity, banking plan, visa needs, and physical space. We pre-check name availability and bank KYC “red flags”.

Day 0–2: Pre-approval package

• ■ Application & trade name reservation (3–5 options).
• ■ Passport copies (clear colour scans, 6+ months validity).
• ■ Passport-size photo (white background).
• ■ UAE entry/visa status (if in UAE). NOC if a current UAE employee is a shareholder/director (zone-specific).
• ■ Proof of address (home utility/bank statement).
• ■ UBO/KYC forms (ownership chart to the natural person ≥25%).
• ■ Business activity description (1–2 pages is enough; industrial needs more detail).
• ■ Some zones ask a bank reference letter / CV for regulated-ish activities.

Day 2–5: Initial approval

• Zone issues an Initial Approval/Pre-Approval (green light to proceed).
• You pay the first fee tranche; we book the Articles/MoA signing (e-sign in many zones).

Day 3–7: Office / facility & license issuance

• Choose flexi-desk, dedicated office, or warehouse (industrial).
• Sign the lease (EJARI/tenancy equivalent in many zones).
• Authority issues the Trade License + Incorporation Certificate + Share Certificates + MoA/Articles.

Day 5–10: Immigration setup & visa quota

• Create Immigration Establishment Card and (if applicable) E-Channel account.
• Apply for employment quota (director/manager/owners first).
• Optional: Investor/Partner visa (usually 2–10 years depending on category and zone).

Day 7–14: Corporate bank account initiation

• Prepare full KYC pack (see Section 7).
• Book banker interview (in-person or video; some banks require UAE presence).
• Expect account approval anywhere from 5–20 working days after complete KYC (profile-dependent).

Total realistic timeline: 5–10 working days to license for straightforward service activities; 2–6 weeks to full banking live (profile/sector dependent). Industrial/regulated take longer.

5) Step-by-step: from zero to operating business (20 steps)

Step 1 — Confirm activity & zone
Match your exact business to the zone’s activity list. One word mismatch can derail banking and VAT later.

Step 2 — Name reservation
3–5 options; avoid regulated words (“bank,” “insurance,” “university,” etc.) unless you have approvals.

Step 3 — Shareholder & director structure
Decide FZE vs FZCO; define UBO ownership clearly. If using a corporate shareholder, prepare legalised/apostilled corporate docs.

Step 4 — Document pack
Passports, photos, address proofs, CVs (if asked), NOC (if on existing UAE employment), and UBO forms.

Step 5 — Pre-approval
Zone screens KYC and activity. We clear follow-ups fast.

Step 6 — Lease selection
Pick flexi-desk (lowest cost), standard office, or warehouse/unit. Visa quota often scales with space.

Step 7 — Incorporation signing
E-sign or in-person MoA/Articles; pay initial fees. Obtain Incorporation Certificate and Trade License.

Step 8 — Company stamps & resolutions
Adopt board/shareholder resolutions (banking authority, signatories, fiscal year, auditors). We customise.

Step 9 — Immigration Establishment Card & quota
Essential for visa issuance. Some zones do this automatically; others need forms & fees.

Step 10 — Manager/Investor visa (optional)
Entry permit → medicals → biometrics → Emirates ID → visa stamping (now e-visa). Remote options exist for some categories.

Step 11 — Corporate bank shortlist
We match your industry + nationality mix + expected flows to banks that are receptive. (Avoid “spray and pray”.)

Step 12 — Bank KYC
Prepare license pack, MoA/Articles, share certificates, UBO chart, invoices/contracts, business plan, CVs, sample counterparties, 6–12 months statements from your existing company/personal accounts.

Step 13 — Bank interview
Explain the source of funds, business model, and expected monthly volumes. Be specific about markets, ticket sizes, and why UAE.

Step 14 — Banking approval
Account opens → activate online banking → order debit cards → set up dual-control approvals for payments.

Step 15 — VAT registration (if applicable)
If taxable supplies exceed AED 375,000 (mandatory) or likely to exceed (voluntary at AED 187,500), register. Plan 0% exports, 5% domestic, designated zones treatment for goods.

Step 16 — Corporate Tax (CT) registration
All juridical entities register. Free zone entities may qualify as QFZP (0% on qualifying income) if conditions met (see Section 8).

Step 17 — Customs code (traders)
Register with Customs (Dubai/Abu Dhabi/etc.) and set up importer code. Activate duty suspension options in eligible designated zones.

Step 18 — WPS payroll (employees)
If you hire employees, register with MOHRE and implement Wage Protection System. Set offer letters and contracts in the correct zone template.

Step 19 — Office activation & utilities
Internet/phones, signage rules, access cards. Some zones offer plug-and-play co-working.

Step 20 — Compliance calendar
Set reminders: license renewal, lease renewal, VAT returns, CT return, ESR notification/report, UBO updates, audit (if required by your zone), beneficial owner registers.

6) Documents checklist (what to prepare in advance)

For each shareholder/director/manager (individual):

• ■ Passport (valid 6+ months; clear colour scan)
• ■ Passport-size photo (white background)
• ■ Proof of residential address (utility/bank statement, ≤3 months)
• ■ CV / professional profile (some zones)
• ■ UAE visa status or entry stamp (if in UAE)
• ■ NOC if you are on a UAE employment visa (zone-specific)

If shareholder is a company:

• ■ Certificate of Incorporation & Good Standing (legalised/apostilled)
• ■ Memorandum/Articles (legalised/apostilled)
• ■ Board Resolution approving the UAE entity and authorised signatory (legalised/apostilled)
• ■ UBO declaration and structure chart down to natural persons

For banking (in addition to the above):

• ■ Business plan (2–5 pages) with products/services, markets, volumes, margins
• ■ Sample contracts/LOIs and invoices (if existing operations)
• ■ 6–12 months bank statements (existing corporate/personal)
• ■ Office lease/EJARI or zone tenancy letter
• ■ List of largest counterparties (countries, names where possible)

7) Corporate bank account — how to improve your odds

UAE banks are selective. Approval hinges on KYC clarity and a convincing commercial story.

• Choose the right bank for your profile: sector appetite (IT/marketing/trading), nationality mix, expected countries (sanctions filters), need for multi-currency (USD/EUR/GBP/JPY), relationship minimums, and digital banking.
• Ground your flows: Name 3–7 specific counterparties by country/sector, expected invoice sizes, monthly volumes, and payment rails (SWIFT, local).
• Explain source of funds (SOF) and source of wealth (SOW): If capital is coming from your company abroad, share its statements and audited accounts.
• Show substance: Lease/desk, UAE phone, website, brochures, Letter of Intent from clients.
• KYC governance: Two signatories with dual-control; keep share transfers and UBO changes pre-approved by your bank.

TRW banking desk packages this in a banker-friendly data room and sits with you in the interview so you clear questions in one shot.

8) Taxes & compliance (free zone reality in 2025)

Corporate Tax (CT):

• Headline rate 9% for taxable income.
• Free zone companies may be Qualifying Free Zone Persons (QFZP) with 0% on qualifying income if they:
• ■ Maintain adequate substance in the free zone;
• ■ Derive Qualifying Income (e.g., certain goods distribution from/within designated zones to foreign persons, manufacturing, processing, holding of shares and securities, reinsurance, certain HQ/treasury/logistics services to related parties or foreign persons, and ancillary activities);
• ■ Do not conduct Excluded Activities (e.g., banking/insurance to non-qualifying, certain IP exploitation, real estate dealings in mainland, or regular transactions with natural persons except limited cases);
• ■ Comply with transfer pricing and documentation;
• ■ Do not elect into standard CT.
• Non-qualifying income (e.g., many mainland dealings) is taxed 9%.
• Registration & returns are still required even at 0% on qualifying income.

VAT (5%)

• Registration mandatory at AED 375,000 turnover; voluntary at AED 187,500.
• Exports generally 0%; domestic supplies 5%; designated zones for goods have special rules (movements within/between D-zones may be outside VAT scope but watch for conditions).
• File quarterly (often) and keep tax invoices and evidence of export.

Economic Substance Regulations (ESR)

• If you undertake relevant activities (e.g., HQ services, distribution & service centre, holding company, shipping, IP, financing, fund management), file ESR Notification and, where applicable, ESR Report showing substance (people, expenses, premises).

Ultimate Beneficial Owner (UBO)

• Maintain UBO register and file/update with registrar/authority within prescribed periods for any change ≥25% control. Penalties apply for non-compliance.

AML/CFT for certain sectors

• If you’re a DNFBP (e.g., company services provider, real estate broker, precious metals dealer), register with the relevant AML platform, appoint a Compliance Officer, and implement KYC policies.

Labour & WPS

• If you hire, you must use Wage Protection System and comply with MOHRE contracts, insurance, leave, and termination rules.

Audit & accounts

• Some free zones mandate annual audited financials (e.g., DMCC, JAFZA) while others request on threshold/at renewal. Regardless, CT and banks now expect proper books.

9) Office & visas — choosing the right footprint

Space types:

• ■ Flexi-desk: Shared desk; lowest cost; limited visa quota (often 1–3).
• ■ Executive office: Private office, higher quota.
• ■ Warehouse/industrial: For storage/manufacturing; visas scale with area.
• ■ Co-working: Practical for startups with staff; confirm it satisfies bank and immigration requirements.

Visas:

• Investor/Partner visa (often 2–10 years depending on rules at the time).
• Employment visas: Use establishment card + quota; process: entry permit → medicals → biometrics → Emirates ID → visa issuance.
• Family visas: After you hold a principal visa and meet salary/housing criteria.

10) Trading & logistics add-ons

• Customs code with the Emirate customs authority.
• Importer/Exporter registration (if moving goods).
• E-commerce fulfilment: Consider zones with logistics partners inside (JAFZA/DAFZA/KEZAD/RAKEZ) and Designated Zone benefits.
• Third-party logistics (3PL) contracts, bonded warehousing, and intra-GCC shipping rules (incoterms, origin certificates).

11) Common pitfalls (and how we avoid them)

• Wrong activity on license → bank rejects KYC/VAT mismatch.
• ✔ TRW cross-checks activity codes with bank appetite and VAT ramifications before you file.
• Rushing to the “cheapest” zone → later blocked from warehousing or from adding staff.
• ✔ Choose a zone that fits the 2-year plan, not 2-week price.
• No substance → lose QFZP status; 9% CT kicks in.
• ✔ We right-size people, premises, and contracts to your qualifying activities.
• Poor banking story → account stuck 8–12 weeks or closed later.
• ✔ Banker-grade data room + interview coaching; pick the right bank the first time.
• Ignoring ESR/UBO → fines at renewal.
• ✔ TRW compliance calendar + filings.
• Mainland dealings without planning → unexpected VAT/CT treatment.
• ✔ Contract for exports/foreign persons correctly; use local distributors where needed.

12) TRW’s end-to-end free zone setup package

1. Zone & activity selection with a cost/benefit matrix.
2. Name reservation and initial approval.
3. Company incorporation (MoA/Articles, share certificates, corporate registers).
4. Lease negotiation (flexi-desk to warehouse); visa quota planning.
5. Immigration establishment card, E-channel, quota.
6. Bank account orchestration (shortlist, KYC pack, banker meeting, follow-ups).
7. Tax & compliance: CT registration; QFZP eligibility mapping; VAT registration; ESR notification/report; UBO filings; AML (DNFBPs).
8. HR & WPS setup; offer letter/contract templates; handbook.
9. Trade enablement: customs code, importer registration, logistics contracts.
10. Governance kit: board/shareholder resolutions, signing matrix, related-party policy.
11. Annual maintenance: license renewal, audit coordination, tax returns, ESR/UBO updates.
12. Scale & restructure: add activities, offices, or a mainland branch; intercompany agreements; IP/holding structures.

For broader cross-border planning, see TRW’s International Trade page.

13) FAQs (practical answers)

How fast can I get a license?
Simple service activities can be licensed within 5–10 working days after complete documents. Industrial/regulated take longer.

Do I need to visit the UAE?
Many zones allow remote incorporation. For banking and visas, presence is often required (banker discretion; visa biometrics).

Can I sell on the UAE mainland?
Through a local distributor or a mainland branch. Trading directly to end customers on mainland requires proper customs/VAT and often mainland licensing.

Do I pay corporate tax?
If you are a QFZP and earn qualifying income, those profits may be at 0%. Non-qualifying income (e.g., many mainland dealings) is 9%. You still register and file.

Is audit mandatory?
Depends on zone/activity/threshold. Banks and CT compliance effectively make proper accounts necessary.

What about real employees?
If you hire, you must comply with labour law, contracts, insurance, WPS, and leave/termination rules.

14) Step-by-step mini-checklist (printable)

• [ ] Choose zone + activity (bank-friendly).
• [ ] Name reservation (3–5 options).
• [ ] Docs: passports, photos, address proofs, UBO forms, corporate legalisations (if any).
• [ ] Initial approval & pay first fees.
• [ ] Lease (flexi-desk/office/warehouse).
• [ ] License & incorporation certificate issued.
• [ ] Immigration card & visa quota; investor/manager visa if needed.
• [ ] Bank KYC pack; book interview; open account.
• [ ] VAT registration (if needed).
• [ ] Corporate Tax registration (QFZP assessment).
• [ ] Customs code (traders); e-commerce fulfilment set-up.
• [ ] WPS & HR; employment contracts.
• [ ] Compliance calendar: renewal, VAT/CT returns, ESR/UBO filings, audit.

15) Summary table — UAE free zone setup at a glance

Contact TRW Law Firm

Tahmidur Remura Wahid (TRW) Law Firm
Contact Numbers: +8801708000660 · +8801847220062 · +8801708080817
Emails: info@trfirm.com · info@trwbd.com · info@tahmidur.com

Global Law Firm Locations:

• Dhaka: House 410, Road 29, Mohakhali DOHS
• Dubai: Rolex Building, L-12 Sheikh Zayed Road.

Ready to form your UAE free zone company with banking and compliance handled end-to-end? Write to us for a zone short-list, bank probability score, and a fixed-fee incorporation plan tailored to your activity and markets.