Business Setup

Setting up a UAE company is rarely the difficult step. Choosing a structure you will not have to unwind in two years is.

The three routes each carry real constraints. Mainland companies can trade freely within the UAE and bid for government work, but come with heavier compliance and, for some activities, local ownership or service-agent requirements. Free zone companies are faster, cheaper and offer full foreign ownership, but a free zone entity cannot generally trade directly into the mainland market without a distributor or a branch. Offshore holding companies hold assets and shares well, but they cannot obtain residence visas or take on UAE trading activity at all.

The mistake that costs the most is picking on setup cost alone. A cheap free zone licence is expensive if the business turns out to need mainland clients, or if the activity listed on the licence does not match what the company actually does — which is also one of the fastest ways to have a bank account application declined.

Banking deserves particular attention. UAE corporate account opening has tightened considerably, and approval depends on the substance behind the application: a coherent business model, a licence whose activities match it, demonstrable source of funds, and often a physical office rather than a flexi-desk. Structures that look identical on paper get very different answers from the same bank.

Corporate tax has raised the stakes again. Since June 2023 UAE corporate tax applies at nine per cent above the AED 375,000 threshold, with a qualifying free zone regime that carries conditions worth understanding before you rely on it — not after the first return is due.