Each Dubai free zone is run by its own authority, which issues the company licence instead of the Dubai economic department. This guide explains how the system works and what to check before choosing one.
How a Dubai free zone works
Most zones allow 100% foreign ownership and the repatriation of profit and capital. Legal forms include a Free Zone Establishment, a Free Zone Company, an FZ-LLC and a branch. A free zone licence does not automatically exempt a company from corporate tax, VAT or audits.
How many are there?
Dubai is commonly described as having around 27 free zones governed by 11 authorities, and the government's city portal highlights 21 named zones. Some operators, such as IFZA, run from within other zones and are not listed separately.
Zones by industry
- Trading and logistics: JAFZA, Dubai South, DAFZ, DMCC, Dubai CommerCity.
- Technology and startups: Dubai Internet City, Dubai Silicon Oasis, Dubai Science Park.
- Media and creative: Dubai Media City, Studio City, Production City, Design District, Outsource City.
- Finance and professional services: DIFC, with DMCC, DWTC and Meydan for consulting.
- Healthcare and education: Dubai Healthcare City, Science Park, Academic City, Knowledge Park.
The authorities
One authority can regulate several zones. The Dubai Development Authority, for example, covers several. The authority controls registration, permitted activities, renewals, amendments, share transfers and deregistration. DMCC and JAFZA require annual audit submissions, and JAFZA asks for an updated audit report yearly for FZE and FZCO entities.
Cost
There is no fixed price. It varies by zone, activity, structure, workspace and visas. The components are:
- Licence and registration
- Workspace
- Visas (establishment card, medical test, Emirates ID, residence visa and health insurance)
- Ongoing renewals, accounting, tax and audit fees
Compare the full first-year and renewal costs, and remember that closing a company needs a formal deregistration.
Can a free zone company operate on the mainland?
Not automatically. Under Dubai rules, mainland operations need the appropriate licence or permit from the economic department. Routes include a mainland branch, a branch headquartered in the free zone or an activity permit, and separate mainland financial records are needed.
Corporate tax
Free zone companies must register with the FTA. A Qualifying Free Zone Person may pay 0% on qualifying income if it meets the conditions: adequate substance, transfer pricing compliance, the de minimis test and audited financial statements.
VAT
The mandatory registration threshold is AED 375,000 and the voluntary threshold AED 187,500. A free zone is not the same as a designated zone for VAT, and free zone services are not automatically outside VAT.
Audits
Whether you need one depends on the authority and your tax position. The UAE rules require audited statements for Qualifying Free Zone Persons and for taxable persons with revenue above AED 50 million. Confirm the current rule with us or the FTA.
Searching for a free zone company
Use the government's licence search with the English or Arabic name, the licence number or the unified licence number. Confirm the legal name, the licence status, the issuing authority, the activities and the legal form.
Common mistakes
- Assuming automatic 0% corporate tax
- Confusing free zones with designated zones
- Ignoring visa, office and renewal costs
- Using outdated authority names
- Starting mainland work without approval
- Letting a licence expire instead of liquidating
FAQs
- Which is the best free zone? None fits every company. Choose by activity and operating model.
- Which is cheapest? None is permanently cheapest, so compare written quotations.
- Can I open a corporate bank account? Yes, subject to the bank's compliance review.
See our business setup service and free zone audit service.
Key takeaways
- Each free zone has its own authority, costs and compliance rules.
- A free zone licence does not mean automatic 0% corporate tax or VAT exemption.
- Mainland trading needs the right licence or permit.
Frequently asked questions
Which is the best free zone?
None fits every company. Choose by activity and operating model.
Can a free zone company trade on the mainland?
Not automatically. It needs the proper mainland licence or permit.
Do free zone companies need an audit?
It depends on the authority and tax position, and Qualifying Free Zone Persons need audited statements.
Talk to a chartered accountant
Questions about your own situation? Reach us directly and we will reply with clear next steps.
This article is general information and not advice for your specific circumstances. Rules and thresholds change, so confirm the current position before you act.
