Free Zone Company Setup in the UAE, Zones, Costs, and Steps

The cheapest free zones in the UAE by starting licence are JAFZA (from AED 5,000), Ajman (from AED 5,565) and RAKEZ (from AED 6,010). For the lowest all-in cost with zero visas, SHAMS leads at an indicative AED 8,325.

The gap matters because a low government-fee zone can still cost more once visas, office and renewals are added. The cheapest zone that fits your activity and visa needs is the one to choose, not the lowest headline price.

Read the cheapest free zones in the UAE guide for the full ranking.

A free zone company cannot trade directly in the UAE mainland. It operates within its zone and internationally.

To sell into the mainland market, a free zone company appoints a mainland distributor, opens a mainland branch, or takes a dual licence. Many founders start in a free zone and add mainland access as they grow, which keeps the early cost low while preserving 100% ownership.

According to the UAE Federal Tax Authority, a qualifying free zone person pays 0% corporate tax on qualifying income and 9% on income that does not qualify. All companies register and file regardless.

The 9% rate applies to taxable profit above AED 375,000; profit below that threshold is taxed at 0%. Qualifying status depends on meeting the free zone person conditions, so most founders confirm their position with a tax adviser before the first filing.

A free zone company sponsors visas according to its package and office. A licence-only or flexi-desk package supports a small number of visas; a physical office supports more.

Each zone publishes a visa quota per package, and the per-visa cost is roughly AED 6,070 plus a one-off immigration card. Founders planning to hire should size the package to the headcount from the start, because upgrading later adds cost.

You do not need a physical office for most free zone companies. A flexi-desk or virtual office satisfies the licence in many zones.

A physical office becomes necessary for higher visa quotas or regulated activities such as healthcare or food. The flexi-desk option is what keeps free zone entry costs low for consultants, holding companies and e-commerce sellers.

One person can own a free zone company. A single shareholder holds 100% of a free zone company, as a Free Zone Establishment (FZE).

A company with two or more shareholders is a Free Zone Company (FZCO). Both forms give full foreign ownership, limited liability and the same tax treatment, so a solo founder loses nothing by setting up alone and can add shareholders later.

A free zone company can open a corporate bank account in the UAE. The licence, incorporation documents and shareholder details are required.

UAE banks apply strict compliance checks, so a clear business activity, a resident shareholder and proof of activity speed up approval. Bizstart prepares the application to reduce the risk of rejection, which is the most common delay founders meet after the licence is issued.

The documents needed to set up a free zone company are passport copies of each shareholder, passport-size photographs, the application form, the chosen company name and activities, and any activity-specific approval.

Companies owned by another company also submit that company's incorporation documents, a board resolution and a power of attorney, attested where required. Regulated activities such as finance, healthcare or education need the relevant authority's approval before the licence is issued.

You can convert a free zone company to a mainland company. The conversion involves a new mainland licence and winding down or branching the free zone entity.

Many founders start in a free zone for the low cost and 100% ownership, then convert as they grow into the UAE market. Bizstart handles these conversions; each zone has its own convert route, set out in the zone guides such as converting an IFZA free zone company.