Company formation in Dubai: which structure for which business

Three questions, asked in this order, rule out half the options in ten minutes. Who pays your invoice, and in which country is that entity registered? How many people need a UAE residence visa through this company? Do you need premises that clients, suppliers or inspectors will visit?

The first answer decides between a free zone and the mainland. The second sets the size of the licence and, with it, most of the yearly cost. The third decides whether you need a registered commercial lease or whether a shared desk will do. The set-up price only comes after that — and it is the least decisive criterion of all.

The licence defines the business, never the other way round. You do not set up “a company in Dubai” and then decide what to sell. You select one or more activities from the issuing authority’s list, and that list — not your website, not your brochure — defines what you are allowed to invoice. A serious client will ask for a copy of the licence before signing, and your bank will reread it at every file review.

Each of the three regimes has its own page here: the free zone company, the mainland company and the offshore company, plus accounting and tax, which applies to all three.

It depends on the space you occupy and the type of licence. A free zone licence without a dedicated office comes with a capped quota, usually a handful of visas. Beyond that, you need to rent an office, and the quota is then calculated in proportion to the floor area. On the mainland the principle is the same: the quota follows the area on the lease registered with Ejari, and the authorities check that the premises exist.

Every residence visa has a recurring cost that first budgets forget: immigration fees, medical test, Emirates ID, employer-paid health insurance, renewal. A structure sized for eight residents is structurally more expensive than one for a sole director, whatever its turnover. We size the quota on the headcount you actually expect in eighteen months, not on an ambition.

The detail of each residence permit, its thresholds and the absence rule — which is not the same for every permit — is covered in the visas and residence section.

Since Federal Decree-Law No. 47 of 2022 came into force, UAE companies are subject to corporate tax at 9% on taxable profit above a threshold of AED 375,000, with a 0% rate below it. The scale is marginal: crossing the threshold does not retroactively tax the whole profit.

A free zone company is not exempt by default. It may qualify as a Qualifying Free Zone Person and have its qualifying income taxed at 0%, but the regime has to be earned: a closed list of eligible activities, real substance in the UAE, a cap on non-qualifying income that must not be exceeded, audited accounts. In practice, a consulting firm that invoices European clients from a shared desk, and whose director spends six weeks a year in the country, is not in a comfortable position to claim that status. This is the most fluid part of the system, and the one to review every financial year for your situation.

How the tax works in full, the exemptions and the filing calendar are covered on the page corporate tax in the UAE.

The first-year price is the most visible figure; it is not the one that matters. The figure that matters is year three: licence renewal, rent or desk, immigration fees per visa, health insurance, bookkeeping, audit where the zone requires it, the corporate tax return, VAT returns where applicable, bank fees and the minimum balance tied up.

Two structures sold at the same set-up price can differ by a factor of two over three years, depending on the zone, the visa quota and the audit requirement. The structure comparator lays these items out line by line, so that the decision is made on the cost of ownership rather than on the headline price.