UAE Free zone companies (FZCO) were very popular in the recent years due to ease of formation, availability of banking and 0% tax. From 2024, even FZCO companies are required to register and pay corporate income tax.
UAE FZCO's cannot sell or provide services to UAE clients and buyers. For that, you will need to register a mainland company.
FZCO companies are faster and easier to form than mainland companies with less filing requirements.
Just like mainland companies the corporate income tax threshold is AED 375,000 and 0% on dividends and capital gains.
Note there is a FZE (1 shareholder) and FZCO (2 shareholders) but most will refer to it as just a free zone company.
Quick Facts
Corporate Tax Rate
9%
Local Director Required
No
Audit Required
No
Complexity
Moderate
Legal Information
Legal Information
Entity Type
Limited Liability Company (LLC)
Company Form
Limited Liability Company (LLC)
Liability
Shareholders' liability is limited to their contribution to the company’s capital. Personal assets are protected unless fraud or misconduct occurs.
Share Capital
Minimum share capital requirements vary by free zone, typically AED 50,000–AED 300,000, but some free zones have no minimum capital requirement.
Company Name Rules
Must be unique and not similar to existing names. Must include "FZCO" in the name. Cannot contain offensive, religious, or misleading terms (e.g., "bank," "insurance," or "government" without approval).
Types of Shares Allowed
Ordinary shares only. No preferred shares.
Bearer Shares Allowed
No, bearer shares are not permitted.
Foreign Ownership Rules
100% foreign ownership allowed.
Redomiciliation
Allowed
Shareholders
1 shareholder (FZE) and 2+ shareholders (FZCO)
Directors
Minimum: 1 director (natural or legal person).
Secretary
Registered Address
Every FZCO must have a registered office within the respective free zone.
Incorporation Timeline
Trade Name Reservation
1-2 business daysSubmit the proposed company name to the respective Free Zone Authority for approval.
Initial Approval & Business Activity Selection
2-3 business daysObtain initial approval from the Free Zone Authority and select permitted business activities.
Preparation of Documents
3-5 business daysDraft the Memorandum of Association (MoA) and other incorporation documents.
Submission to Free Zone Authority
2-3 business daysFile the incorporation documents with the respective Free Zone Authority and pay required fees.
Trade License Issuance
3-5 business daysOnce approved, the Free Zone Authority issues the trade license allowing the company to operate.
Employment & Visa Processing
5-10 business daysRegister with the Free Zone Authority for visa and work permit processing. Required for business owners, managers, and employees.
Bank Account Opening
10-30 business daysOpen a corporate bank account. Most banks require UAE residency for at least one company signatory.
Tax Registration (If Required)
5-10 business daysRegister for corporate tax (if applicable) and Value-Added Tax (VAT) with the Federal Tax Authority.
Compliance & Operational Setup
OngoingEnsure compliance with regulatory requirements, appoint accountants, and begin business operations.
Uae Corporate Taxation
Corporate Income Tax: 9%
Effective Tax Rate: 9%
Exemptions:
Income below AED 375,000 is tax-free.
Dividends and other profit distributions from UAE resident entities or foreign entities are exempt under participation exemptions.
Dividends and other profit distributions from UAE resident entities or foreign entities are exempt under participation exemptions.
No withholding tax on dividend distributions.
No withholding tax on dividend distributions under the UAE corporate tax regime.
Special Regimes
Anti-Avoidance Rules
Follows OECD guidelines with requirements for Master and Local Files; Advance Pricing Agreements (APAs) available.