How to Start Doing Business in UAE: A Step-by-Step Guide

The UAE has transformed its economy impressively. Its GDP jumped from $349 billion in 2020 to $545 billion in 2024, which makes it an attractive business destination. The nation’s global business appeal shows in its demographics – expatriates make up over 80% of its 9.5 million population.

The country sits at a sweet spot between Europe, Africa, and Asia. This location gives businesses direct access to more than 2 billion consumers. The UAE offers strong incentives through its 40+ free zones. These zones allow 100% foreign ownership and zero personal income tax. The new corporate tax rate stands at just 9%.

This detailed guide shows you how to set up and run a successful business in the UAE. You’ll find all the steps, requirements, and key factors to help you start confidently in 2025.

Understanding the UAE Business Landscape

The UAE’s business world keeps changing as the country rolls out new plans to draw investors from around the globe. The country provides a unique setting for business owners who want to start or grow their operations through its steadfast dedication to economic diversification and state-of-the-art solutions.

Key Economic Zones and Their Benefits

The UAE has built more than 40 specialized free zones spread across its seven emirates. These business hubs serve as engines of growth and international commerce. Each zone focuses on specific industries to encourage valuable sector connections. You’ll find zones dedicated to e-commerce, logistics, media, technology, trading, and manufacturing.

Dubai and Abu Dhabi’s free zones feature specialized facilities that cater to technology, finance, aerospace, and healthcare sectors. The free zones in Sharjah have become popular among startups and SMEs because they offer affordable solutions and quick regulatory processes.

These zones come packed with benefits that make them really attractive:

• 100% foreign ownership
• Complete repatriation of capital and profits
• Quick business setup procedures
• Exemption from corporate and income taxes (with certain conditions)
• 100% exemption from customs duties
• Independent regulatory frameworks
• Reliable infrastructure and facilities

Businesses in these zones can reach global markets easily. Their location between East and West gives companies quick access to airports, seaports, and logistics hubs—perfect for international trade.

Recent Changes in Foreign Ownership Laws

Foreign ownership in mainland UAE companies faced major restrictions until recently. Foreign investors could only hold up to 49% of an onshore limited liability company’s share capital, while UAE nationals or companies needed to hold at least 51%.

The UAE Government changed this picture by updating the federal Commercial Companies Law. This big move now lets foreign investors own their businesses completely in specific sectors. Foreign investors aren’t stuck at 49% anymore—they can go all the way to 100%. Companies no longer need a major Emirati shareholder or agent.

Foreign ownership in mainland companies now works in three ways:

1. Businesses on “positive lists” published by UAE’s Departments of Economic Development can have 100% foreign ownership
2. Activities on the Strategic Impact List need to notify UAE regulatory authorities
3. The old 49% rule still applies to activities not on either list

Dubai has taken things further. The Dubai Executive Council Resolution No. (11) of 2025 now lets Dubai free zone businesses expand into mainland Dubai through onshore licenses and permits. This has really changed the UAE’s business landscape.

Tax Advantages for Businesses in 2025

The UAE launched its federal corporate tax system in 2023. It follows global best practices but keeps things simple for businesses. Even with these changes, the UAE still offers one of the world’s most attractive tax environments.

The corporate tax system works in three tiers:

1. No tax on yearly taxable profits below AED 375,000
2. 9% standard rate on profits over AED 375,000 (lowest in the GCC except for Bahrain)
3. 15% Domestic Minimum Top-up Tax for big multinationals making €750 million or more globally (starting January 1, 2025)

Free Zone companies get special treatment. While they count as taxable entities under UAE CT Law, Qualifying Free Zone Persons (QFZPs) can enjoy a 0% rate on qualifying income. To get these benefits, free zone entities must:

• Keep enough business activity in the free zone
• Make qualifying income
• Follow transfer pricing rules
• Have audited IFRS financial statements

Investment activities get good treatment too, with exemptions for qualifying funds and participation benefits. The system doesn’t have withholding taxes on domestic and international payments.

These changes have made the UAE stronger as a global business center. The new tax system keeps the UAE competitive for international businesses while meeting global standards.

Choosing the Right Business Structure

Choosing the right business structure is a make-or-break decision for anyone starting operations in the UAE. Your choice will shape everything from how flexible your operations can be to what taxes you’ll pay and how successful your business becomes.

Mainland Companies: Features and Requirements

UAE mainland companies work under the Department of Economic Development (DED). They can do business freely throughout the UAE and internationally. The UAE’s federal Commercial Companies Law now lets foreign investors own 100% of most mainland companies in most business activities.

Most mainland businesses are Limited Liability Companies (LLCs). They need just one director who can be from any country. These companies look more credible to local customers and can work directly with government organizations. This means they can bid for profitable government contracts.

To set up a mainland company, you’ll need:

• A physical office that’s at least 200 sq ft
• The green light from authorities like the Department of Economic Development and Ministry of Labor
• A trade license that matches what you plan to do

Mainland companies give you more freedom to operate, better access to local markets, and boost your credibility with customers and partners. This structure works best if you want to sell to UAE consumers or team up with the government because it gives you complete market access.

Free Zone Entities: Benefits and Limitations

The UAE has more than 40 free zones that cover many industries. Each zone has its own rules and offers special perks to foreign investors.

Free zone companies come with these perks:

• Foreign investors can own 100% of the business
• No corporate or income taxes (if you meet certain conditions)
• You can take all your capital and profits back home
• Setting up your business is quick and easy
• You don’t pay customs duty

Free zones started as a way to attract foreign money by avoiding mainland ownership rules. Even though mainland companies now allow 100% foreign ownership in most areas, free zones still offer unique advantages in taxes and simpler operations.

But free zone companies have their limits. They can’t sell directly to UAE mainland customers unless they work with a local distributor or service agent. This makes it harder to reach the broader UAE market and might slow down growth for companies that want local customers. Some free zones also cost more to run because of service fees and rules you need to follow.

Offshore Companies: When They Make Sense

Offshore companies are perfect for businesses that don’t need a physical UAE presence. People use them to hold assets, trade internationally, or manage investments outside the UAE.

UAE offshore companies give you:

• Zero taxes on income, corporate earnings, and personal wealth
• Protection of your assets from people you owe money to
• Privacy since your information stays off public records
• Quick setup in just 3-7 days
• No need for an office

These companies work well for international investors who want to protect their assets, own property in certain UAE areas, or hold intellectual property and real estate investments. Nobody can see who owns these companies, which gives you lots of privacy.

The drawbacks? Offshore companies can’t do business in the UAE and might struggle to open bank accounts because banks look more closely at offshore businesses now. They also can’t get UAE residency visas.

Your choice between these structures should match your market goals, how you want to run your business, and your long-term plans. Think about whether you need local market access, want to trade internationally, or just want to protect your assets in the UAE.

Selecting Your Business Location

The right location can make or break a business in the UAE. Your choice will affect how smoothly you operate, reach your market, and succeed overall. The UAE gives you plenty of options, and each spot comes with its own perks that might suit your business needs.

Dubai vs. Abu Dhabi: Comparing Major Business Hubs

Dubai and Abu Dhabi lead the pack as UAE’s powerhouse emirates, each with its own business flavor. Dubai’s population sits at about 3.4 million people, while Abu Dhabi houses 1.5 million. These numbers create two very different markets for finding customers and workers.

These cities have grown in different ways. Dubai has moved away from oil dependency and now thrives on tourism and services. The city’s biggest money-maker is wholesale and retail (22.7% of GDP), followed by financial services (11.9%) and transport and storage (11.7%). Manufacturing brings in 80% of Dubai’s non-oil money.

Abu Dhabi tells a different story. The capital city, which is the largest emirate by size and GDP, keeps closer ties to traditional money-makers. The city’s massive oil wealth makes it attractive to foreign investors. All the same, Abu Dhabi wants to broaden its economy by putting money into manufacturing, science, startups, and worker training.

Dubai shows off its business-friendly side with modern rules and impressive projects like Dubai Islands, its metro system, and Mohammed bin Rashid Solar Park. Abu Dhabi takes a steadier approach with its family-friendly atmosphere and strong government support.

Specialized Free Zones for Different Industries

The UAE boasts more than 46 specialized free zones that serve specific business sectors. Each zone runs by its own rules and offers unique perks to foreign investors.

Here’s what some key free zones offer:

• Dubai Internet City: A tech haven with custom-built infrastructure
• Dubai Media City: A creative hub with top-notch production facilities
• Abu Dhabi Global Market (ADGM): A prize-winning financial center that attracts banks and FinTech companies
• Khalifa Industrial Zone Abu Dhabi (KIZAD): Links to Khalifa Port and over 60 global ports for easy trading
• Dubai Healthcare City: A perfect fit for healthcare and wellness businesses

These zones pack quite a punch – they make up about 40% of UAE’s total exports, including re-exports. Dubai’s free zones alone generate 60% of the city’s total goods exports.

Cost Considerations by Location

Business costs vary a lot between emirates and between mainland versus free zone setups. License fees in Dubai and Abu Dhabi follow similar patterns:

• Professional License: AED 10,000 – 15,000
• Commercial License: AED 15,000 – 20,000
• Industrial License: AED 20,000 – 25,000

Infrastructure costs play a big role in choosing where to set up shop. Dubai’s massive growth has pushed occupancy rates sky-high (above 99% in the DIFC). This drives up property prices and affects workers who must travel from farther away.

Abu Dhabi’s real estate tends to be more reasonable, with less traffic to deal with. The northern emirates, like Ras Al Khaimah, offer even better deals for budget-conscious businesses.

Smart businesses also think about:

1. Market Access: How close you’ll be to customers and partners
2. Connectivity: Getting around and reaching ports and airports
3. Workforce Availability: Finding the right talent nearby
4. Industry Clusters: Benefits of having similar businesses close by
5. Infrastructure Quality: Reliable utilities and internet service

Businesses looking at international markets might love spots near major transport hubs like Jebel Ali Free Zone (right by Jebel Ali Port and Al Maktoum International Airport). Local market-focused companies might do better on the mainland where customers can reach them easily.

Legal Requirements for Company Formation in UAE

Setting up a legal entity in the UAE needs close attention to rules and paperwork. Business owners must follow several significant steps to make sure their company meets all government rules for UAE operations.

Documentation Needed for Registration

The success of your UAE company setup depends on proper preparation and submission of key documents. Most business types need these papers:

• Valid passport copies of all shareholders and appointed managers
• Business plan that shows activities and investment strategy
• Completed application forms for your chosen jurisdiction
• Proof of address for the company and its representatives
• Original approval receipt from the Department of Economic Development

Some legal documents need professional preparation and verification. The Memorandum of Association (MOA) serves as a key document that outlines the company’s structure and goals. Only UAE-based law firms, courts, and notary public can prepare and verify these documents. Civil companies, limited liability companies, and public or private joint stock companies must have this document.

Your company needs a physical address to run legally. The premises should match the requirements set by the emirate’s Department of Economic Development and follow zoning rules. Dubai businesses must register their office or warehouse tenancy contracts through the Dubai Land Department’s Ejari portal.

Visa Requirements for Business Owners

Business owners in the UAE can now apply for the Green visa, which has replaced the two-year residence visa. This visa helps investors who start or join commercial activities in the country.

The visa application needs these qualifications:

• ICP (Identity and Citizenship) approval based on the investors rating system
• Proof of investment (total invested capital if you have multiple licenses)
• Local authorities’ approval

UAE offers various visa options for foreign entrepreneurs. The Green Visa gives five-year residency to investors, business partners, and self-employed people who invest at least AED 1 million. The long-term investor visa provides ten-year residency if you invest AED 2 million or more. This lets you sponsor unlimited domestic helpers and stay outside the UAE for more than six months while keeping your residency.

Corporate Bank Account Setup Process

A corporate bank account marks the final step to get your business running. UAE banks are stable, well-regulated, and tech-savvy, though they have strict compliance rules.

Here’s what you need to open an account:

1. Essential documents including company papers, owner/director IDs, and a detailed business plan
2. Corporate account application forms signed by authorized signatories
3. Board resolution documents that approve account opening
4. Certified copies of incorporation documents, business profile, and memorandum and articles of association
5. Ultimate Beneficial Owners (UBOs) information, including CVs and proof of identity

Many local UAE banks don’t charge opening fees for corporate accounts. They do ask for minimum balances between AED 50,000 and AED 500,000, depending on the bank and account type. LLC or Free Zone companies usually get their accounts in 2 to 4 weeks. Offshore entities or complex applications might take longer.

Step-by-Step Business Setup Process

Setting up a business in the UAE requires entrepreneurs to follow specific steps that ensure they comply with local regulations. A clear understanding of each step will help you create a successful company formation in UAE.

Original Approval and Name Reservation

Your business setup begins when you get approval from relevant authorities. The UAE government’s approval shows they don’t object to your entity, but you can’t start operations right away. Mainland businesses need this approval from the Department of Economic Development (DED) in their emirate.

After getting approval, you’ll need to secure a unique trade name. Your trade name must follow these strict guidelines:

• Include an abbreviation of the legal form (e.g., LLC)
• Avoid improper words or anything that offends public sensibilities
• Match the economic activity you’ll perform
• Exclude names of Allah, government authorities, or third-party logos
• Be unique and not registered by another company

You can submit trade name registration applications through the Department of Economic Development’s website, smart application, or in person. Dubai charges AED 620 to reserve a trade name.

License Application Procedures

The license application process starts after you secure your trade name. You’ll need these vital documents:

• Original approval receipt and previous submissions
• Your lease contract registration certificate copy
• Certified Memorandum of Association
• Extra government approvals (if your activity type needs them)

You must pay all fees within 30 days of getting the payment receipt. Late payments will cancel your application. Dubai and Abu Dhabi license costs range from AED 10,000-25,000. Professional licenses cost less while industrial licenses are more expensive.

Free zone establishments can submit applications online or at their free zone office. Mainland business setup costs start at AED 12,000, while free zone setup begins at AED 6,000.

Office Space Requirements

UAE companies need a physical address that meets their emirate’s Department of Economic Development and local municipality rules. Requirements change based on your business type and location:

Mainland companies typically need at least 200 sq ft of office space. You can choose from:

• Traditional office spaces (rent or buy)
• Shared offices with common facilities
• Virtual offices (limited to specific license types)

Free zones give you more options, including flexi-desk arrangements that cost less upfront. The Dubai Department of Economic Development now lets you get instant licenses through Invest Dubai for consulting, professional services, and online businesses without needing a physical address in the first year.

Memorandum of Association Preparation

The Memorandum of Association (MOA) forms the foundation of your company. This legal document outlines your company’s basic conditions and defines its operations and limits.

Your MOA must include these key clauses:

• Company name (with proper suffix based on company type)
• Registered office location
• Company’s objects and activities
• Member liability clause
• Capital clause (for share capital companies)
• Subscriber’s intention statement

The MOA requirements include:

• Divided paragraphs
• Sequential page numbers
• Notarized signatures
• Witness and signatory details

Only UAE-based law firms, courts, and notary public can prepare and verify these documents. You’ll need to register your completed MOA with the commercial register of your economic department or free zone authority.

Navigating the New UAE Corporate Tax System

The UAE’s corporate tax system has become crucial to entrepreneurs doing business in UAE since 2023. This fundamental change in the country’s traditionally tax-free environment stands as one of the most competitive tax frameworks worldwide.

Understanding the 9% Corporate Tax Framework

The Federal UAE Corporate Tax Law took effect for financial years starting on or after June 1, 2023. A progressive structure now applies throughout all emirates. Businesses must pay a standard rate of 9% when their taxable income exceeds AED 375,000. This rate remains the lowest in the GCC region, except for Bahrain.

The tax applies to most business activities, including:

• UAE-incorporated mainland companies
• Free zone entities (with special provisions)
• Branches of foreign companies
• Individuals conducting licensed commercial activities

Businesses must register for corporate tax even if their earnings fall below the taxable threshold. Tax returns should be submitted within nine months after the financial year ends.

Tax-Free Thresholds and Exemptions

The UAE corporate tax framework allows businesses with annual taxable profits below AED 375,000 to benefit from a 0% tax rate. This helps smaller enterprises and startups grow their operations.

Several entities don’t need to pay corporate tax:

• UAE government entities and government-controlled organizations
• Businesses engaged in extractive businesses (subject to emirate-level taxation)
• Qualifying public benefit entities
• Qualifying investment funds

Free zone entities can enjoy a 0% tax rate on qualifying income if they meet specific conditions as Qualifying Free Zone Persons (QFZP). These entities must maintain adequate substance in the UAE, generate qualifying income, and follow transfer pricing regulations.

VAT Registration and Compliance

Companies need to think about Value Added Tax (VAT), which started in 2018. Registration becomes mandatory when a company’s taxable supplies hit AED 375,000. Companies can register voluntarily if their revenues exceed AED 187,500.

Companies can register for VAT online through the Federal Taxation Authority portal. The process requires business information, operations details, and financial data. Approved businesses receive a tax registration number and must meet VAT requirements by issuing invoices and filing returns.

Missing registration deadlines results in heavy penalties. Companies pay AED 10,000 if they fail to register within 30 days of exceeding thresholds. Late payments incur additional penalties starting at 2% of outstanding balances.

Obtaining Necessary Permits and Approvals

Running a successful business in the UAE needs industry-specific permits along with the general trade license. These permits help businesses stay compliant with the law and protect everyone involved.

Industry-Specific Licenses and Permits

UAE businesses need special permits based on their sector. Healthcare providers must get licenses from the Health Authority of Abu Dhabi (HAAD) or Dubai Health Authority (DHA) when they operate medical clinics or supply equipment. Restaurants and food manufacturers need safety permits. The Ministry of Education must approve all educational institutions. Real estate companies need certification from the Real Estate Regulatory Authority (RERA). The Road and Transport Authority (RTA) issues licenses for transportation businesses. Each sector like financial services, tourism, media, energy, and manufacturing needs approval from their respective regulatory bodies.

Health and Safety Compliance

The UAE Labor Law requires employers to create a safe workplace for their staff. Companies must follow safety standards under the Ministry of Human Resources and Emiratisation (MOHRE) and local authorities’ supervision. Workers should get proper protective gear, safety training, and access to medical facilities on-site. Companies must report workplace accidents that cause injury or death to MOHRE within 24-48 hours. Breaking these rules can lead to fines, work stoppage, or criminal charges in serious cases. Industrial and construction companies with more than 100 workers must have qualified Occupational Health and Safety Officers.

Import/Export Licensing Requirements

International trade needs special import/export permits. The UAE Export Control Executive Office (ECEO) or Federal Authority for Nuclear Regulation (FANR) issues permits for controlled items. Right now, you need ECEO permits for armored vehicles and certain chemical weapons convention items, while FANR handles nuclear-related licensing. Businesses must get a trade license from their emirate’s Department of Economic Development to import goods. The process needs standard papers like commercial invoices, origin certificates, detailed packing lists, and relevant permits. Most shipments must go through a two-step document verification process called “legalization”.

Post-Setup Business Operations

UAE businesses need to handle day-to-day operations and stay compliant with local laws after their establishment. A proper management system for these post-setup processes helps create sustainable business operations.

Hiring and Employment Regulations

UAE businesses must stay current with the country’s evolving employment laws. Major changes to work legislation will reshape employment conditions in 2025. The Green visa now offers five-year residency for investors and entrepreneurs, replacing the previous two-year residence visa.

New employment regulations starting April 1, 2025, will better define remote and part-time employees. Remote employees who work outside the UAE won’t need UAE residence visas or work permits. The maternity leave now covers adoptive mothers and women who experience stillbirth after 24 weeks.

Accounting and Audit Requirements

UAE businesses must keep accurate financial records. The law requires companies to keep these records for at least five years. Mainland companies need external audits that examine financial statements, activities, and compliance with accounting practices.

Companies with revenue that exceeds AED 50,000,000 and Qualifying Free-Zone Persons must have audited financial statements. Free zone entities follow different audit rules—Free Zone Establishments (FZE) and Free Zone Companies (FZCO) usually need mandatory audits.

Annual Compliance Calendar

A well-laid-out compliance calendar helps businesses avoid penalties. Here are the key deadlines:

• Trade License: Renewal when the license expires
• Tenancy Contract/Ejari: Renewal as specified in the contract
• P.O. Box: Annual renewal by December 31
• VAT Returns: Submission by the 28th day of the month following the tax period
• Economic Substance Notification: Filing within six months of financial year-end
• Economic Substance Report: Submission within one year from financial year-end
• Annual AML/CFT Risk Assessment: Yearly submission through the Ministry of Economy portal

The UAE government authorities provide excellent post-setup support. This helps businesses stay compliant while they focus on growth opportunities.

Business success in the UAE relies on smart planning and a good grasp of regulations. Business owners need to review their goals, markets, and operations before they pick the right structure and location.

The UAE attracts global investors with its competitive tax system, prime location, and business-friendly rules. Free zones create specialized spaces with tax perks, and mainland businesses get full market access. These choices fit different business needs and growth plans.

A detailed legal system will give a stable foundation through proper documentation, visa rules, and corporate governance. Business owners get clear guidelines that cover everything from original registration to staying compliant.

Smart entrepreneurs should really look into their options and get expert help when needed. They must stay compliant with all rules. The UAE’s ever-changing business world rewards good preparation and smart choices that lead to environmentally responsible growth and a soaring win.