Setting up a UAE company: mainland, free zone or offshore — and the tax steps in your first three months
Choosing between a mainland, free zone and offshore company decides where you can trade — and the Corporate Tax clock starts on incorporation. How to choose, and what to file in the first three months.
Many founders spend weeks comparing licence fees and very little time on what happens after the licence is issued. In the UAE both matter: the structure you choose decides where you can trade, and the Corporate Tax clock starts on the day the company is incorporated.
This guide covers both halves — choosing the right structure, and the compliance steps in your first three months. For the setup itself, our business setup team at ProBiz Setup handles mainland, free zone and offshore formation.
Step 1 — choose the structure that fits how you will trade
| Mainland | Free zone | Offshore | |
|---|---|---|---|
| Licensed by | The emirate's economic department (in Dubai, the Department of Economy and Tourism) | The free zone authority (for example IFZA, DMCC, RAKEZ) | An offshore registry (for example RAK ICC or JAFZA Offshore) |
| Where you can trade | Anywhere in the UAE and abroad, including government contracts | Inside the free zone and internationally; selling into the mainland needs a distributor, a mainland licence or a permit | Business outside the UAE and holding assets — not trading with customers in the UAE |
| Foreign ownership | Up to 100% for most activities | 100% | 100% |
| Residence visas | Yes — quota usually linked to office space | Yes — depending on the licence package | No |
| Typical fit | Retail, contracting, services to UAE customers | Consulting, trading, tech, e-commerce, regional HQs | Holding shares, property and other assets |
Mainland. Since June 2021, under the amended Commercial Companies Law, most mainland activities can be 100% foreign-owned. A short list of "strategic impact" activities — such as banking, insurance, defence and telecommunications — still carries ownership restrictions. More on mainland company setup.
Free zone. Full ownership, simple set-up and flexible office options make free zones the default for many founders. If you expect UAE mainland customers, plan for it from the start: in Dubai, Executive Council Resolution No. 11 of 2025 now allows free zone companies to operate on the mainland through a branch licence or a temporary permit issued by the Department of Economy and Tourism, with the free zone authority's prior approval. More on free zone company setup.
Offshore. Useful for holding shares and assets, not for trading in the UAE or sponsoring visas. An offshore company is still incorporated in the UAE, so under the Corporate Tax Law it is a resident person and must register. More on offshore company setup.
Step 2 — get the licence activity right
The activity on your licence affects far more than the licence fee. Banks check it when they open your account, it shapes your VAT treatment, and for free zone companies it is the starting point for deciding whether income can qualify for the 0% Corporate Tax rate. A licence that does not match what the business actually does is a common cause of bank account delays and later tax problems.
Step 3 — the tax and compliance steps in your first three months
| Open the bank account | As soon as the licence is issued — banks ask for the licence, constitutional documents and shareholder KYC. Bank account assistance |
| Beneficial owner (UBO) register | Submit to the registrar (your licensing authority) within 60 days of licensing, and report any change within 15 days (Cabinet Decision No. 109 of 2023) |
| Corporate Tax registration | Within 3 months of incorporation for companies incorporated since 1 March 2024 — mainland, free zone and offshore alike (FTA Decision No. 3 of 2024) |
| Bookkeeping | From the first transaction. Your first return is due 9 months after the end of your first financial year, and it is built from these books |
| VAT registration | Mandatory once taxable supplies and imports exceed AED 375,000 in the last 12 months, or are expected to within the next 30 days; voluntary from AED 187,500 |
Late Corporate Tax registration carries an AED 10,000 penalty. The penalty applies even where no tax is ever payable. If it has already been charged, read how the waiver works.
A free zone licence is not automatically 0%. The standard rates are 0% on taxable income up to AED 375,000 and 9% above it. A free zone company pays 0% only on qualifying income, and only while it meets every condition — including adequate substance and audited financial statements. See the qualifying free zone person conditions.
Setting up, or already licensed?
Still choosing a structure? Talk to our business setup team at probizsetup.com — licence, activity selection, visas and bank account, handled by one team.
Already licensed? We take it from there: Corporate Tax registration and returns, VAT and monthly bookkeeping with free accounting software included. See our packages or ask for a proposal.
Sources: Federal Decree-Law No. 32 of 2021 on Commercial Companies and Cabinet Resolution No. 55 of 2021 (activities with strategic impact); Dubai Executive Council Resolution No. 11 of 2025; Federal Decree-Law No. 47 of 2022 on Corporate Tax (Articles 3, 11, 18, 51 and 53), Cabinet Decision No. 116 of 2022 and Ministerial Decision No. 84 of 2025 (audited financial statements); FTA Decision No. 3 of 2024 on registration timelines; Cabinet Decision No. 10 of 2024 (late-registration penalty); FTA Public Clarification CTP001; Cabinet Decision No. 109 of 2023 on beneficial owners; Federal Decree-Law No. 8 of 2017 on VAT.