Company Formation UAE: Your Definitive Guide to Business Setup in Dubai

Company Formation UAE: Your Definitive Guide to Business Setup in Dubai

Estimated reading time: 15 minutes

Key Takeaways

• Dubai’s strategic position and world-class infrastructure make it a leading hub for company formation UAE.
• Federal Decree-Law No. 26 of 2020 and the Corporate Tax Law enable up to 100% foreign ownership and simplified governance.
• Deciding between a mainland license Dubai and a free zone company setup Dubai hinges on market access, tax structure and visa requirements.
• A clear, step-by-step process covers name reservation, legal structure, documentation, premises, licensing and post-registration compliance.
• Engaging a Dubai business registration lawyer ensures regulatory compliance and risk mitigation throughout your setup journey.

Introduction

Context & Opportunity

1. Dubai/UAE as a 2025 Global Business Hub
Dubai’s strategic crossroads between Europe, Asia and Africa—supported by Expo 2020’s District 2020 innovation zone, mega-projects like Dubai Islands and Al Maktoum International Airport’s expansion, plus seamless connectivity to 200+ destinations—reinforce its status as a premier global business nexus. Company formation UAE offers entry to the Middle East and acts as a springboard for regional operations.

2. Pro-Business Reforms
– Federal Decree-Law No. 26 of 2020 on Commercial Companies (effective 1 Jan 2024) reformed governance, simplified boards, lowered share-capital thresholds and extended 100% foreign ownership in most sectors.
– Federal Decree-Law No. 47 of 2022 on Taxation (Corporate Tax Law, effective 1 Jun 2023) introduced a 9% federal corporate tax on profits above AED 375,000, preserving 0% rates for qualifying free-zone entities.
Search Intent & Audience

This guide serves entrepreneurs, SMEs and multinationals researching company formation UAE. Readers evaluating mainland license Dubai versus free zone company setup Dubai will find actionable insights for market entry, expansion or restructuring.

In this definitive guide to company formation UAE, we outline the critical steps of business setup Dubai and preview the choice between mainland license Dubai and free zone company setup Dubai.

Overview of Company Formation UAE

Legal Framework & Key Legislation (July 2025)

1. Federal Decree-Law No. 26 of 2020
Establishes company types, enhances foreign-ownership thresholds and governance norms. Strategic activities remain subject to Cabinet annexes. Source.

2. Federal Decree-Law No. 47 of 2022 (Corporate Tax Law)
Defines taxable persons, exemptions for free-zone entities and OECD-aligned transfer pricing. 

3. Cabinet Resolution No. 40 of 2019
Regulates trade-name criteria, prohibited terms and economic-activity classification; still enforced. 

Entity Types

• Limited Liability Company (LLC): Separate legal personality; 2–50 shareholders; liability limited to capital; suited to mainland license Dubai and many free zone setups. 
• Branch of Foreign/GCC Company: Not distinct; parent liable; mainland branches need a local service agent, free-zone branches permit 100% ownership.
• Civil Company, Sole Establishment, Professional License: For licensed professionals or single‐owner services (unlimited liability). 

Business Setup Dubai: Mainland License vs. Free Zone Company Setup Dubai

A. Mainland License Dubai

Regulator: Dubai Department of Economy & Tourism (DET). 

Key Features:
a. On-shore trading & full UAE market access.
b. Up to 100% foreign ownership under Decree-Law 26/2020.
c. Ejari-registered office (min. 200 sq ft) and visa quota per office size.

Process & Timeline: Name reservation → initial approval → MoA/AoA notarization → Ejari lease & visa quota → license issuance (10–30 working days). 

B. Free Zone Company Setup Dubai

Popular Free Zones & Specialties:
– DMCC (commodities, trading, fintech). 
– DIFC (financial services, common-law courts). 
– JAFZA/DAFZA (logistics, manufacturing). 

Advantages: 100% foreign ownership; 0% corporate & personal tax (subject to exemptions); efficient customs procedures.

Process & Timeline: License under zone regulations via online portals; 5–20 days. 

Step-by-Step Guide to Company Formation UAE

1. Pre-Approval & Trade Name Reservation

Reserve unique names via DET portal or free-zone dashboards, avoiding prohibited terms per Resolution 40/2019.

2. Choosing Legal Structure & Activity Classification

Map activities to official lists (OECD/NAICS codes), confirm entity forms, capital thresholds and sector approvals.

3. Document Preparation & Notarization

Draft and notarize MoA/AoA, prepare Power of Attorney, attest and translate to Arabic if required.

4. Office Space & Lease Registration

Mainland: secure ≥200 sq ft premises, register Ejari lease.
Free zone: select flexi-desk or traditional lease.

5. License Application & Fee Payment

Submit documents, pay fees; receive digital license via Smart Services.

6. Post-Registration Formalities

Open corporate bank account, apply for employment visas and labor cards (MOHRE & GDRFA for mainland; zone authority for free zones).

7. Renewal & Compliance

Annual license renewal, Ejari revalidation, statutory audit if subject to Corporate Tax Law, and UBO disclosures.

Role & Benefits of a Dubai Business Registration Lawyer

A. Regulatory Compliance & Risk Mitigation: Tracks changes in ownership limits, tax deadlines and advises on restructurings. 

B. Document Drafting & Due Diligence: Prepares MoA/AoA, agreements, NDAs and conducts due diligence for permits.

C. Liaison with Authorities: Manages filings with DET/DED, free-zone bodies, MOFAIC and Chamber of Commerce.

D. Ongoing Legal Support: Advises on board resolutions, mergers, joint ventures and dispute resolution as laws evolve.

Cost, Timeline & Practical Considerations

Government Fees & Deposits:
– Mainland LLC: AED 20,000–60,000+
– Free zone entity: AED 25,000–40,000+ 

Professional Fees: Legal, PRO and consulting: AED 7,000–15,000+.

Typical Timelines:
– Mainland: 2–4 weeks
– Free zone: 1–3 weeks

Future-Proofing: Plan for multi-branch and cross-emirate licensing; consider conversion from free zone to mainland as needed.

Common Pitfalls & Strategic Tips

• Ensure complete filings and correct activity codes to avoid licensing delays.
• Match free zone specializations (DMCC for commodities, DIFC for financial services) with your core activities.
• Maintain up-to-date corporate governance records and robust shareholder agreements.

Conclusion & Next Steps

From trade name reservation and entity selection to MoA notarization, visa processing and annual compliance, this guide provides a structured roadmap for company formation UAE. Align your jurisdiction choice—mainland license Dubai or free zone company setup Dubai—with your business goals and market strategy. Engage a qualified Dubai business registration lawyer for efficient licensing and sustained regulatory compliance.

Frequently Asked Questions

What is the difference between a mainland license and a free zone company setup in Dubai?

A mainland license allows on-shore trading across the UAE, bidding on government contracts and flexible office options with visa quotas tied to premises size. A free zone setup offers 100% foreign ownership, 0% corporate tax and streamlined procedures but restricts on-shore activities unless a local distributor is appointed.

How long does it take to set up a company in Dubai?

Mainland registrations typically take 10–30 working days, while free zone setups range from 5–20 days, subject to additional approvals for regulated activities.

Can foreigners own 100% of a UAE company?

Yes. Federal Decree-Law 26/2020 allows 100% foreign ownership in most mainland activities and all free zone entities, with strategic sectors subject to Cabinet-issued lists.

What are the main costs involved in company formation UAE?

Government fees range from AED 20,000–60,000+ for mainland and AED 25,000–40,000+ for free zones. Professional fees for legal, PRO and consulting services range from AED 7,000–15,000+.

Do I need a lawyer to set up my business in Dubai?

While not mandatory, a Dubai business registration lawyer can ensure compliance with evolving regulations, draft and vet legal documents, expedite approvals and mitigate risks throughout the formation process.