Starting a Free Zone Business in the UAE: The Complete 2025 Guide

The UAE has long been one of the most attractive destinations globally for entrepreneurs and investors. Central to this appeal are the country’s free zones—special economic areas that offer significant benefits for foreign business owners, including 100% ownership, full capital repatriation, and zero corporate or personal tax under specific conditions.

As of 2025, the UAE is home to over 45 free zones across its seven emirates, each tailored to specific industries, business sizes, and activity types. Whether you’re a solo consultant, digital entrepreneur, or international trading firm, starting a free zone business in the UAE offers a flexible and cost-effective entry point into the region’s thriving economy.

This guide explains the process of setting up a free zone company in the UAE, outlines key considerations, and provides insight into selecting the right zone for your business.

ADGM Free zone

What is a Free Zone?

A free zone, also known as a free trade zone, is a designated area within the UAE where businesses can operate under distinct regulatory frameworks. These zones are administered by their respective Free Zone Authorities and are designed to promote foreign investment in targeted sectors.

Free zones typically allow 100% foreign ownership, provide streamlined setup procedures, and offer a range of support services including licensing, visa issuance, and commercial space leasing. They are particularly attractive for businesses that do not require direct access to the UAE mainland consumer market.

Key Advantages of Free Zone Companies

1. 100% Foreign Ownership

Foreign investors can fully own their company without the need for a local sponsor or Emirati partner.

2. Full Capital and Profit Repatriation

Business owners can transfer profits and capital abroad without restrictions.

3. Corporate Tax Benefits

Most free zones continue to offer 0% corporate tax for eligible businesses until 2028 under the UAE’s corporate tax framework. However, businesses with income exceeding AED 375,000 annually may be subject to corporate tax unless they meet exemption criteria.

4. Sector-Specific Clustering

Free zones often cluster businesses within the same sector (e.g., media, tech, manufacturing), encouraging networking and resource sharing.

5. Business Support Services

Many free zones offer licensing, visa processing, legal guidance, and physical or virtual office solutions under one authority.

Types of Free Zone Licenses

The type of license you need will depend on the nature of your business. Common license types include:

• Commercial License – For trading goods and general trading

• Service/Professional License – For consulting, IT services, marketing, design, and more

• Industrial License – For manufacturing or production-based activities

• Freelance Permit – For independent professionals in media, design, education, and tech

• E-commerce License – For online platforms and digital business models

Some free zones also offer dual licenses for operating in both the free zone and the UAE mainland, subject to additional approvals.

How to Start a Free Zone Company in the UAE: Step-by-Step (2025)

Step 1: Define Your Business Activity

Clearly outline your intended activity. Free zones often limit the scope of each license to a particular sector or set of services.

Step 2: Choose a Free Zone

Select a free zone that matches your business goals, budget, and preferred location. For example:

• Tech startups: Dubai Internet City or Dubai Silicon Oasis

• Media professionals: Twofour54 (Abu Dhabi) or Dubai Media City

• Traders: Jebel Ali Free Zone or SAIF Zone

• Freelancers: Shams (Sharjah) or RAKEZ (Ras Al Khaimah)

Step 3: Select a Company Structure

Options include:

• Free Zone Establishment (FZE): single shareholder

• Free Zone Company (FZCO): multiple shareholders

• Branch of a foreign or UAE company

Step 4: Apply for a Business License

Submit a license application along with required documents, such as:

• Passport copies of shareholders

• Passport-size photographs

• Visa or Emirates ID copy (if applicable)

• Proposed business name and activity list

• Application form provided by the free zone

Step 5: Choose an Office Solution

Options range from:

• Flexi-desk/shared workspace (ideal for freelancers or small teams)

• Private offices

• Warehouses or light industrial units (for manufacturing and logistics businesses)

Step 6: Pay Fees and Obtain Approvals

Fees include license issuance, office rental, visa quotas, and other admin costs. Once paid and approved, you’ll receive:

• Certificate of Incorporation

• Business License

• Memorandum of Association

• Lease Agreement

Step 7: Apply for Residence Visas (Optional)

Free zones typically allow you to sponsor your own residency and that of your employees and dependents. The number of visas allowed depends on your office size and license type.

Estimated Cost of Setting Up in a Free Zone (2025)

Costs vary widely between free zones and depend on the type of license, visa quota, and office solution.

Expense Category	Estimated Range (AED)
License and Registration	6,000 – 15,000/year
Office (Flexi Desk or Private)	3,000 – 20,000/year
Visa Processing (per visa)	3,000 – 6,000
Freelance Permits	Starting from 5,500/year
Setup Packages (All-Inclusive)	12,000 – 25,000 (entry-level)

Some zones offer “zero visa” packages for solopreneurs or digital businesses not needing residency.

Popular Free Zones for New Businesses in 2025

Dubai

• DMCC: Ideal for trading, crypto, commodities

• IFZA: General purpose, competitive rates

• Meydan Free Zone: Digital-first, flexible for SMEs

• DIC/DMC: Tech and media clusters

Abu Dhabi

• ADGM: Global finance and fintech hub

• Twofour54: Content creators, gaming, and production

• Masdar City: Sustainability and cleantech focus

Sharjah

• Shams: Freelancers, creative industries

• SPCFZ: Publishing, digital education

• SAIF Zone: Industrial and trading businesses

Ras Al Khaimah

• RAKEZ: Versatile, cost-effective, with industrial options

Fujairah

• Creative City: Media, influencers, marketing services

Things to Consider Before Choosing a Free Zone

Scope of Activity

Ensure the zone allows your intended business activity and supports potential future expansion.

Office Requirements

Some zones mandate a minimum office size per visa. Check whether flexi-desk is sufficient for your needs.

Visa Quota

Each free zone has different allowances and cost structures for visa quotas.

Tax and Audit Requirements

While corporate tax is 0% in many zones (subject to 2023–2028 exemptions), some businesses may still be required to file annual audits depending on zone rules.

Ability to Trade in the Mainland

Free zone companies cannot conduct direct business with UAE mainland entities unless they appoint a local distributor or obtain a dual license (where available).

Final Thoughts

Starting a business in a UAE free zone in 2025 is more accessible, flexible, and affordable than ever before. Whether you’re launching a solo consultancy, scaling a startup, or relocating your international firm, free zones provide a tailored environment to succeed—with world-class infrastructure, business-friendly regulation, and minimal red tape.

With over 45 zones to choose from, selecting the right one requires a clear understanding of your goals, budget, and operational needs. Fortunately, the UAE’s competitive landscape means there is likely a free zone that fits your business model perfectly.