The UAE isn't tax-free anymore, it's low-tax, and the single decision that shapes almost everything else, cost, market access, and your actual tax bill, is whether you register on the mainland or in one of the country's 45-plus free zones. Here's what it takes to start a business in the UAE in 2026.
1. Which jurisdiction fits you?
Before you register anything, it helps to know what you're actually choosing between.
- Mainland LLC. Registered with the Department of Economy and Tourism (DET) or your emirate's equivalent, a mainland company can trade freely across the entire UAE, contract with the public sector, and open branches anywhere. Since a 2021 reform, most commercial and industrial activities allow 100% foreign ownership; only certain strategic activities still require a local partner.
- Free zone company. Guarantees 100% foreign ownership across the board, but a free zone company generally can't sell directly to UAE mainland buyers without an agent or branch. Each free zone specializes: DIFC and ADGM for financial services, Dubai Internet City for tech, DMCC for trading, JAFZA for logistics, and dozens more.
As a rough guide, mainland tends to be the better fit if most of your revenue comes from UAE-based clients; free zone tends to win once profit clears roughly AED 700,000 to 800,000 a year and most of your income comes from outside the mainland.
2. Register your business
Free zone licenses can be issued digitally in as little as 24 to 48 hours for certain activities, though full operational status, bank account, contracts, invoicing, realistically takes 4 to 8 weeks. Mainland formation usually takes 1 to 3 weeks depending on your activity and required approvals, and requires a physical office with a registered Ejari tenancy contract, a real requirement, not a formality. Total setup costs range roughly AED 10,000 to 50,000 for mainland and AED 15,000 to 60,000-plus for free zone, plus AED 3,000 to 7,000 per visa. Minimum declared capital also varies widely: mainland LLCs are often AED 150,000 to 1,000,000 (though it doesn't always need to be fully deposited upfront), while free zone LLCs can run as low as AED 1,000 to 50,000, and some jurisdictions have dropped the requirement entirely.
3. Check licenses and permits
The UAE doesn't issue a single national business license; your activity type determines your license category, legal form, and required approvals. Regulated sectors, finance, healthcare, education, carry additional licensing on top of standard registration.
4. Understand UAE taxes
Federal corporate tax, in effect since June 2023, is 0% on taxable profit up to AED 375,000 and 9% above that, for both mainland and free zone companies under the general regime. Free zone companies can additionally qualify for the Qualifying Free Zone Person (QFZP) regime, a genuine 0% rate on "qualifying income" if they meet strict substance and activity requirements, but this is the detail people miss most often: income from UAE mainland buyers generally isn't qualifying income, so it's taxed at 9% regardless of where your company is registered. Structure your activity list and client base with this in mind before you pick a jurisdiction, not after.
VAT is 5% standard. Registration is mandatory once taxable turnover exceeds AED 375,000 in a 12-month period, with voluntary registration available from AED 187,500. Corporate tax and VAT are registered separately through the Federal Tax Authority (FTA) via the EmaraTax platform, each with its own registration number.
5. Stay compliant
Companies within scope of corporate tax must register with the FTA and obtain a Corporate Tax Registration Number, in addition to a separate VAT Tax Registration Number if applicable. Mainland companies must keep their information current with the DET, including any change in partners, shareholding, capital, or address. Personal income tax remains 0% for individuals, still genuinely true even as corporate tax has arrived.
UAE business costs at a glance
| Item | Cost |
|---|---|
| Mainland setup, total | ~AED 10,000 to 50,000 |
| Free zone setup, total | ~AED 15,000 to 60,000+ |
| Visa (per person) | ~AED 3,000 to 7,000 |
| Corporate tax, up to AED 375,000 profit | 0% |
| Corporate tax, above AED 375,000 | 9% |
| Free zone QFZP rate on qualifying income | 0% |
| VAT, standard rate | 5% |
| VAT registration threshold | AED 375,000 turnover |
Frequently asked questions
What's the main choice when starting a business in the UAE?
Whether to register on the mainland or in one of the country's 45-plus free zones, since it shapes cost, market access, and your actual tax bill.
What's the corporate tax rate in the UAE?
0% on taxable profit up to AED 375,000, 9% above that, for both mainland and free zone companies under the general regime.
Does a UAE free zone company always get 0% tax?
No. Free zone companies can access a 0% rate on qualifying income under the QFZP regime, but income from UAE mainland buyers generally isn't qualifying income and is taxed at 9% regardless.
What's the VAT rate in the UAE?
5% standard, with mandatory registration once taxable turnover exceeds AED 375,000.
Can a foreigner own 100% of a mainland UAE company?
Yes, for most commercial and industrial activities since a 2021 reform; only certain strategic activities still require a local partner.
Fees and rates above come from the Federal Tax Authority (FTA) and the Department of Economy and Tourism as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a UAE-qualified accountant or corporate services firm about your specific situation.