UAE Business Registration Guide

Mainland Company

• Licensing: The mainland company is registered with the "Department of Economic Development" (the "DED") of the relevant emirate. The licence types include: the "commercial licence", the "professional licence", the "industrial licence", and the "tourism licence".
• Ownership: Since 2021, the foreign investors may own 100% of the mainland company without the need for the UAE national partner or the local service agent (for most business activities). The "positive list" of activities eligible for the 100% foreign ownership was expanded to cover all commercial and industrial activities.
• FTA registration: The mainland company with the taxable turnover exceeding AED 375,000 per year must register with the Federal Tax Authority (the "FTA") for the corporate tax. The corporate tax filing is due 9 months after the end of the financial year.
• Share capital: No minimum share capital requirement for most activities. The share capital must be adequate for the nature of the business (the "adequate capitalisation" principle under the corporate tax law).

Free Zone Company

• 40+ free zones: The UAE has over 40 free zones, each with its own regulatory framework and licence types. The major free zones include: the "Jebel Ali Free Zone" (the "JAFZA"), the "Dubai Multi Commodities Centre" (the "DMCC"), the "Dubai Airport Free Zone" (the "DAFZA"), the "Abu Dhabi Ports Company" (the "ADPC"), the "Sharjah Airport International Free Zone" (the "SAIF Zone"), and the "Ras Al Khaimah Economic Zone" (the "RAK Economic Zone").
• 0% corporate tax: The free zone companies that qualify as the "Qualifying Free Zone Persons" pay 0% corporate tax on the qualifying income. The conditions include: the adequate substance, the arm's length transactions, and the compliance with the qualifying activity list.
• Physical office requirement: The free zone company must maintain the physical office space within the free zone. The "flexi-desk" and the "virtual office" options are available for the low-risk activities (the consulting, the IT services, the trading).
• Visa quota: The free zone company receives a visa quota based on the office space (1 visa per 9 to 12 square metres of the office area). The additional visas may be obtained by renting the additional space.

Offshore Company

• RAK ICC: The "Ras Al Khaimah International Corporate Centre" (the "RAK ICC") offers the offshore company registration. The RAK ICC offshore company is exempt from the UAE corporate tax (no taxable presence). The annual renewal fee is approximately USD 2,500 to USD 3,500.
• JAFZA Offshore: The "Jebel Ali Free Zone Offshore" (the "JAFZA Offshore") allows the registration of the offshore companies for the holding, the investment, and the IP ownership. The JAFZA Offshore company may own the real estate in the designated freehold areas of Dubai.
• ADGM Offshore: The "Abu Dhabi Global Market Offshore" (the "ADGM Offshore") is a common law jurisdiction offering the limited liability partnerships and the offshore companies. The ADGM is a "qualified jurisdiction" for the international tax planning.
• No corporate tax filing: The offshore companies are generally not subject to the UAE corporate tax as long as they do not carry on the "trade or business" in the UAE. The offshore company must not have the "permanent establishment" in the UAE.

DIFC / ADGM Registration

• DIFC (Dubai International Financial Centre): The DIFC is a common law financial free zone with its own civil and commercial laws (based on the English common law). The DIFC offers the "company", the "limited liability partnership", the "special purpose company", and the "recognised company" structures.
• ADGM (Abu Dhabi Global Market): The ADGM is a common law financial centre based on the English common law and the principles of the English trust law. The ADGM offers the "company", the "limited partnership", the "foundation", and the "trust" structures.
• Corporate tax treatment: The DIFC and the ADGM companies are treated as the free zone entities for the UAE corporate tax purposes. The qualifying income is taxed at 0%. The non-qualifying income is taxed at 9% (above AED 375,000).
• Regulatory oversight: The DIFC is regulated by the "Dubai Financial Services Authority" (the "DFSA"). The ADGM is regulated by the "Financial Services Regulatory Authority" (the "FSRA"). The entities conducting the "financial services" (the "banking, the insurance, the asset management, the funds") require the DFSA or the FSRA licence.

Corporate Tax Registration Threshold — AED 375,000

• 0% for taxable income up to AED 375,000: The UAE corporate tax law provides a 0% tax rate for the taxable income up to AED 375,000. This threshold applies per tax period per entity. The threshold is NOT prorated for the short periods or the part-year registrations.
• 9% for income above AED 375,000: The taxable income exceeding AED 375,000 is taxed at 9%. The first AED 375,000 remains tax-free. For example: a company with AED 500,000 taxable income pays 9% on AED 125,000 = AED 11,250.
• FTA registration requirement: Every taxable person (the resident company, the free zone company, the natural person with the business turnover above AED 375,000) must register with the FTA. The registration deadline is generally within 30 days of the licence issuance or the commencement of the business.
• No tax for individuals: The AED 375,000 threshold applies only to the business income. The individuals are not subject to the corporate tax or the personal income tax regardless of the income level.

FAQs

Does the free zone company need the physical office?

Yes. The free zone company must maintain the physical office space within the free zone. The "flexi-desk" option (a shared desk in a co-working space) is suitable for the consulting, the IT, and the professional services. The "physical office" (a private lockable space) is required for the trading, the logistics, and the manufacturing activities.

Can the offshore company own the UAE real estate?

It depends. The JAFZA Offshore company may own the real estate in the designated freehold areas of Dubai. The RAK ICC and the ADGM Offshore companies generally cannot own the UAE real estate directly — they may hold the shares in a UAE property-owning company.

Do the offshore companies need to file the corporate tax returns?

The offshore companies that do not carry on the "trade or business" in the UAE are generally not required to file the corporate tax returns. However, the FTA may request the return if the offshore company has the "permanent establishment" in the UAE. The legal advice is recommended for the specific circumstances.