Business setup in Dubai is five records the bank reads together

What has to exist before the company can work

The UAE government's own portal says that an investor can establish a business online through the Basher platform in 15 minutes. That statement is accurate, and it describes the trade licence. It does not describe a company that can sign a lease, sponsor its owner's residence visa, pay a salary through the Wage Protection System, receive money from a customer and file a tax return.

A working company in Dubai exists in five official records at once. Each record is kept by a different authority, and each is created from information you supply. The licence comes first and is the easiest to obtain. The other four take longer because each depends on the one before it.

In the files I have worked on since 2007, the setup that fails rarely fails at the licence. It fails when the records disagree. The licence describes one business, the premises suit another, the ownership register shows a holding company the bank cannot see through, and the first invoices describe a third activity altogether. The bank is the first institution that reads every record together, so it is usually the bank that finds the disagreement.

The rest of this note follows the order in which these records are created, and it labels each point as law or as practice. Formation advice mixes the two constantly, and the difference matters when you plan.

Who may own a Dubai company

The ownership question has a short answer for most businesses and a longer one for a few.

The general rule is full foreign ownership. Federal Decree-Law No. 26 of 2020 amended the old Commercial Companies Law to remove the requirement for a 51% Emirati shareholder, and Federal Decree-Law No. 32 of 2021 on Commercial Companies consolidated the change. In practice, a foreign individual or company can now own all of the shares in a mainland limited liability company carrying on ordinary trading, services or industrial activity. This is law.

Strategic activities are the exception. The same framework lets the Cabinet designate activities of strategic impact and attach licensing conditions, including limits on foreign ownership. The federal portal lists, among them, security and defence, telecommunications, banking, exchange, financing and insurance, and a further group that includes commercial agencies. A founder who wants to become the registered commercial agent of a foreign brand, for example, does not get full foreign ownership for that activity.

Some legal forms still need a local service agent. The portal lists an attested service agent agreement among the documents for civil establishments and companies wholly owned by non-GCC nationals, which in Dubai typically means professional-licence businesses. The agent holds no shares and does not run the business. The requirement is a document in the file, not a partner in the company.

Free zones were always foreign-owned. Free zone companies have allowed full foreign ownership from the start, which is why many founders still assume that full ownership requires a free zone. It no longer does.

Mainland, free zone or financial free zone

This decision is usually presented as a contest of costs. It is a question about who your customers are and where they are, and the cost follows from the answer.

Mainland. A mainland company is licensed by the emirate's economic department, which in Dubai is the Department of Economy and Tourism (DET), formerly the Department of Economic Development. It can trade across the UAE and lease premises anywhere the planning rules permit. Invest in Dubai lists its licence types as industrial, commercial and professional, alongside procedural routes such as the instant, eTrader, dual, SME and Intelaq licences.

Commercial free zone. The UAE has more than 40 free zones. Each licenses companies under its own regulations, and each restricts trade with the mainland. A free zone suits a business whose customers are abroad, inside the zone, or other free zone companies. The decision between zones is its own exercise, set out in the note on how to choose a UAE free zone.

The 2025 change in Dubai. Executive Council Resolution No. 11 of 2025, issued on 3 March 2025, created a framework for Dubai free zone companies to operate in mainland Dubai with a licence or permit from DET. KPMG and other commentators describe two routes: a branch licence, valid for one year and renewable, and the Free Zone Mainland Operating Permit, announced in October 2025, valid for six months and renewable. DIFC companies are outside the framework. The rule narrows the old gap between free zone and mainland. It does not remove it, because the permit covers specified activities and adds a second licensing relationship.

Financial free zones. DIFC and ADGM are common-law jurisdictions with their own company laws, registrars and courts. They suit holding structures, funds, family offices and regulated financial businesses more than ordinary trading. The comparison between them is in the note on ADGM and DIFC holding companies.

Tax does not decide this. A free zone does not deliver a 0% corporate tax rate on its own, and a mainland company is not automatically worse off. Article 18 of Federal Decree-Law No. 47 of 2022 sets conditions that a Qualifying Free Zone Person must meet to obtain 0% on qualifying income, and many free zone companies will pay 9%. The tax comparison is in the note on free zone and mainland corporate tax.

The activity is the foundation of the file

There are more than 2,000 licensable business activities in the UAE. The activity you select is the first fact in the licence, and every later record is built on it.

• It decides the licence type and the legal form. The federal portal states that the legal form must match the business activity. A consulting activity, a trading activity and a manufacturing activity lead to different licences and, often, different legal forms.
• It decides the extra approvals. Some activities need approval from another authority before or after the initial approval: the Central Bank for financial institutions and exchange houses, the Securities and Commodities Authority for investment advice and broking, TDRA for telecommunications, the National Media Council for publishing and advertising, and others. This is law.
• It decides the premises. Some activities cannot be licensed from a flexible desk because the authority requires a warehouse, a clinic or a fitted office.
• It is what the bank checks your invoices against. When money arrives for a service the licence does not cover, the bank sees an activity mismatch. This is bank practice, and it is one of the commonest reasons accounts are reviewed.

Two errors are frequent. The first is under-licensing, choosing a narrow activity to save fees and then trading outside it. The second is over-licensing, choosing "general trading" or a long list of unrelated activities, which reads to a compliance officer as a company that has not decided what it does. The right licence describes the business you will run in its first two years.

The setup sequence, step by step

The steps below follow the order the authorities use. Each one depends on the one before it. Where the federal portal describes the mainland process, the free zone process is usually shorter but follows the same logic.

1. Define the activity and the customers. Write down what the company will sell, to whom and where those customers are. This decides mainland or free zone and the activity codes, and it is the description the bank will later test.

2. Choose the jurisdiction and the legal form. On the mainland the legal forms are the general partnership, the limited partnership, the limited liability company and the public and private joint stock companies. Most foreign-owned trading and service businesses use a limited liability company.

3. Reserve the trade name. The name must carry the legal-form suffix, such as LLC, must suit the activity and must not repeat a registered name or use the name of a religion, a government body or a foreign organisation. The economic department registers trade names; the Ministry of Economy and Tourism registers trademarks, which is a separate step.

4. Obtain the initial approval. The initial approval means the government has no objection to the business being established. It does not permit you to trade. The federal portal states that foreign investors must obtain the approval of the General Directorate of Residency and Foreigners Affairs before the initial approval, and that some activities need approval from their sector authority first.

5. Sign the constitutional documents. A limited liability company needs a memorandum of association attested by a UAE notary, court or authorised law firm. Where the shareholder is a foreign company, its own documents must be legalised in its home country and attested for use in the UAE, which is where most remote setups lose time, as set out in the note on registering a UAE company remotely.

6. Secure the premises. The portal is clear that every business must have a physical address. In Dubai a mainland office or warehouse tenancy must be registered with Ejari, and the lease is part of the licence file. In a free zone, the facility agreement plays the same role. The premises largely set how many visas the company can sponsor.

7. Pay and collect the licence. The fees must be paid within 30 days of the payment voucher, or the application is cancelled. The licence issues, and the company exists.

8. Open the immigration file. The licensing authority issues the establishment card, which allows the company to sponsor residence visas. The owner's or manager's visa follows: entry permit, medical fitness test for anyone aged 18 or over, Emirates ID biometrics and the residence permit. The family routes are in the note on UAE visas for the owner and family.

9. Open the bank account. The bank receives the licence, the memorandum, the ownership chart, the premises evidence, the passports and visas of the owners and signatories, and an account of where the money comes from and where it will go. The next section covers how it reads them.

10. Register for tax and file the ownership register. Register with the Federal Tax Authority for corporate tax, register for VAT once the threshold is met, and keep the beneficial ownership register current with the licensing authority.

The order matters most in the middle. A company that signs a flexible-desk agreement in step 6 and then tries to sponsor four employees and a family in step 8 will find the visa allocation does not exist. A company that opens its account in step 9 with a licence describing a different business from its pitch deck will spend the next month explaining the difference.

How the bank reads the company

The trade licence does not entitle a company to an account. The account is a separate decision by the bank, made under the customer due diligence and risk-based rules of the UAE anti-money laundering framework, now Federal Decree-Law No. 10 of 2025 and Cabinet Resolution No. 134 of 2025. A business may not run its trade through a personal account. This is law.

What the compliance officer does with the file is practice, and it is consistent across banks. In my experience the questions come in roughly this order.

• Who owns and controls it? The ownership chart must reach natural persons. A holding company above the Dubai company is acceptable when its own owners are documented. A trust, a foundation or a nominee arrangement that is not mapped to people is the fastest route to a refusal.
• What does it do? The officer compares the licensed activity with the business plan, the contracts and the expected counterparties. A precise activity, with customers in named countries, reads well. A broad one does not.
• Where is it? A registered Ejari tenancy or a real free zone office supports the file. A flexible desk can be enough for a simple service business. For a trading company with large flows, many banks expect more.
• Where does the money come from? The officer wants the source of the initial capital and the source of the owner's wealth, with documents, and a credible forecast of turnover and transaction flows.
• Who will operate the account? Some banks require at least one authorised signatory who holds a UAE residence visa, and most want to meet the signatory. Both are bank practice, not law, and both vary between banks.

Digital banks and the business arms of traditional banks onboard simple profiles more easily, and traditional banks apply larger minimum balances and fuller reviews. Neither will open an account for a file whose records disagree. The common refusal patterns are in the note on why a UAE trade licence does not open a bank account.

Ownership has to be visible from the first day

Cabinet Decision No. 109 of 2023 on the procedures for the real beneficiary, in force since 16 November 2023 and replacing Cabinet Decision No. 58 of 2020, requires every UAE legal entity to identify the natural persons who own or control it and to keep a register of them.

The test is 25% or control. A beneficial owner is a natural person who owns or controls, directly or indirectly, 25% or more of the capital or of the voting rights, or who otherwise exercises control. Where no one meets that test, the register names the person who controls the company by other means and, failing that, the senior managing official. This is law.

Changes have a 15-day window. When the beneficial-owner information changes, the company must update its register and notify the licensing authority within 15 days of becoming aware. A share transfer, a new investor or a change in a holding company above the Dubai entity all count.

Layered ownership is allowed, if documented. A UAE company owned through a holding company in another country is common and lawful. The register still has to name the people at the top, and the bank will ask for the same chart with the same names. The full obligations are in the note on UBO registration under Cabinet Decision 109.

Tax registration starts with the licence

A Dubai company is within UAE corporate tax from incorporation, whether or not it makes a profit. The tax position is decided by its own facts, not by the zone it sits in.

• Corporate tax. Federal Decree-Law No. 47 of 2022 charges 0% on taxable income up to AED 375,000 and 9% above it. A newly incorporated company is generally required to register within three months of incorporation under the Federal Tax Authority's registration timelines in FTA Decision No. 3 of 2024, and late registration carries an AED 10,000 penalty. The return and the payment are due within nine months of the end of each tax period.
• The first-year waiver. The Federal Tax Authority has announced that the late-registration penalty is waived where the first tax return is filed within seven months of the end of the first tax period, instead of nine. The calendar for a new company is in the note on the first year after a UAE company is registered.
• Small Business Relief. A resident company with revenue of AED 3,000,000 or less can elect to be treated as having no taxable income for tax periods ending on or before 31 December 2029, following Ministerial Decision No. 131 of 2026. It must still register and file.
• The free zone rate. The 0% rate for a Qualifying Free Zone Person depends on qualifying income, adequate substance, the de minimis limit on non-qualifying revenue and audited financial statements, as set out in the note on how a free zone company earns the 0% rate.
• VAT. Under Federal Decree-Law No. 8 of 2017, registration is mandatory once taxable supplies exceed AED 375,000 in the previous 12 months or are expected to in the next 30 days, and voluntary from AED 187,500. For goods held in a free zone, the special VAT treatment applies only where the zone is a Designated Zone under Cabinet Decision No. 59 of 2017, a much shorter list than the free zones.
• Electronic invoicing. Businesses with revenue below AED 50 million are due to appoint an accredited service provider by 31 March 2027 and to issue electronic invoices from 1 July 2027, under Ministerial Decision No. 244 of 2025 as amended. A company formed now should choose accounting software with that date in mind.
• Economic substance. The Economic Substance Regulations were cancelled for financial years ending after 31 December 2022 by Cabinet Decision No. 98 of 2024. A new company has no separate substance filing, although substance still matters for the free zone rate and for the bank.

If the owner lives in the UK. A Dubai company whose decisions are taken in the UK can be UK tax resident under the central management and control test, whatever its licence says. That question belongs with the note on opening a Dubai company from the UK.

Law or practice, side by side

Much of the confusion in formation advice comes from treating bank and authority practice as law, or law as optional. The table separates the two for the points founders ask about most.

Where setups break in practice

The patterns below account for most of the setups I am asked to repair. None of them is a licensing problem. Each is a disagreement between records.

The licence describes one business and the invoices another. A company licensed for management consultancy that starts trading goods will have its account reviewed when the first goods payment arrives. The fix is to license the real activity before trading, not after the bank asks.

The premises cannot carry the visa plan. A flexible-desk package with an allocation for one or two visas cannot sponsor the owner, a spouse, children and three staff. The visa plan should decide the premises.

The ownership chart stops at a company. A Dubai company owned by an offshore holding company whose shareholders are not documented will fail the bank's ownership review and is out of line with the beneficial ownership register.

The free zone company sells to the mainland without a permit. Trading directly onshore on a free zone licence alone has never been permitted. In Dubai the route since Resolution No. 11 of 2025 is a DET branch licence or operating permit for the activity concerned, and trading first and applying later is still a breach.

The tax registration was left for the accountant at year end. By then the three-month registration window has usually passed. The penalty can often be avoided with an early first return, but only if someone knows the rule exists.

Execution checklist before you pay anyone

• A one-page description of the business. What you sell, to whom, in which countries, and through which channels. Every later record should match it.
• The activity list, chosen against that description. Precise, complete for the first two years, and checked for activities of strategic impact or sector approvals.
• The visa plan. Who the company will sponsor in its first year, including family, which decides the premises.
• The ownership chart to natural persons. With passports, proof of address and, for any corporate shareholder, its constitutional documents ready for legalisation and attestation.
• The source-of-funds file. Evidence of the initial capital and of the owner's wealth, prepared for the bank before the account application, not after the first query.
• The tax calendar. The financial year, the corporate tax registration deadline, the VAT test and the electronic invoicing date, with a named person responsible.
• The cost over three years. Licence renewals, premises, visas, audit and accounting, compared across options. The drivers are in the note on what a UAE company actually costs.

Frequently asked questions

How do I set up a business in Dubai?

Define the activity and your customers, choose mainland or free zone and the legal form, reserve a trade name, obtain the initial approval, sign and attest the memorandum of association, secure premises (registered with Ejari on the mainland), and pay for the licence. Then open the immigration file and residence visas, open the bank account, register for corporate tax, generally within three months of incorporation, and keep the beneficial ownership register current.

Can a foreigner own 100% of a company in Dubai?

Yes, for most activities. Federal Decree-Law No. 32 of 2021 on Commercial Companies allows full foreign ownership of mainland companies, following the removal of the 51% Emirati shareholding requirement by Federal Decree-Law No. 26 of 2020. Activities of strategic impact, such as security and defence, telecommunications, banking, insurance and exchange, and commercial agencies, keep ownership limits or extra approvals. Free zone companies have always allowed 100% foreign ownership.

Should I choose a mainland or a free zone company in Dubai?

Choose by where your customers are. A mainland company licensed by the Department of Economy and Tourism can trade anywhere in the UAE. A free zone company suits customers abroad or inside the zone, and since Executive Council Resolution No. 11 of 2025 a Dubai free zone company can serve the mainland through a DET branch licence or operating permit. A free zone does not guarantee a 0% corporate tax rate, which depends on the Qualifying Free Zone Person conditions.

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

There are two answers. The licence can be issued very quickly, and the federal portal says a business can be established online in 15 minutes. A company that can employ, bank and file also needs premises, an establishment card, residence visas, a bank account and a tax registration, and those depend on document attestation, medical and biometric appointments and the bank's own review. Plan for the working company, not the licence date.

How much does it cost to set up a company in Dubai?

It depends on the jurisdiction, the licence type and number of activities, the premises, the number of visas and the ongoing compliance, which is why quotes for the same business can differ by a multiple. Compare the total cost over three years, including renewals, visas, audit and accounting, rather than the first-year licence fee. Licence packages that look cheap often limit the visa allocation or the activities.

Can I set up a company in Dubai without living there?

Yes. A non-resident can own a Dubai company, and most of the licensing can be done remotely, with documents notarised and attested in the home country and powers of attorney where needed. Some steps need presence: the medical test and Emirates ID biometrics for a residence visa, and usually a meeting with the bank. Some banks also prefer, or require, an authorised signatory who holds a UAE residence visa.

Do I need an office to set up a company in Dubai?

Yes, every licence needs a physical address. On the mainland the tenancy must be registered with Ejari, and the premises must suit the activity and municipal planning rules. In a free zone, a flexible desk or shared office can be enough for some activities, but the space you lease largely sets how many residence visas the company can sponsor, and banks look at substance when they review the account.

Does a new Dubai company have to register for corporate tax?

Yes. A UAE company is within corporate tax from incorporation and is generally required to register with the Federal Tax Authority within three months, even if it has not traded. Late registration carries an AED 10,000 penalty, which the Federal Tax Authority waives where the first return is filed within seven months of the end of the first tax period. Corporate tax is 0% up to AED 375,000 of taxable income and 9% above.

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Critical advisory. A Dubai company is quick to license and slow to make usable, and the time is lost where the records disagree: an activity that does not match the invoices, premises that cannot carry the visas, an ownership chart that stops at a company, a tax registration nobody diarised.

I build the file in the order the bank will read it, with the activity, the premises, the visa plan, the ownership chart and the source of funds settled before the licence application goes in. If you are planning a Dubai company, or repairing one that the bank has queried, you can reach us through our services page. This article is general information about UAE law and practice as at 10 November 2026 and not legal or tax advice; requirements differ by authority and activity and change often, so confirm your own position before you act.