In 2025, Dubai continues to solidify its position as one of the most attractive global destinations, not only for its tourism and safety, but also for company formation and international business expansion, blending together tax efficiency, digital infrastructure, and strategic regional connectivity.
With a flat 9% corporate tax now applicable only on profits exceeding AED 375,000 (approx. EUR 88,500) and zero tax for qualifying Free Zone income, Dubai offers a uniquely balanced fiscal environment for both startups and established foreign investors.
But beyond low taxation, the real game-changer is the evolving legal and regulatory landscape of the region. The commitment of the authorities to economic transformation driven by flagship initiatives like “Make It in the Emirates” and “Dubai Economic Agenda D33” has introduced a new wave of investor-friendly reforms. Among these is Executive Council Resolution 11/2025, which for the first time allows Free Zone companies to operate directly in the Mainland without the need for a separate legal entity.
Whether you’re a tech entrepreneur, a manufacturing firm, or a multinational company looking for regional expansion, Dubai in 2025 presents more opportunity, more flexibility and fewer barriers than ever before. Here's what you need to know to set up a company in Dubai under the latest legal framework.
At Al Safar & Partners Advocates & Legal Consultants, we understand that setting up a company in Dubai is not only a legal process, but a strategic business decision. Our role goes far beyond handling documents: we act as long-term business-legal advisors guiding clients through the intricacies of UAE regulations with clarity and precision. From selecting the right company structure and drafting compliant legal documents, to securing regulatory approvals and ensuring full tax and licensing compliance, our local lawyers and international legal consultants provide comprehensive support at every stage. Whether you are a startup or an expanding international venture, we are here to ensure your business is built on a solid legal foundation, structured for growth, and protected against future risks.
Jurisdiction Options: Mainland, Free Zone, or Hybrid
When opening a company in Dubai, investors can choose between three jurisdiction options:
- Mainland, which allows 100% foreign ownership, full access to the UAE market (including public tenders), but requires a physical office and is subject to 9% corporate tax on profits above AED 375,000 (approx. EUR 88,500);
- Free Zone, which offers 100% foreign ownership, sector-specific benefits, and 0% corporate tax (if substance rules are met and income is generated outside the UAE); and
- Hybrid, introduced under Resolution 11/2025, which enables Free Zone companies to operate in the Mainland via a branch license, headquarter permit, combining flexibility with expanded market reach.
Mainland (Onshore/Dubai Department of Economy)
- Grants full access to the UAE market, and, where applicable the ability to trade directly with local companies and bid on public or government contracts.
- 100% foreign ownership permitted (no local sponsor required), following the 2021 amendments to Federal Law No. 32 of 2021 on Commercial Companies.
- Requires a real physical office, registered with Ejari. Virtual offices are allowed only for short-term or initial license phases.
- Corporate Tax of 9% applies to net profits exceeding AED 375,000 per year, as per Federal Decree-Law No. 47 of 2022 (effective since June 2023).
- Mainland companies must also register for VAT (5%) if annual taxable turnover exceeds AED 375,000.
- Subject to Economic Substance Regulations (ESR) and Ultimate Beneficial Ownership (UBO) disclosures.
Free Zone
- Retains 100% ownership, and zero (0%) corporate tax (only if the entity qualifies as a “Free Zone Qualifying Person” under UAE Corporate Tax Law - Federal Decree-Law No. 47/2022), and tailored infrastructure per sector. Otherwise, if the entity does not align with the required conditions, a 9% corporate tax applies to annual profits above AED 375,000.
- Great for international trade, tech, or media ventures.
Hybrid (via Resolution 11/2025)
- Free Zone firms can now apply for:
a) A Mainland branch license (with office)
b) A Headquarter license (HQ in Free Zone, no Mainland office)
c) A 6-month Mainland permit
- All via DET (Dubai Department of Economy and Tourism), enabling seamless operations across jurisdictions
- Step-by-Step Formation Guide (2025)
Define your business activity
- When incorporating a company in Dubai, the first and most important step is to define the intended business activity. The UAE authorities offer a catalogue of over 2,000 approved activities, grouped under seven main license types: commercial, industrial, professional, tourism, agricultural, occupational, and IT & technology etc.
Each license type corresponds to specific regulatory requirements and determines where the business can be registered — in the Mainland, in one of Dubai’s Free Zones, or under the new Hybrid model. Choosing the right activity ensures full legal compliance and smooth licensing procedures from the start.
According to UAE commercial regulations (including those under DET/DED and various Free Zone authorities), a company may register multiple business activities under a single trade license, provided the activities are compatible and fall under the same license category or approved grouping.
2. Legal Structure
- Mainland: Options include Limited Liability Company (LLC), Sole Establishment (Sole Proprietorship), Branch of a Foreign Company (Branch), Civil Professional Company (Civil Company), and Public Joint Stock Company (PJSC).
- Free Zone: Depending on each free zone in particular, the options include Free Zone Establishment (FZE – single shareholder), Free Zone Limited Liability Company (FZ LLC – multiple shareholders), Free Zone Company (FZC), or a Branch. Hybrid setups follow the Branch or Headquarters (HQ) model under Resolution 11.
3. Trade Name Reservation
- This step is performed by us as legal representatives via Dubai Department of Economy and Tourism (DET) or through the respective Free Zone authority portals.
- Trade names must be unique, respectful, and include appropriate legal suffixes (e.g., LLC, FZE).
4. Initial Approval
- As legal representatives, we prepare and submit on behalf of the client the full documentation and application file using various channels.
- For Mainland registrations, filings are processed via the Dubai Department of Economy and Tourism (DED), while for Free Zone entities, submissions are made directly through the relevant Free Zone authority.
5. Memorandum of Association (MOA)
- As part of the incorporation process, we assist with drafting the necessary corporate documents. For Limited Liability Companies (LLC) or Civil Companies, this involves preparing a Memorandum of Association (MOA).
- In the case of Free Zone entities, each authority has its own set of incorporation documents, which we assist in completing and submitting according to the specific Free Zone’s regulatory requirements.
6. Choose Office Setup
- Mainland: Ejari-registered lease is mandatory, ensuring legal protection and transparency for landlords and tenants.
- Free Zone: Dubai offers a wide range of Free Zones catering to various industries, providing options from flexi-desks to full-suite offices. Among the most prominent Free Zones in 2025 are Dubai Multi Commodities Centre (DMCC), Dubai Airport Free Zone (DAFZA), Dubai Internet City (DIC), Dubai Media City (DMC), Dubai Silicon Oasis (DSO), Dubai International Financial Centre (DIFC), Jebel Ali Free Zone (JAFZA), Dubai South Free Zone, Meydan Free Zone, Dubai Healthcare City (DHCC), Dubai Design District (d3), Dubai Maritime City Free Zone, Dubai Production City. Each Free Zone offers tailored infrastructure and sector-specific benefits, making Dubai an attractive hub for a diverse range of businesses.
7. Approvals for Special Activities
Certain business activities in Dubai require prior approvals from specific regulatory authorities, in addition to the standard licensing process. These approvals ensure that businesses operating in sensitive or strategically important sectors comply with industry-specific regulations and safety standards.
For example, companies engaging in:
- Telecom, health, food, tourism: approvals from GDRFA, Ministry of Economy, Telecom Regulatory Authority, etc.
- Food-related businesses (restaurants, catering, food trading) require clearance from the Dubai Municipality Food Safety Department and may also need inspections from the Emirates Authority for Standardization and Metrology (ESMA).
- Tourism and hospitality activities (hotels, travel agencies, tourism operators) are licensed through the Department of Economy and Tourism (DET) and require special permits based on the scope of activity.
- For visas: apply for Golden or Green Visa based on investment, including dual-license activity levels.
Additionally, investors or entrepreneurs who meet the qualifying investment or business thresholds can secure long-term residency under the UAE’s Golden Visa (up to 10 years) or Green Visa (up to 5 years). These visas include benefits like family sponsorship and multi-entry privileges. While a dual-license structure may support your business strategy, the visas are granted based on investment or entrepreneurial criteria, not merely the company’s licensing model.
8. License Issuance & Fees
- For Mainland companies, the Department of Economy and Tourism (DET) typically issues business licenses within 3 to 5 working days, assuming all documents and approvals are properly submitted. In select cases, a fast-track license can be obtained in as little as 15 minutes, applicable to low-risk, pre-approved activities that require no external clearance.
- For Free Zone entities, licensing is managed by the respective Free Zone Authority, and approval timelines usually range from 1 to 4 weeks, depending on the Free Zone selected, the type of business activity, and the office package (e.g., flexi-desk, executive suite).
- Fees vary widely based on jurisdiction, business activity, number of visas, and optional services such as legal drafting, notarisation, or office space.
9. Registration & Compliance
Once your business license is issued, it’s critical to complete registration and maintain compliance across all relevant jurisdictions in Dubai; failing to do so can result in fines or restrictions under the UAE’s evolving tax and regulatory framework.
- Mainland: Companies must register with the Dubai Chamber of Commerce and may also register with the Ministry of Finance to qualify for government contracts. They are subject to 9% Corporate Tax (for profits > AED 375,000), must file annual tax returns to the Federal Tax Authority, maintain audited financial statements, register for VAT if turnover exceeds AED 375,000, and comply with Ultimate Beneficial Ownership (UBO) and economic substance rules
- Free Zone: Businesses register via the relevant Free Zone Authority, but must also complete FTA Corporate Tax registration, regardless of whether they expect zero tax status.
To maintain 0% CT, they must qualify as a Qualifying Free Zone Person (QFZP), meaning they derive qualifying income, meet economic substance requirements, and keep separate financial documentation for income categories. Free zone entities must file annual tax returns, keep records for seven years, and submit audited financial statements even if revenue is below AED 50 million.
- Hybrid (Dual-License Models): When a Free Zone company expands via a Mainland branch or permit, the onshore income is taxed separately and must be reported under Mainland regime; financial statements must be kept for each segment to ensure clear Corporate Tax compliance and avoid cross-contamination
10. Tax & Substance Rules
- A 9% corporate tax applies on annual net profits above AED 375,000, as per Federal Decree-Law No. 47 of 2022 (effective June 2023).
- Free Zone companies can benefit from 0% tax if the income is generated outside the UAE or from other Free Zone entities, the substance requirements are met, and CT registration is completed. Otherwise, a 9% corporate tax applies to annual profits above AED 375,000.
- VAT (Value Added Tax): A 5% VAT applies if annual taxable turnover exceeds AED 375,000. Registration with the Federal Tax Authority (FTA) is mandatory, along with invoicing and regular VAT filings.
- Under Cabinet Resolution No. 57 of 2020, companies conducting “relevant activities” (e.g., holding, IP, finance, shipping) must show real operations in the UAE: local staff, office space, and operating expenses. Non-compliance may lead to fines or loss of tax benefits.
- Starting from 2025, large multinational groups meeting OECD Pillar Two thresholds (i.e., global consolidated revenue over EUR 750 million) will be subject to a 15% domestic minimum top-up tax in the UAE.
11. UAE Set to Launch Mandatory E-Invoicing by 2026: A Game-Changer for Tax Compliance and Efficiency
In parallel with the structural reforms transforming company formation in Dubai, a series of recent reports highlights that the UAE is preparing for a full digital invoicing process transformation set to begin in mid‑2026. According to Gulf News, the upcoming e‑invoicing mandate will allow businesses to cut invoice processing costs by up to 80% and will require full overhaul of invoice workflows, with the Federal Tax Authority (FTA) receiving invoices in real-time to strengthen VAT transparency and reduce fraud. Meanwhile, Gulf News Focus underlines that the system based on the global Peppol model will roll out in phases, offering advanced notice to help firms prepare and ensure interoperability among accredited providers.
Final Word: Your 2025 Launchpad in Dubai
The 2025 legal framework, highlighted by Resolution 11/2025, the introduction of 100% foreign ownership on the Mainland, and enhanced digital licensing platforms, has transformed the landscape of company formation in Dubai. Entrepreneurs can now launch their businesses within a Free Zone to benefit from attractive tax incentives and later expand into the Mainland without undergoing a complex restructuring process. This approach offers a rare blend of operational flexibility, scalability, and long-term strategic value.
To provide our clients with fully tailored and accurate legal support, it is essential to hold a videocall or meeting to thoroughly understand the nature of the business they intend to establish in the UAE. Only after this detailed discussion can we recommend the most suitable jurisdiction for company formation, whether it be a Free Zone, Mainland, or Hybrid setup, ensuring the structure aligns perfectly with the client’s specific business goals and compliance requirements.
As trusted legal advisors, at Al Safar & Partners Advocates & Legal Consultants, we manage the entire company formation process in Dubai and its Free Zones with full legal compliance and professionalism. Our team consists of Emirati lawyers and top-tier international legal consultants who ensure every step is executed flawlessly, avoiding unexpected costs and guaranteeing a smooth, 100% compliant establishment of your business to secure your trade name and to utilize official payment portals, ensuring your business launch is secure and efficient. In 2025, Dubai is not only ready for business: it is optimized for success!
For more information or legal assistance, contact Al Safar and Partners today on 0527583267 - [email protected] - https://www.alsafarpartners.com/
Written By: Mr. Paul George Căta - Partner & Senior Legal Consultant at Al Safar and Partners Law Firm.