The most common questions according Corporate Tax and VAT in Dubaj / Emirates.
Free Zone
Free zone companies can open UAE corporate bank accounts, but documentation requirements may be stricter than for mainland firms. Banks may request proof of office space, business plans, and trade history. Some banks prefer mainland or long-established free zone entities, especially for high-risk sectors. Partnering with a professional firm can help streamline account opening.
Yes, but you cannot sell directly to customers in the mainland without a local distributor or third-party logistics provider licensed in the mainland. Alternatively, you can establish a branch in the mainland under the same ownership. Free zone licenses often include e-commerce as an activity, but operational restrictions apply. Always ensure that your logistics and tax setup complies with UAE laws to avoid penalties.
Free zone entities can own property only in designated freehold areas approved for foreign ownership. They may also invest through offshore structures or by setting up a mainland subsidiary. It’s important to check the specific regulations of the free zone and the Dubai Land Department. Consulting legal and tax advisors ensures the structure supports your investment goals and tax efficiency.
No, unless using a local distributor or opening a mainland branch.
Yes, foreign investors can fully own a free zone company.
Yes, most banks in the UAE allow this, but requirements vary.
Yes, most free zones allow multiple activities under one license, provided they fall under related categories. For example, trading and consultancy may require separate license segments, or even dual licensing. It’s cost-effective to group complementary services under one entity, but you must comply with free zone rules and activity approvals. Always consult with the free zone authority when adding new services.
Yes, depending on the size and type of your office package.
Most free zones allow you to change your license activity, upgrade your office, or add business activities, but processes and fees differ. You’ll usually need to submit a formal request, update your Memorandum of Association (MOA), and meet space or staff requirements. It’s important to ensure your business activity is properly reflected to avoid issues with banks, auditors, or regulators. It’s advisable to plan your structure carefully from the start to minimize changes later.
Yes, unless they only transact within designated zones and meet all conditions.
Yes, at least a flexi-desk or virtual office is usually required.
To maintain 0% corporate tax, free zone companies must demonstrate real economic activity within the zone. This includes having physical premises, local employees, and actual operations aligned with licensed activities. Failure to meet substance rules may lead to loss of preferential tax treatment. The UAE Corporate Tax Law enforces this through audits and documentation reviews.
Usually 5–10 working days, depending on the free zone authority.
Yes, but qualifying companies may remain at 0% if they meet substance and activity requirements.
Free zone companies must renew their trade license annually, which includes paying a renewal fee and providing updated documents. Some zones also require updated tenancy contracts and visa renewals. Failure to renew can result in penalties, license suspension, or legal consequences. Keeping track of renewal deadlines is essential for continuous operation and compliance with immigration and regulatory authorities.
DMCC, Dubai Internet City, Dubai South, and JAFZA.
A special economic area offering tax exemptions, full foreign ownership, and business-friendly regulations.
Designated free zones are special VAT zones that offer certain tax benefits, particularly VAT exemptions on specific transactions. These zones are treated as being outside the UAE for VAT purposes under specific conditions. Non-designated free zones are subject to standard VAT regulations. Choosing the right type of zone affects your tax planning and compliance obligations. It’s crucial to understand how this classification impacts your import/export and intra-group transactions.
A flexi-desk is a shared office space ideal for startups, with limited usage hours and lower visa quotas. A physical office provides dedicated space and higher credibility, often required for certain activities. Warehouses cater to logistics and manufacturing businesses and may include loading docks and storage areas. The facility type impacts your business license, visa eligibility, and operational permissions.
