Starting a company in Dubai begins with one of the most important decisions: how to choose the right Dubai free zone licence. The licence is the legal backbone of your business. It sets the boundaries of what you can do, the number of visas you can issue, and the compliance rules you must follow.
With packages in 2025 starting from around 12,000 and licences issued in as little as 5–10 business days, it pays to understand your options before you apply.
The Role of a Licence in Business Setup
Your licence determines your scope of operations, whether that means trading products, delivering services, or manufacturing goods. It influences your setup costs, the type of office space you need, and even your tax status. Getting this choice right from the beginning ensures your business plan fits within Dubai’s regulations and avoids unnecessary amendments later.
Types of Dubai Free Zone Licences
Most free zones group licences into three main categories.
Commercial Licence
A commercial licence covers trading in goods, from import and export to wholesale, retail, and e-commerce. An electronics retailer selling online, or a general trading company importing multiple product lines, would both operate under this category. Some licences allow broad “general trading”, while others focus on specific products such as food or auto parts.
Professional Licence
A professional licence is designed for service-oriented businesses. This includes consultants, coaches, designers, IT specialists, and other professionals who provide expertise rather than goods. For example, a freelance marketing consultant or a software development firm would typically need a professional licence. Specific fields, such as legal or engineering consultancy, may also require proof of qualifications or external approvals.
Industrial Licence
An industrial licence applies to businesses engaged in manufacturing or processing. This could be a cosmetics producer, a furniture workshop, or a food packaging plant. These licences often require physical facilities within the free zone and compliance with safety and environmental standards.
Matching Licence to Your Business Model
Defining Your Core Activities
Start by identifying your main business activity. If your revenue comes from selling products, a commercial licence is appropriate. If your work relies on skills or expertise, a professional licence is the best fit. If you produce goods, you will need an industrial licence. Companies with mixed activities should prioritise the primary source of income, or consider multiple licences if required.
Aligning with Your Growth Plans
Think about the next two to three years. Most licences allow up to three activities, with additional ones available for a fee. Planning for future diversification avoids costly amendments. For instance, a consultancy firm planning to sell software later should check whether both activities can be included under one licence or if a second licence will be required.
Costs, Packages and Visa Allocations
Licence Fees and Visa Quotas
Free zone licences are priced by visa business quota. A zero-visa package can cost as little as 8,000–12,000, while licences with one to six visas typically range from 12,000 to 30,000 or more. Each additional visa increases the fee, and larger quotas may require renting private office space rather than using a shared desk.
Entrepreneurs should also budget for government costs, such as immigration cards and visa issuance, which average 3,000–4,000 per person.
Processing Timelines
Company registration and licence issuance can be completed in 1–10 business days, depending on the free zone and activity. Residence visas typically take an additional 2–3 weeks to process, which includes the entry permit, medical fitness test, Emirates ID, and visa stamping. With express services, timelines can shorten, but most entrepreneurs should plan for a full setup period of about a month.
Compliance Considerations
Economic Substance Regulations (ESR)
Free zone companies carrying out “Relevant Activities” such as headquarters services, distribution, or shipping must demonstrate substance in the UAE. Since 2023, the requirement to file ESR reports has been removed for financial years ending after December 2022, but the obligation to maintain substance remains.
Ultimate Beneficial Owner (UBO) Declarations
All companies must file details of their ultimate beneficial owners under Cabinet Resolution No. 109 of 2023. Any change in ownership or control must be reported to the free zone authority within 15 days. Failure to comply can lead to fines or suspension of the licence.
VAT Registration and Tax Implications
Companies with a taxable turnover exceeding 375,000 are required to register for VAT. Voluntary registration is available above 187,500. Free zone companies are not automatically exempt; they must register if they meet the threshold and file returns with the Federal Tax Authority.
Corporate Tax in 2025
Free zone businesses can benefit from a 0% corporate tax rate on qualifying income, provided they meet the criteria for a Qualifying Free Zone Person. Qualifying income generally includes revenue from transactions with other free zone companies or overseas clients, as well as certain approved activities.
Income from the UAE mainland is usually considered non-qualifying and taxed at 9%, unless it falls under the de minimis rule (less than 5% of total revenue or 5 million).
Practical Guidance for Entrepreneurs
Questions to Ask Before Choosing
- What am I offering: goods, services, or manufactured products?
- How many people will need visas?
- Where will my clients be based?
Balancing the Budget with Flexibility
Low-cost packages are attractive, but upgrading later can be disruptive. If you expect to hire staff within your first year, consider a higher visa quota from the start. A slightly higher upfront cost often saves time and expense as the business scales.
Choose the Right Free Zone Company Licence
Choosing the right free zone company licence in Dubai means matching your licence type to your activities, ensuring your visa package fits your team size, and staying ahead of compliance. With transparent pricing, quick processing times, and clear corporate tax rules, Dubai free zones remain a strong choice for entrepreneurs in 2025. By planning carefully now, you set your company on firm legal and financial ground, allowing you to focus on growth with confidence. Contact us today at DUQE for further information.
FAQ
Can one licence cover multiple activities?
Yes. Most licences allow up to three related activities, with more available at an extra fee.
How often do licences need renewal?
Free zone licences are renewed annually, usually at a cost similar to the initial fee.
What happens if I outgrow my licence package?
You can upgrade to a larger visa quota or apply for an additional licence if you expand into new activities.