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Home Blog UAE Free Zones: Comprehensive 2025 Guide

UAE Free Zones: Types, Varieties & Differences - 2025 Guide

Sep 25, 2025
10 min
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Gulnora Djamalova
Oct 1, 2025 06:48
UAE Free Zones: Types, Varieties & Differences - 2025 Guide

UAE Free Zones: Types, Differences and Selection - 2025 Guide

Free Economic Zones (Free Zones, FZ/FZE/FZ-LLC) - regulated jurisdictions within the UAE with their own admin portals, activity lists and licensing conditions. They allow foreign founders to own 100% of a company, quickly obtain resident visas and operate globally. In this guide - classification of free zones (by emirate, industry and regime), key differences from the mainland, substance requirements, banking perspective and selection criteria for IT, e-commerce, consulting, trading and professional finance sectors.

  • 100% foreign ownership and simplified licensing within the chosen free zone.
  • Different types of zones: universal (multi-sector) and sector-specific (logistics, media, finance, etc.).
  • Zone choice affects: permitted activities, speed of launch, cost, banking perspective and substance.
  • For onshore operations (inside the UAE) a mainland license or distributor may be required.
  • Tax regime depends on income source and compliance with conditions (ESR, qualifying income, etc.).
  • Banks assess model transparency, substance, founders’ experience and client geography.
  • Timelines: often 2–5 business days for a license + 1–3 weeks for visa/Emirates ID.
Advantages of Free ZonesPotential Drawbacks
Fast setup, predictable processes, English-language portalsRestrictions on onshore trade and government tenders without mainland
100% ownership, flexible office solutions (flexi/virtual desk)Varied banking appetite across zones and industries
Wide activity lists for IT/e-com/consulting/mediaSubstance and reporting requirements (ESR, audit, bookkeeping)
Possibility of visas for founder and teamCompany relocation between zones requires procedures and costs

Classification of Free Zones - by Specialization and Emirate

Zone TypeExamplesBest ForFeatures
Universal (multi-sector)IFZA, RAKEZ, SHAMS, SPC, KEZAD, Meydan FZStartups, consulting, IT, creativeBroad activities, fast launch, competitive fees
Trade/LogisticsJAFZA, DMCC (trading), Ajman FZTrading, import/export, distributionWarehousing solutions, customs infrastructure
Media/CreativeDubai Media City, twofour54Production, media, content studiosSectoral licenses, specific requirements
Technology/ResearchDubai Internet City, Dubai Silicon OasisIT products, R&D, Dev centersTech ecosystem, community, office clusters
Finance/Professional Services (financial regulation)DIFC, ADGMFintech, funds, financial servicesOwn regulators, strict requirements and cost

Free Zone vs Mainland - What to Choose?

  • Sales geography: global export/online - comfortable in FZ; constant onshore retail/government contracts - often mainland.
  • Types of activity: some licensed professions/trading activities are easier in mainland.
  • Banking: crucial link 'business model - zone - substance'. For financial-regulated activities - ADGM/DIFC.
  • Office and team: flexi-desk in FZ works at the start; as you grow - full offices/warehouses.
  • Compliance and taxes: both FZ and mainland require accounting, reporting, ESR/CT/VAT where applicable.

How to Set Up a Company in a Free Zone - Step by Step

Requirements and Documents

  • Passport (6+ months), 3×4 photo on white background.
  • Contacts (email, phone), correspondence address.
  • Chosen activities and desired legal name.
  • Beneficiaries/directors’ details; in some zones - CV/LinkedIn.
  • For family sponsorship: attested marriage/birth certificates + lease and insurance.
  • By sector - additional approvals (media, education, financial regulation, etc.).

Timelines and Stages (Reference)

  • License: 2–5 business days for popular zones and activities.
  • Entry permit / status change: 2–7 days depending on nationality/status.
  • Medical check/biometrics: 1–3 days after booking.
  • Visa/Emirates ID: 3–10 days; check dates before international travel.
  • Bank: 1–4 weeks; strong KYC package and clear model speed up the process.

Banking and Substance - What Banks Look At

Key factors: transparent business model, source of funds (SOF), source of revenue (SOR), UAE ties (office/team/contracts), client portfolio, counterparties’ compliance policies. Prepare website, product/service description, transaction roadmap, projected turnovers, contracts/invoices, founders’ profiles, proof of experience. When using free zone benefits maintain sufficient substance (local management and documented decisions), critical for ESR and qualifying income.

Common Mistakes and How to Avoid Them

  • Wrong activity choice: mismatch with real model leads to rejections/changes.
  • Ignoring onshore: for local trade consider mainland or distributor.
  • Weak KYC: no website/proof of operations increases bank queries.
  • Zero substance: when using FZ benefits, record management/staff/contracts for ESR.
  • Accounting gaps: no bookkeeping/contracts - risk during audits and with banks.
  • Unplanned zone migrations: clarify migration procedures in advance.

Taxes and Compliance - Free Zone Companies Overview

UAE introduced corporate tax (basic rate 9%) for profits from UAE sources above threshold, while in some free zones qualifying income may benefit from exemptions (e.g. 0%) if conditions and substance are met. Economic substance (ESR), accounting, audit (in some zones), UBO reporting and KYC/AML compliance are standard. VAT applies if taxable supplies in UAE exceed threshold or on voluntary registration. Always verify with current rules of chosen zone and consult specialists.

FAQ

  • Can I sell onshore from FZ? For systematic retail/services onshore, a mainland license or local agent is often required.
  • Is FZ good for SaaS/consulting? Yes, many zones list suitable activity codes.
  • Do I need a physical office? Often flexi/virtual desk is enough; when scaling - full office/warehouse.
  • How many visas per license? Depends on zone, package and office area; check quotas in advance.
  • Which zone is best for banking? Banks weigh model, zone, experience and substance - not just the zone ‘name’.
  • Can I switch zones later? Yes, but it’s a separate procedure with costs and timelines.
  • Is audit mandatory? In some zones and at certain revenue levels audit is mandatory; keep primary records.
  • How to handle marketplaces/delivery? Check marketplace requirements and customs regimes of warehouses.
  • Can I keep warehouse outside the zone? Yes, but consider customs, VAT and lease/substance conditions.
  • How to choose between IFZA/RAKEZ/SHAMS/KEZAD etc.? Compare activities, cost, timelines, visa quotas and banking logic for your case.
  • Does zone affect taxes? Yes, regime depends on income source and compliance with FZ/ESR/CT conditions.
  • Is local director required? Usually not for FZ; check rules of the specific zone and activity.
  • Is FZ suitable for holding IP/shares? Yes, with correct structure, accounting and ESR compliance.

Disclaimer: this material is for informational purposes only and does not constitute tax, legal or investment advice. Free zone rules are updated; always check current requirements in your chosen jurisdiction.

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