Key Takeaways
- A company with revenue up to AED 3 million can use Small Business Relief for tax periods ending on or before 31 December 2029 (Ministry of Finance, 7 August 2026).
- You claim the relief in your Corporate Tax return. A Qualifying Free Zone Person or a member of a multinational group can't claim it.
- VAT registration becomes mandatory above AED 375,000 of taxable supplies and imports. You may register from AED 187,500, and you have 30 days once you're liable (as of October 2026).
- Every new company registers for Corporate Tax within three months of incorporation. Missing that deadline costs AED 10,000 (as of October 2026).
- Since 1 January 2025, private-sector workers in every emirate must have health insurance. MOHRE lists a basic package at AED 320 per year (October 2026).
Before an SME (a small or medium-sized enterprise) in Dubai can trade, the owner has to settle the legal form, the licence activity, the office, visas and tax registration. The order matters. Your lease, your visa quota and both tax registrations depend on the licence. The rules below are as of October 2026.
Mainland or free zone for an SME in Dubai
Start with your customers. They decide the option more than anything else. Say you do office-based work for clients abroad or for other businesses. A free zone usually suits that. It's an area with its own authority that licenses companies under its own rules. If you serve the public or sell across the UAE, a mainland licence fits better. Mainland means anywhere in the emirate outside a free zone.
Foreign ownership is now the rule on the mainland. Activities with strategic impact are the exception and have limits (Commercial Companies Law, Article 10). The Ministry of Economy and Tourism lists seven such groups, among them banking and insurance, telecoms, and Hajj and Umrah services.
On service agents, two government pages disagree. A local service agent is a UAE national who handles government paperwork for a fee but owns no shares. u.ae's guide to starting a mainland business (16 July 2026) says businesses owned completely by non-GCC residents need one. GCC stands for the Gulf Cooperation Council, the bloc of Gulf states the UAE belongs to. Yet u.ae's foreign ownership page (6 April 2026) says the rule of 51 per cent Emirati ownership or a local agent was removed for most activities, and that branches no longer need an Emirati service agent. Because of that gap, get a written answer from the Department of Economy and Tourism (DET), Dubai's mainland licensing office, formerly DED, on whether your activity needs an agent.
A free zone company can be wholly foreign owned. To work on the Dubai mainland, it needs a licence or permit under Executive Council Resolution 11 of 2025 (Article 3). A Dubai permit doesn't cover any other emirate. If you sell goods, the trading company guide goes into more detail.
Which option costs less depends on your activity, how many visas you need and the desk or office. There's no single price for a company in Dubai. Before you compare totals, get an itemised fee sheet from each zone or from DET.
Legal form, licence and office in one table
A limited liability company (LLC) can have between two and fifty partners, or a single owner. The law sets no fixed minimum capital (Federal Decree-Law 32 of 2021, Articles 71 and 76). Dubai's official guide lists five licence types: industrial, commercial, professional, E-Trader and dual (dubai.ae, October 2026). The dual one is a mainland branch run by a free zone company from its free zone office. The table helps you see who issues each licence and what it means for premises and staff.
| Option | Issued by | Premises | Staff and visas |
|---|---|---|---|
| Dubai mainland LLC or professional licence | DET | Most licences need a leased address registered in Ejari, Dubai's official register of tenancy contracts. DET can tell you what your activity needs | The Ministry of Human Resources and Emiratisation (MOHRE) issues the work-permit quota. A valid Ta'qeem report is a condition |
| Dubai e-trader licence | DET | Run from home; sole proprietorship only | Check with DET whether staff and visas are allowed |
| Abu Dhabi mainland | ADDED (Abu Dhabi Department of Economic Development), through the TAMM government services platform | A standard licence follows the usual setup procedure. ADDED lists Freelancer and Mobdea as needing no premises, and Tajer holders have a time-limited exemption | Quota set by MOHRE |
| Free zone company | The zone | Flexi-desk, desk or office, depending on the package | The visa quota, the number of residence visas you may apply for, follows the package or desk |
| Free zone company selling in Dubai | The zone and DET | A branch run from the zone at AED 10,000 a year, or a six-month permit at AED 5,000 | Dubai only. Other emirates need their own licences |
Licensing in Dubai happens in three stages: initial approval, then the trade name, then the licence itself. If you have premises, the tenancy goes into Ejari. For a company lease through a trustee centre, that costs AED 220. The AED 177.75 rate through the Dubai REST app or the Dubai Land Department website is for leases where tenant and landlord are both individuals (October 2026). For the technology and funding side, see the startup company guide.
Staff, visas and insurance
On the mainland, MOHRE issues the work-permit quota. It says the quota is now granted instantly (February 2026), provided you hold a valid Ta'qeem report. That's MOHRE's check of your business before it sets the quota. Its service page gives no formula based on office size. Free zones link the quota to the package or the desk. Get that number from the zone before you rent or pay.
Health insurance for private-sector workers has been mandatory in every emirate since 1 January 2025. That's when the federal scheme reached the northern emirates. Dubai and Abu Dhabi already ran their own schemes. MOHRE lists a basic package at AED 320 per year (October 2026). The insurance gets checked whenever a residence permit is issued or renewed.
Don't apply for a visa while your licence is dormant. The Federal Authority for Identity, Citizenship, Customs and Port Security (ICP) fines an employer who obtains an entry visa without conducting business. Its entry permit service lists the fine at AED 20,000.
Accounting, VAT and Corporate Tax for a small company
Corporate Tax is 0% on taxable income up to AED 375,000 and 9% on anything above it (Cabinet Decision 116 of 2022). Taxable income is your profit after the tax adjustments. A new company registers within three months of incorporation (Federal Tax Authority (FTA) Decision 3 of 2024), and that includes free zone companies. Registering late costs AED 10,000. A late return costs AED 500 per month for the first 12 months (Cabinet Decision 75 of 2023 as amended).
Value added tax (VAT) has its own threshold. Registration is mandatory once your taxable supplies and imports pass AED 375,000 over the past 12 months, or are expected to in the next 30 days. Taxable supplies are the sales that VAT applies to. You may register voluntarily from AED 187,500 (VAT Executive Regulation, Articles 7 and 8, consolidated September 2026). Apply within 30 days of becoming liable. You owe VAT on every taxable supply from the day liability began (VAT Executive Regulation, Article 7). Penalties were reformed from 14 April 2026. The Ministry of Finance consolidated text puts late registration at AED 10,000 (Cabinet Decision 40 of 2017 as amended by Cabinet Decision 129 of 2025, Table 1, row 3). Check that amount in the FTA penalty table.
You have to register even when little or no tax is due. A company that skips Corporate Tax registration because it expects to pay 0% still gets the AED 10,000 penalty. An accounting firm or a bookkeeping service can keep the ledgers that both registrations rely on. The VAT registration guide walks through the process.
Small Business Relief, conditions and who can use it
Small Business Relief now runs to tax periods ending on or before 31 December 2029. Ministerial Decision 131 of 2026 extended it from 31 December 2026 (Ministry of Finance news, 7 August 2026). The revenue limit of AED 3 million comes from Ministerial Decision 73 of 2023. The English text of these decisions is not an official translation.
You claim the relief in the Corporate Tax return, one period at a time. The company still has to register and file. Revenue must stay within the limit in that period and in the earlier relevant periods. If it went over in any of them, the election is lost. Splitting one business into several to stay under the limit doesn't help, because the general anti-abuse rule catches it.
The relief comes with trade-offs. In an election year, exempt income, reliefs, deductions and loss relief don't apply. That year's tax losses can't be carried forward, and neither can its net interest expenditure. Two kinds of company can't claim at all. One is a Qualifying Free Zone Person (QFZP), a free zone company that meets the conditions for the 0% rate. The other is a constituent company of a multinational group. Whether to elect in a year with losses is a question for a corporate tax consultant.
Funding and banking basics
A bank looks at a new company's paperwork before it looks at the business plan. The Central Bank's customer due diligence guidance tells banks to verify the customer and the beneficial owners, the real people who own or control the company in the end. If a bank can't complete those checks, the guidance says it shouldn't open or keep the relationship. The Central Bank rulebook lists the guidance as in force from 7 November 2025. Look for the April 2026 update there.
Some banks publish their entry-level accounts. Mashreq lists NEO BIZ Pro at AED 99 per month with no minimum balance (Mashreq NEO BIZ page, October 2026). Emirates Islamic's Digital Business Package asks for an average monthly balance of AED 10,000 and copies of residence visas for all shareholders (bank pages, October 2026). Have the ownership chain and the source of your funds ready before you apply. The activity wording on the bank form should match your licence exactly.
Funding is a different matter from licensing. If you run a technology company and want investors to buy into it, the startup company guide covers the options. Thinking of buying a business that's already trading? Read the checklist for buying an existing company first.
Women founders and the Mobdea licence
ADDED lists the Mobdea licence among its Abu Dhabi licence types. It's for female UAE citizens and doesn't need a physical headquarters (ADDED, October 2026). Ask ADDED which activities it covers before you build plans around it. For other options, the licensing authority can confirm whether your nationality and residence status make you eligible. Your bank or zone may run a programme for women founders. Find out whether they do, and on what terms.
A first-year plan
Follow this order and each registration stays inside its deadline.
- Pin down your customers and the activity wording. Then pick mainland or free zone.
- Get an itemised fee sheet from DET, ADDED or the zone, and have the visa quota confirmed.
- Sign a lease only once the licensing authority has confirmed the premises suit your activity. Then register the tenancy.
- Register for Corporate Tax within three months of incorporation.
- Check taxable supplies against AED 375,000 every month, and register for VAT within 30 days of going over.
- Open the bank account with the ownership chain and source of funds ready.
- Decide on Small Business Relief when you file your first return.
Two delays cost money. One is a late VAT application, and the FTA table has the amount. The other is a late Corporate Tax registration, which is AED 10,000 under Cabinet Decision 75 of 2023 as amended (as of October 2026). Still deciding what business to start? The business ideas guide shows the licence each idea needs.
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