Onshore companies in Free Economic Zones of Dubai and the UAE

More than 40 free economic zones operate in the United Arab Emirates, allowing foreign investors to register onshore (resident) companies for almost all types of commercial activities. These regulated business environments are suitable for onshore business models with clear legal frameworks for international companies. Each zone has its own specialization, regulator, and licensing requirements applicable within specific jurisdictions.

For example, Dubai Media City is one of the specialized free zones focusing on media, marketing, and creative industries, while Jebel Ali Free Zone (JAFZA) is among the largest industrial zones, traditionally used for logistics, trade, manufacturing, and international onshore holding companies operating within designated economic zones.

Purpose and role of free economic zones

UAE free economic zones were established with the aim of:

attracting foreign investment into designated business zones, including onshore investors and foreign companies;
developing international trade and services through specialized economic areas;
diversifying the economy via sector-focused jurisdictions;
creating a sustainable business environment beyond the oil sector for long-term onshore operations.

Thanks to a stable legal framework, developed infrastructure, a favorable geographic location, and a business-friendly tax regime, these zones have developed rapidly. Today, tens of thousands of onshore companies are registered across Dubai’s economic zones and similar jurisdictions in other emirates.

Tax regime and regulation

Onshore companies registered in the UAE free economic zones are fully resident companies; however, the tax regime depends on the specific conditions applicable within each zone and the nature of the business activities carried out under an onshore structure.

Key provisions:

Corporate Tax applies in the UAE at a standard rate of 9%; however,
Free Zone Persons operating within qualifying free zones may apply a 0% rate if they meet the requirements for qualifying income and economic substance applicable to onshore businesses and regulated companies.
VAT at 5% applies to certain types of transactions if the company registered in a zone is VAT-registered and carries out taxable supplies.
There is no personal income tax for individuals.
There are no restrictions on the repatriation of capital and profits from onshore companies operating in these zones.

The UAE is not an offshore jurisdiction and is not included in any “blacklists” of tax havens. The country fully complies with international AML, KYC, BEPS, and CRS standards, which apply equally to all onshore entities and companies registered in free economic zones.

Key advantages of companies in the UAE free zones

Companies registered in UAE free zones benefit from a number of key advantages that make this format one of the most popular structures for onshore international business and foreign investors, including:

100% foreign ownership in free zones;
no personal income tax;
the possibility to apply a 0% corporate tax rate if conditions are met within specific zones;
free repatriation of capital and profits;
a developed banking system servicing onshore companies and international companies in these jurisdictions;
a stable political and economic environment;
modern infrastructure and logistics;
the ability to obtain residency visas for owners, managers, and employees of onshore companies registered in free zones.

There are no restrictions based on citizenship or residency of shareholders and directors. Founders may be either individuals or legal entities acting as parent companies.

Residency status and differences from classic offshore companies

Companies registered in the UAE free economic zones:

may have a real office within the zones;
may be effectively managed from the UAE as onshore businesses and operating companies;
may confirm economic substance in accordance with applicable regulations.

Unlike classic offshore companies, where management from the country of registration often creates tax risks, companies operating in UAE free zones can safely confirm tax residency when processes are properly structured under an onshore model.

This is particularly important in the context of increased international scrutiny of:

effective management in regulated zones;
onshore substance and control of companies;
cross-border payments.

Double taxation treaties

The UAE has concluded more than 100 double taxation avoidance agreements, providing significant advantages for international businesses and holding structures registered as onshore entities and companies in free economic zones.

Business opportunities

Having a company in the UAE free zones allows businesses and international companies to:

build efficient international trade operations using these zones as hubs within an onshore framework;
relocate part of the value chain to the UAE through specialized jurisdictions;
leverage the region’s logistics potential offered by industrial zones;
operate in Middle Eastern, African, and Asian markets;
establish a regional headquarters or operational hub under an onshore structure.

Companies may be registered in free economic zones:

as independent legal entities;
as subsidiaries;
as branches of foreign companies operating on an onshore basis.

Share capital

The amount of share capital depends on:

the selected free zone;
the type of activity permitted within the zone;
the company structure under the chosen onshore setup for registered companies.

In some zones, share capital may not be required to be paid in or may be set at a nominal level. For capital-intensive projects (such as manufacturing, education, and healthcare), requirements in certain jurisdictions may be significantly higher.

After registration, there are generally no restrictions on the use of share capital unless otherwise specified by the license conditions.

Licensing of activities

A company in a free economic zone must obtain a license for its chosen activity to operate as an onshore company. The main types of licenses include:

Commercial/trading license – for trading in goods;
Service license – for the provision of services (consulting, IT, marketing, etc.);
Industrial/manufacturing license – for production activities carried out by licensed companies.

Licensing requirements vary significantly across zones, ranging from minimal to highly detailed, depending on the sector (e.g., education, healthcare, or finance).

Registration documents

If the founder is an individual registering an onshore company in a free zone:

passport;
proof of residential address;
bank reference (if required);
CV or information on professional experience (for licensed activities).

If the founder is a legal entity establishing a company in a free zone:

incorporation documents of the parent company;
resolution to establish a subsidiary;
documents legalized at the UAE embassy and the UAE Ministry of Foreign Affairs.

Registration of a branch of a foreign company

Branches of foreign companies in the UAE free economic zones:

may conduct full commercial activities under an onshore regime;
do not require share capital;
operate based on a zone-specific license as registered companies.

The parent company’s documents are subject to multi-stage legalization.

Our support

Our consultants provide full support for onshore companies operating in UAE free zones and international companies, and:

select the optimal zone and company type;
analyze tax and regulatory implications specific to onshore structures;
prepare and legalize documentation;
support licensing, bank account opening, and visa processing;
provide ongoing corporate and administrative support.

To receive a preliminary consultation on registering an onshore company in a free zone in Dubai or other UAE emirates, please send us your inquiry.