The introduction of the Federal Corporate Tax (CT) regime in the UAE, governed by Federal Decree-Law No. 47 of 2022, represents a pivotal shift in the nation’s commercial landscape.

Far from revoking the benefits of the Dubai Free Zones, the new law formalizes the criteria for tax exemption, demanding a strategic, compliance-first approach.¹

 

For entrepreneurs, international investors, and C-suite executives, the focus has shifted from simply being “tax-free” to becoming a Qualifying Free Zone Person (QFZP).

This expert guide details the mandatory Corporate Tax registration requirements, outlines the true cost of establishing a compliant Free Zone entity in 2025, and provides a comparative cost analysis to inform your strategic decision-making.

Mandatory Corporate Tax Registration: The New Compliance Imperative

Even while benefiting from a potential 0% CT rate, every Free Zone entity, including those enjoying a full tax exemption on qualifying income, is mandated to register with the Federal Tax Authority (FTA) via the EmaraTax portal.

 Non-compliance, including missing registration deadlines, attracts a penalty of AED 10,000.

 

The Core Requirement: Becoming a Qualifying Free Zone Person (QFZP)

To maintain the preferential 0% CT rate on Qualifying Income, a Free Zone entity must satisfy the conditions to be classified as a QFZP.

 This is the cornerstone of the new regime.

 

Criteria	Compliance Requirement	Official Source Reference
Registration	Must be registered with the FTA for Corporate Tax.	FTA Guidelines / Federal Decree-Law No. 47 of 2022
Adequate Substance	Must maintain “adequate substance” in the Free Zone, proving Core Income Generating Activities (CIGA) are carried out there. This involves having sufficient assets, qualified employees, and operating expenses relative to the activities.	Economic Substance Regulations (ESR) and CT Law
Qualifying Income	Income must be derived from Qualifying Activities and not Excluded Activities. Generally, income from transactions with other Free Zone Persons or international clients qualifies.	Ministerial Decision No. 139 of 2023 on QFZP
De Minimis Rule	Non-qualifying revenue must not exceed the De Minimis threshold, which is the lower of 5% of total revenue or AED 5 million in the relevant tax period.	Ministerial Decision No. 139 of 2023
Tax Election	The entity must not have elected to be subject to the standard 9% CT rate.	Federal Decree-Law No. 47 of 2022

💡 Expert Insight: The concept of “Adequate Substance” means a Flexi-Desk setup might suffice for a solo consultant with minimal CIGA, but a Trading or Logistics entity will require a physical office, warehouse, and demonstrable staffing to qualify for the 0% rate.⁵

 

Comprehensive Cost Breakdown: Establishing a Free Zone Company in Dubai (2025 Est.)

The total first-year cost for setting up a Free Zone company in Dubai ranges significantly, from as low as AED 15,000 for a basic, zero-visa package to over AED 50,000 for setups requiring multi-visa quotas and premium infrastructure.

 The cost is highly dependent on the choice of Free Zone, business activity, and required visa quota.

 

Initial Registration & Licensing Fees (The Foundation)

These are the non-negotiable costs payable to the Free Zone Authority (FZA) to incorporate the entity and issue the initial trade license.

Cost Component	Typical Cost (AED)	Notes & Strategic Considerations
Name Reservation Fee	AED 620 – AED 2,000	Varies by FZA. Often included in all-inclusive packages (e.g., IFZA, Meydan).
Registration/Incorporation Fee	AED 3,000 – AED 10,000+	One-time fee for formal establishment (e.g., FZ-LLC, FZE). DMCC’s registration fee is typically higher, around AED 9,020 (Source: DMCC Schedule of Charges).
Trade License Fee (Annual)	AED 10,000 – AED 35,000+	The most significant annual cost. Trading/General Trading licenses are consistently more expensive than Service/Consultancy licenses.
Memorandum & AOA Drafting	AED 1,500 – AED 3,000 (or Included)	Cost for the drafting of the foundational constitutional documents.
Total Initial Estimated Range	AED 15,000 – AED 45,000	For a zero-visa, service license package in a budget-conscious zone.

Office Space Requirement (The Substance Cost)

Physical presence is crucial for meeting ESR and QFZP requirements. Choosing the right space directly impacts your annual cost and visa eligibility.

Office Type	Annual Cost Range (AED)	Visa Quota Impact	Best Suited For
Flexi-Desk / Co-working	AED 5,000 – AED 15,000	Typically 0-1 Visa Quota	Solo founders, digital nomads, consultancies with minimal local activity (must still prove CIGA).
Dedicated Desk	AED 15,000 – AED 30,000	Typically 2-3 Visas	SMEs requiring a physical base for CIGA, but not a private office.
Private Office	AED 25,000 – AED 100,000+	3+ Visas (Scalable)	Large teams, Trading/Industrial activities, businesses prioritizing a premium address (e.g., DMCC, DAFZA).

Visa & Immigration Costs (The Human Capital Cost)

Each visa application incurs mandatory government fees managed by the Federal Authority for Identity, Citizenship, Customs, and Port Security (ICP).⁷

 

Visa Component	Frequency	Typical Cost (AED)	Notes
Establishment Card (Immigration Card)	Annual Renewal	AED 1,800 – AED 2,500	Mandatory for the company to sponsor visas.
Investor/Employment Visa (3-Year)	Every 2-3 Years	AED 7,500 – AED 12,500+	Includes Entry Permit, Status Change, Medical Fitness Test, and Emirates ID stamping.
Refundable Security Deposit	One-Time (Refundable)	AED 2,000 – AED 3,500 per visa	Required by some authorities/zones to cover potential repatriation costs.
Total Per Visa (Initial Est.)	AED 9,300 – AED 16,000+	Includes refundable deposit. Actual residency cost is lower (approx. AED 4,000 – 7,000 per visa stamping).

 Hidden & Ongoing Operational Costs (The Overlooked Expenses)

Prudent budgeting requires accounting for necessary third-party and annual recurring expenses often excluded from initial setup packages

 

Expense Category	Estimated Cost (AED)	Frequency	Rationale / Official Requirement
Audited Financial Statements	AED 4,000 – AED 15,000+	Annual	Mandatory for license renewal and Corporate Tax filing.
Bank Account Setup Assistance	AED 3,000 – AED 8,000	One-Time	Assistance to navigate minimum balance requirements (often AED 50,000 – AED 200,000), documentation, and compliance checks.
External Approvals	AED 2,000 – AED 20,000+	One-Time / Annual	Required for regulated activities (e.g., Food & Beverage, Healthcare, Finance, specific IT activities from Dubai Silicon Oasis).
Document Attestation/Legal Translation	AED 1,500 – AED 4,000 per doc	One-Time	Mandatory for non-UAE documents (Power of Attorney, M&A) via the Ministry of Foreign Affairs (MoFAIC).
PRO Services (Optional/Recommended)	AED 5,000 – AED 15,000	Annual	Outsourcing visa processing, customs, and documentation to a Public Relations Officer.

Strategic Cost Comparison: Key Dubai Free Zones (2025 Est.)

Choosing the right Free Zone is paramount. It determines not only your initial investment but also your ongoing compliance overhead and market access.

Free Zone (FZA)	Key Specialisation & Value Proposition	Est. Entry-Level Cost (Year 1, Zero-Visa) (AED)	Est. Annual Renewal (AED)
DMCC (Dubai Multi Commodities Centre)	Commodities, Trading, Services. Premium location, established global brand.	AED 25,000 – AED 40,000+	AED 20,000 – AED 35,000+
IFZA (International Free Zone Authority)	E-commerce, Consultancy, Services. Fastest, most competitive for a Dubai address.	AED 14,900 – AED 25,000+	AED 12,000 – AED 18,000+
Dubai South Free Zone	Logistics, Aviation, E-commerce. Proximity to Al Maktoum Airport, cost-effective for trade.	AED 12,000 – AED 20,000+	AED 10,000 – AED 16,000+
JAFZA (Jebel Ali Free Zone)	Industrial, Logistics, Trading. Access to Jebel Ali Port, largest infrastructure.	AED 15,000 – AED 30,000+ (License)	AED 15,000 – AED 25,000+
DAFZA (Dubai Airport Free Zone)	High-value trade, Services. Premium, strategically near Dubai International Airport.	AED 20,000 – AED 35,000+	AED 18,000 – AED 30,000+

Note: The lowest-cost packages often exclude visas and merely provide a license and flexi-desk usage for a single year.

 

Conclusion: Cost Optimization and Strategic Compliance

Successful Free Zone setup in the post-CT era requires a transition from a purely cost-driven decision to a Total Cost of Compliance (TCC) model.

• Cost Optimization Strategy: The most effective way to optimize costs is to select a Free Zone that perfectly matches your CIGA and visa requirements (e.g., choose IFZA or Dubai South for low-visa, service-based startups, or DMCC/JAFZA for multi-visa trading and premium operations). Opting for multi-year licenses can also unlock significant discounts (up to 20% at some authorities).

• The CT Registration Imperative: The single most critical step is the mandatory Corporate Tax registration with the FTA and the rigorous maintenance of Adequate Substance to secure the QFZP status and the 0% CT rate. Failure to prove CIGA, or exceeding the De Minimis threshold, will subject the entire income to the standard 9% CT rate, negating the primary Free Zone benefit.

   

For international investors and C-suite executives, the message is clear: the UAE’s Free Zones remain a globally competitive, low-tax environment, but success hinges on professional structuring and uncompromised compliance with Federal Tax Authority (FTA) regulations from Day 1.

Official Sources Integrated & Referenced:

1. Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (UAE Ministry of Finance).

2. Ministerial Decision No. 139 of 2023 defining Qualifying Free Zone Persons (QFZP) and Qualifying Income (UAE Ministry of Finance).

    

3. Federal Tax Authority (FTA) Guidelines on Corporate Tax Registration and Deadlines.

4. DMCC Schedule of Charges (DMCC Authority for specific fee structures).

5. Federal Authority for Identity, Citizenship, Customs and Port Security (ICP) for visa/immigration fee structures.