Foreign investors choose between a mainland company licensed by an emirate, a free zone entity licensed by a free zone authority, or a company in the DIFC or ADGM financial free zones. Mainland companies can be wholly foreign-owned in most activities, but strategic-impact activities need federal approval. All non-exempt entities outside the financial free zones must keep a beneficial owner register using a 25% test.
Mainland, free zone or financial free zone
A mainland company is formed under the federal Commercial Companies Law and licensed by the economic department of the emirate where it operates. It can trade anywhere in the UAE and contract directly with mainland customers and, subject to procurement rules, government bodies. Since 2 January 2022 the law has allowed 100% foreign ownership in most activities, ending the earlier 49% cap and the need for an Emirati majority shareholder.
A free zone entity is licensed by the relevant free zone authority under that zone's regulations, which may displace parts of the Commercial Companies Law. Free zones are usually chosen for full foreign ownership in all permitted activities, simpler set-up and access to the Qualifying Free Zone Person tax regime, but trading directly in the mainland market generally needs an onshore presence.
The DIFC (Dubai) and ADGM (Abu Dhabi) are financial free zones with their own common-law company laws, registrars and courts. They suit regulated financial services, holding and fund structures, and groups that want English-law-based corporate rules.12345
Entity forms and ownership rules on the mainland
The Commercial Companies Law recognises five forms. Foreign investors almost always use the limited liability company, which may have between 2 and 50 partners or be owned by a single person. Joint stock companies are used for larger or listed businesses.
A foreign company can instead register a branch or representative office on the mainland. Both must appoint a UAE national local service agent, an individual or a wholly UAE-owned company, who has no ownership or management role.
Strategic-impact activities, including security and defence, banking and insurance, currency printing, telecommunications and Hajj and Umrah services, need approval from the relevant federal authority before foreign investors can engage in them. Emirates can also restrict further activities.678910
Beneficial ownership
Cabinet Resolution No. 109 of 2023 requires legal persons to identify every natural person who owns or controls 25% or more, or controls the entity by other means, keep a register, and file it with the registrar. Changes must be filed within 15 days. Companies in the DIFC and ADGM follow their own beneficial ownership rules, and wholly government-owned companies are outside the resolution.
Banks ask for the same information at account opening, so preparing a clear ownership chart with supporting documents for every intermediate holding company saves time at both the registrar and the bank.111213
| Route | Governing law and registrar | Foreign ownership | Key points |
|---|---|---|---|
| Mainland LLC | Federal Decree-Law No. 32 of 2021; emirate economic department | Up to 100%, except strategic-impact and emirate-restricted activities | 2 to 50 partners, or a single owner; can trade across the UAE |
| Mainland branch or representative office | Foreign-company provisions of the Commercial Companies Law; emirate economic department | Wholly owned by the parent | Needs a UAE national local service agent; not a separate legal person |
| Free zone entity | Free zone regulations, with federal law; free zone authority | 100% within the zone's permitted activities | Direct mainland trading generally needs an onshore presence; may qualify for the 0% free zone tax rate |
| DIFC or ADGM company | DIFC or ADGM company law based on English common law; zone registrar | 100% | Own courts and financial regulator; outside the federal beneficial owner resolution |
How it works, step by step
- Confirm that the planned activity is open to full foreign ownership in the chosen emirate or free zone and whether it is a strategic-impact or regulated activity.1810Emirate economic department or free zone authority; relevant federal authority for strategic-impact activities
- Choose the legal form (LLC, branch, representative office or free zone entity) and reserve the trade name.6Emirate economic department or free zone registrar
- Obtain any sector approvals needed before licensing.14Sector regulator
- File constitutional documents and obtain the commercial licence.15Emirate economic department or free zone authority
- File the beneficial owner register and keep it updated within 15 days of any change.1112Registrar of the licensing authority
- Register for corporate tax and, where thresholds are met, VAT.1617Federal Tax Authority
No timings or fees are shown unless an official source states them.
Documents usually needed
- Parent company certificate of incorporation, constitutional documents and board resolution approving the UAE entity, legalised and attested for UAE use
- Passport copies of shareholders, managers and authorised signatories
- Memorandum of association or free zone constitutional documents
- Beneficial owner register and ownership chart showing every intermediate entity
- Local service agent agreement (mainland branches and representative offices)
- Office lease or tenancy registration meeting the licensing authority's requirements
Common mistakes
- Setting up in a free zone and then trading directly with mainland customers without an onshore presence.
- Assuming every activity is open to 100% foreign ownership without checking the emirate's activity list and the strategic-impact list.
- Treating the DIFC or ADGM as interchangeable with other free zones; their company law, courts and beneficial ownership rules are different.
- Not filing beneficial ownership changes within 15 days after a group reorganisation or share transfer.
- Choosing a branch without weighing the local service agent requirement and the tax position of a permanent establishment against a subsidiary.
When the business crosses borders
- Parent company documents usually need notarisation and legalisation in the home country and attestation for UAE use before filing; timelines depend on the home country.
- The beneficial owner test looks through intermediate holding companies to natural persons, so foreign holding structures must be documented up to the ultimate owners.
- A foreign company operating through a UAE branch is taxed on profits attributable to that permanent establishment, while a UAE subsidiary is a resident taxpayer in its own right.
- Holding the UAE entity through a DIFC or ADGM company is common for regional structures, but the tax result depends on substance and the Qualifying Free Zone Person rules.
Questions businesses ask
Do we still need an Emirati partner on the mainland?
Not for most activities. Since 2 January 2022 the Commercial Companies Law has allowed 100% foreign ownership of mainland companies. Strategic-impact activities and some emirate-restricted activities still need approval or carry ownership limits, and branches and representative offices need a UAE national local service agent.189
Can one shareholder own a mainland LLC?
Yes. An LLC normally has 2 to 50 partners, but the law allows a single person, individual or corporate, to incorporate and own one.7
Does the federal beneficial owner regime apply in the DIFC and ADGM?
No. Cabinet Resolution No. 109 of 2023 excludes financial free zones, which run their own beneficial ownership registers. Mainland and other free zone entities are covered.13
What this guide does not yet confirm
These points need checking with a qualified local professional in the United Arab Emirates before you rely on them.
- The full list of strategic-impact activities in Cabinet Decision No. 55 of 2021 and its approval procedure were taken from a secondary source; the decision text could not yet be checked.
- The foreign-company provisions (Articles 335 to 339) of Federal Decree-Law No. 32 of 2021 and the content of the 2025 amendment (Federal Decree-Law No. 20 of 2025) were not reviewed.
- Minimum capital and licensing fees differ by emirate and free zone and were not confirmed; none are stated here.
- DIFC and ADGM company law details (forms, registrar procedures, beneficial ownership rules) could not be checked on their official sites.
- Penalties for beneficial ownership breaches under Cabinet Resolution No. 132 of 2023 were not reviewed.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
Foreign investors may own 100% of an onshore (mainland) commercial company, and the former requirement for a major Emirati shareholder or agent for commercial companies was removed. Mainland companies only. Activities designated by the Cabinet as having strategic impact are excluded and need separate approval (see ae-establish-005). Emirate economic departments publish the activities open to full foreign ownership.
The u.ae page describes the 2020 amending decree-law; the Commercial Companies Law now in force is Federal Decree-Law No. 32 of 2021 (see ae-establish-002), which carries the same position. Chambers Investing In 2026 (UAE chapter) also states that 100% foreign ownership of mainland companies has been permitted since 2 January 2022.
The Commercial Companies Law currently in force for mainland companies is Federal Decree-Law No. 32 of 2021, which entered into force on 2 January 2022. Mainland companies. Companies in the DIFC and ADGM are governed by those zones' own company laws (see ae-establish-010).
The record lists one amendment. Chambers Investing In 2026 identifies it as Federal Decree-Law No. 20 of 2025; its content was not reviewed here.
The DIFC and ADGM have their own company laws based on English common law principles, so the federal Commercial Companies Law does not apply to companies incorporated there; non-financial free zones are subject to federal law plus their own regulations, and may exclude the Commercial Companies Law. ADGM applies English common law directly; the DIFC uses a common-law-based framework. Free zone rules vary by zone (for example Jafza excludes the Commercial Companies Law, but its registrar may apply some provisions where Jafza's own regulations are silent).
Secondary source. DIFC and ADGM official pages could not yet be checked.
Free zone companies have generally benefited from customs exemptions but cannot trade directly in the mainland market unless they establish an onshore presence. Non-financial free zones. Free zone rules and mainland distribution arrangements vary.
Secondary source, which describes the position as historical. The customs treatment of free zone to mainland movements was not confirmed on a customs authority page (dubaicustoms.gov.ae could not yet be checked).
A Qualifying Free Zone Person pays corporate tax at 0% on qualifying income and 9% on other taxable income, provided it keeps adequate substance, earns qualifying income, has not elected to be taxed at standard rates and meets transfer pricing requirements. Free zone persons only (mainland entities cannot use this regime). Failing any condition removes the status from the start of that tax period. The incentive period may be extended but cannot exceed 50 years. Detailed qualifying activities and de minimis rules are in Cabinet and Ministerial Decisions not reviewed here.
The Commercial Companies Law allows five company forms: joint liability company, limited partnership company, limited liability company, public joint stock company and private joint stock company. Mainland companies. Branches and representative offices of foreign companies are dealt with separately in the law's provisions on foreign companies.
English translation hosted by RAKEZ (a Ras Al Khaimah government authority). The Arabic text prevails.
A limited liability company may have between 2 and 50 partners, and a single person may incorporate and own an LLC. Mainland LLCs under the Commercial Companies Law. Free zones set their own rules on shareholder numbers.
English translation hosted by RAKEZ. The Arabic text prevails.
Foreign investors need approval from the relevant federal authority to carry on activities of strategic impact, which under Cabinet Decision No. 55 of 2021 include security, defence and military activities; banks, exchange houses, finance companies and insurance; currency printing; telecommunications; and Hajj and Umrah services. Mainland activities. The list summarised in the source may not be complete; Dubai's guidance refers to seven strategic-impact sectors. Emirates may also keep their own lists of restricted activities.
Secondary source: the text of Cabinet Decision No. 55 of 2021 could not yet be checked. Chambers Doing Business In 2025 (UAE) gives a wider list of restricted sectors, including upstream oil and gas, water and electricity distribution, Quran memorisation centres and fisheries-related services.
A mainland branch or representative office of a foreign company must appoint a local service agent who is a UAE national or a company wholly owned by UAE nationals; the agent holds no ownership or management stake. Mainland branches and representative offices of foreign companies. Free zone branches follow the rules of the relevant free zone authority.
Secondary source. The foreign-company provisions of Federal Decree-Law No. 32 of 2021 (Title 9) could not yet be checked in the version opened, so the primary basis was not confirmed. Emirate practice should be checked with the licensing department.
Abu Dhabi's economic department identified 1,105 commercial and industrial activities open to full foreign ownership, and Dubai opened more than 1,000 activities while excluding strategic-impact activities in seven sectors. Emirate-level lists for mainland companies. Lists are updated by each emirate's economic department and may have changed since publication.
The page appears to date from the 2021 reforms and uses former agency names (Department of Economic Development; Dubai Economy). Current lists should be checked with the emirate department.
A beneficial owner is a natural person who owns or ultimately controls a legal person directly or indirectly through 25% or more of the ownership, or who controls it by other means such as the right to appoint or remove most directors. Mainland and non-financial free zone legal persons. Excluded entities are set out in ae-establish-009. Where no person meets the test, the resolution provides fallback rules.
Cabinet Resolution No. 109 of 2023 replaced Cabinet Resolution No. 58 of 2020. JAFZA's guidance gives 15 December 2023 as its effective date; the resolution itself says it takes effect the day after Official Gazette publication.
Companies must keep a register of beneficial owners and submit any change in beneficial ownership information to the registrar within 15 days of the change. Entities covered by Cabinet Resolution No. 109 of 2023. Administrative penalties for breaches are set by Cabinet Resolution No. 132 of 2023 (not reviewed here).
The beneficial owner resolution does not apply to companies in financial free zones, to companies wholly owned by the federal or a local government (or by their wholly owned companies), or to the government partner where a government is a shareholder. Financial free zones (the DIFC and ADGM) run their own beneficial ownership regimes. Companies owned by a listed company subject to adequate disclosure rules are also exempt from the duty to hold beneficial ownership information.
The resolution says financial free zones without naming them; the DIFC and ADGM are the UAE's two financial free zones.
Sector regulators, including those for banking, insurance, aviation, real estate development and higher education, may impose licensing requirements or ownership limits in addition to the trade licence. Mainland; free zones and the financial free zones have their own regulators for regulated activities.
Secondary source.
A foreign investor needs a company licence from the relevant federal or emirate authority for a mainland business, or from the free zone authority for a free zone business. Emirate economic departments (for example in Dubai and Abu Dhabi) issue mainland trade licences; each free zone authority licenses entities in its zone.
Secondary source.
Every taxable person must register for corporate tax and file a corporate tax return no later than nine months after the end of the relevant tax period. Federal. The Minister may prescribe registration exceptions. Registration is required even where the business is already VAT-registered.
The FTA Corporate Tax page carries a news item that returns and payment for financial years ended 31 December 2025 were due by 30 September 2026.
VAT registration is mandatory when taxable supplies and imports exceed AED 375,000 in the previous 12 months or are expected to exceed it in the next 30 days, and voluntary registration is available above AED 187,500. Federal. The mandatory threshold does not apply to non-resident businesses, which must register regardless of value when they make taxable supplies in the UAE. Supplies within designated zones follow special rules.
Questions on this topic
10 statements on entry, investment and company formation in the United Arab Emirates
