How to Start a Business in Dubai or RAK: A Realistic Guide
I've set up and renewed UAE companies for nearly two decades, and the honest truth is this: the process is simpler than the setup industry wants you to believe, and more expensive over time than the headline prices suggest. Here is how it actually works, what it actually costs, and where the traps are.
First decision: free zone or mainland?
This single choice drives everything else.
| Free Zone | Mainland | |
|---|---|---|
| Ownership | 100% foreign, always | 100% foreign for most activities |
| Serve UAE retail customers | Restricted (needs distributor or dual licence) | Unrestricted |
| Office requirement | Flexi-desk usually enough | Physical address usually required (Ejari) |
| Government tenders | Generally no | Yes |
| Typical annual cost (solo) | AED 12,000–25,000 | AED 15,000–35,000+ |
For consultants, agencies, traders and online businesses whose clients are companies or overseas, a free zone is almost always the right starting point. You can migrate to mainland later if the business demands it.
Second decision: Dubai or RAK (or elsewhere)?
- Dubai free zones — IFZA, Meydan and similar "value" zones start around AED 12,000–15,000 per year; DMCC is the premium option (roughly AED 20,000–35,000) with the strongest brand recognition. Choose Dubai when client perception, networking and banking convenience matter.
- RAKEZ (Ras Al Khaimah) — consistently among the cheapest credible options, with aggressive bundle promotions. An hour from Dubai. Choose RAK when cost control matters more than a Dubai address on the licence.
- Others worth knowing — SHAMS (Sharjah) and Ajman Free Zone compete at the low end; Abu Dhabi's ADGM suits finance and holding structures.
The step-by-step process
- Define activities — pick licence activities matching your real revenue streams. Adding activities later costs money; mismatches cause banking problems.
- Reserve the trade name — the free zone or DED checks availability and naming rules.
- Submit documents — passport copies, photo, application forms; some zones want a simple business plan for certain activities.
- Receive licence & establishment card — typically 3–10 working days in free zones.
- Process residence visas — entry permit, medical test, biometrics, Emirates ID (1–3 weeks in practice).
- Open the bank account — the slowest step; see the banking guide. Allow 2–6 weeks.
- Register for Corporate Tax — mandatory registration with the Federal Tax Authority even if your profit is below the taxable threshold; VAT registration applies above AED 375,000 turnover.
The costs nobody puts on the pricing page
- Visa runs every two years — medical + Emirates ID + stamping, roughly AED 3,000–5,000 per person.
- Mandatory health insurance — from ~AED 700 (basic northern emirates) to AED 5,000+ (decent Dubai family cover) per person per year.
- Corporate tax accounting — even a nil return needs bookkeeping; budget AED 3,000–8,000 per year for a small entity's accounting.
- Attestations and notarisations — degree attestation, POAs and similar one-offs, AED 500–2,000 each when needed.
Do you need a setup consultant?
For a standard solo free zone company: usually not. Free zones have sales teams whose job is to walk you through their own process for free. A consultant earns their fee when your case is non-standard — regulated activities, complex shareholding, mainland approvals from multiple authorities, or you simply are not in the country. If you do use one, get the free zone's direct quote first so you know exactly what the markup is.
Request written quotes from at least one Dubai value zone (e.g. IFZA or Meydan), one premium zone if brand matters (DMCC), and RAKEZ. Compare licence, visa, establishment card, insurance and — critically — year-two renewal, line by line.
Frequently asked questions
How much does it cost to start a business in Dubai?
As of mid-2026, low-cost Dubai free zone licences start around AED 12,000–15,000 per year without a visa, and roughly AED 15,000–22,000 with one residence visa. Premium zones like DMCC cost more. Mainland licences typically run AED 12,000–30,000 depending on activity and approvals. These are approximate figures — request current quotes before budgeting.
Is RAK cheaper than Dubai for company setup?
Generally yes. RAKEZ packages in Ras Al Khaimah have historically undercut most Dubai free zones, sometimes significantly during promotions. The trade-offs are distance from Dubai (about an hour by car), and some clients or banks perceiving a Dubai address as more premium.
Do I need a local sponsor to own a UAE company?
For most activities, no. Free zone companies have always allowed 100% foreign ownership, and since the Commercial Companies Law reforms most mainland activities also allow 100% foreign ownership. A small list of strategic activities still has restrictions.
How long does UAE company formation take?
Free zone: typically 3–10 working days for the licence, plus 1–3 weeks for the residence visa process. Mainland: usually 1–4 weeks depending on activity approvals. Banking is the slowest step afterwards — allow 2–6 weeks for a business account.
Free zone or mainland — which should I choose?
Choose free zone if your clients are overseas or other companies, you want the lowest cost and simplest admin. Choose mainland if you need to serve UAE consumers directly, bid on government work, or open a physical shop or office anywhere in the city.
This guide reflects publicly available information and personal experience as of July 2026 and is not legal, tax or financial advice. Licence prices, ownership rules and tax obligations change — verify current requirements with the relevant free zone, the Department of Economic Development, and the Federal Tax Authority before proceeding.