The UAE has moved from a zero-tax jurisdiction to a low-tax one with real substance expectations. That makes the setup decision more nuanced than it used to be. Here is how the three main routes compare in 2026.
The three routes
Free zone company
A company licensed inside one of the UAE’s free zones (DMCC, IFZA, ADGM, DIFC and others). 100% foreign ownership, fast setup, and — for qualifying activities and income — the chance to be a Qualifying Free Zone Person (QFZP) taxed at 0% on qualifying income, with 9% applying to non-qualifying income.
Mainland LLC
Licensed by the relevant emirate’s economic department. Lets you trade directly in the UAE domestic market and bid on government contracts. Subject to 9% corporate tax above the AED 375,000 threshold.
Offshore (RAK ICC)
A non-resident vehicle used for holding and international structuring. It cannot trade inside the UAE or get a residence visa, but it is efficient as a holding layer.
Corporate tax in 2026
UAE corporate tax applies at 9% on taxable income above AED 375,000, with 0% below it. Free zone companies can keep 0% on qualifying income if they meet the QFZP conditions — adequate substance, qualifying activities, and staying within the de-minimis limits on non-qualifying revenue. Getting QFZP status wrong is the most expensive mistake we see.
Substance matters now
A mailbox is no longer enough. Expect to demonstrate office space, qualified people in the UAE, and genuine decision-making in-country if you want the favourable treatment to hold up.
Costs and timeline
Rega sets up a UAE structure from $9,300 in the first year, including incorporation, required filings, and a banking account. Free zone setups are typically the fastest; mainland and visa-linked setups take longer because of additional approvals.
Which route fits
- Holding / international IP: free zone or RAK ICC, structured for QFZP where possible.
- Selling into the UAE market: mainland LLC.
- Pure holding layer, no UAE activity: RAK ICC.
Not sure whether you qualify for 0% as a QFZP? Message Rega on WhatsApp and we will pressure-test it before you commit.