Technology Business Setup in the UAE
Done by an accountant, not a licence agent

The 0% you will probably actually use is not the one you were sold

Almost every setup agent sells the free zone on 0% Corporate Tax. What they mean is the Qualifying Free Zone Person regime, which is a real thing and a demanding one: qualifying income only, no mainland permanent establishment, genuine substance in the UAE, transfer pricing documentation, and audited financial statements, all reassessed every year.

In practice, very few of the software and IT businesses we work with end up on that route. Most reach 0% through Small Business Relief instead. It applies where revenue is at or below AED 3 million in the tax period, it is elected on your return rather than granted, and it needs no audit.

Here is why that matters before you sign anything. Small Business Relief is available to mainland companies too. So for most early stage tech businesses, the tax reason you were given for choosing a free zone is not actually a reason. The structure should be chosen on the things that genuinely differ.

So what should decide Free Zone or Mainland

Once tax stops being the deciding factor, the question gets simpler and more practical. It comes down to who your clients are.

A free zone suits you if your customers are outside the UAE, or are other free zone companies. Setup is fast, ownership is fully yours, and flexi-desk packages keep the early cost down. Mainland suits you if you sell to UAE mainland businesses or want government work, because a free zone company cannot invoice mainland clients directly without a branch or an agent.

The other real differences are visa quota, permitted activities, office requirements and banking credibility. None of those are tax questions, and all of them have consequences you will live with.

The date worth planning around

Small Business Relief is not permanent. It is available only for tax periods ending on or before 31 December 2029. After that, a business still under AED 3 million moves to the ordinary rules: 0% on the first AED 375,000 of taxable profit and 9% above it, unless it qualifies for and elects the free zone route instead.

That is far enough away not to panic about and close enough that it should shape the decision. A structure built entirely around a relief with an expiry date is a structure you will be revisiting. We plan for the position you will be in after it ends, not just the one you are in now.

Which free zone, if you go that way

They differ on cost, activity list, visa quota and reputation rather than on tax. We have written each one up properly rather than summarising them here.

Activity selection is a VAT decision too

The activities on your licence decide what you can legitimately invoice for, and that feeds straight into your VAT treatment later. A licence that says one thing while you invoice for another is a problem that surfaces at exactly the wrong moment, usually during a VAT review or when a client's procurement team checks. We pick activities against what you actually sell, not against a template.

Year two, which nobody quotes you

The setup quote covers the licence, the establishment card and your visas. It does not cover what arrives twelve months later: the licence renewal, visa renewals as they fall due, bookkeeping, VAT returns if you are registered, the Corporate Tax return, and an audit if you are claiming the free zone rate. For a lean business that second number is frequently larger than the first, and it is the one almost nobody budgets for. We will tell you what it looks like before you commit, because we are the ones who will be doing it.

Licence, visa and bank account

We handle the trade licence end to end: activity selection, name reservation, approvals and incorporation documents. Residence visas and PRO work are done in house as well. The corporate bank account is usually the slowest part for a new tech company, and we prepare the file and stay with it until the account is open.

Hiring developers abroad from your UAE company

Many tech founders set up in Dubai and then build the team wherever the talent is. That is normal, and it works, as long as the structure is right from the start. The first decision is employee or contractor in each country: misclassifying an employee as a contractor carries real penalties in most jurisdictions. For staff on payroll outside the UAE, an Employer of Record or a local payroll provider handles the local labour law, social security and benefits, and keeps your UAE entity clean.

On tax: salaries, EOR fees and contractor costs for a global team are generally deductible for UAE Corporate Tax when they are wholly for the business, so keep the contracts and payment records. The UAE does not withhold tax on outbound payments, but the recipient's country might, and the UAE's double tax treaties can reduce or remove that. We set the structure up so hiring abroad does not create a tax problem at home.

Set up compliant from day one

Because we are accountants rather than a setup agent, we do not stop at the licence. Corporate Tax registration is mandatory for every UAE business including those paying nothing, and late registration carries an AED 10,000 penalty. We handle that, VAT registration where it applies, and the bookkeeping, so the first year end is an administrative event rather than a discovery.

What we will tell you honestly

If the cheapest zone is the right answer for you, we will say so, even though there is less in it for us. If you do not need a mainland licence, we will say that too.

And if you are still testing an idea, billing a handful of clients and nowhere near any threshold, setting up a UAE company may simply be premature. That conversation happens more often than you would expect, and it is a better outcome than a licence you renew for three years while you work out what the business is.

What our company formation service includes

Related guides

• Mainland vs Free Zone: How to Choose
• Technology Business Setup in the UAE: The 10 Steps in Order
• How to Run Your UAE Company From Abroad (and When You Need a Visa)