Also referred to as a business license, a trade license is a document that specifies the activities that a company can carry out in the UAE.

There are three main types of licenses:

• Professional license – For professionals, craftsmen and artisans
• Commercial license – For all trading activities
• Industrial license – For all industrial and manufacturing activities

The requirements may vary depending on which jurisdiction you will set up your company (free zone or mainland), but the basic documents include:

• Attested copy of shareholder and director passports
• Proof of address
• Minimum 3 months’ bank statement
• Education certificates (if applicable)
• Certificate of share capital deposit (if required)

Foreign nationals who want to operate a business in the UAE need a visa, which will allow them to legally reside in the country. Here are the three types of visas you can secure (depending on the jurisdiction):

• Investor visa – For businesses with only one shareholder (Sole Ownership)
• Partner visa – For businesses with multiple shareholders
• Employment visa – Issued by certain free zones with different designations, such as General Manager or Director.

Once your trade license is issued, you will then receive your establishment card (some jurisdictions automatically issue the establishment card, while others issue it upon request).

After your establishment card has been issued, you can proceed with applying for a visa. You will need to submit the following documents:

• Passport copy
• Digital photo (passport size)
• Entry permit
• Current visa status (optional for those who are already inside the country)

A free zone is a special economic jurisdiction in the UAE that offers the following business benefits:

• 100% foreign ownership of a business
• 100% repatriation of profits
• 0% income tax
• Corporate tax exemption (subject to meeting certain criteria)
• No customs duties on imports and exports
• No paid upfront share capital (in most free zones)
• No physical office space required (depending on the free zone)

However, if your business is registered in a free zone, you can only trade within that free zone and internationally. To conduct trade in the mainland, you will need to get permission from the concerned free zone authority and the local Department of Economic Development.

As mentioned above, free zone companies can only trade and operate within the free zone where they are registered and overseas. In contrast, mainland companies are free to trade anywhere in the UAE and outside of the country.

Furthermore, setting up a company in the mainland previously required a local sponsor, who will own 51% of the company. With the revised Commercial Companies Law, foreign investors can now own 100% of their mainland companies, except in strategic sectors such as oil and gas and banking.

A mainland company setup offers the following benefits:

• 100% foreign company ownership (in most activities)
• 100% profit repatriation
• 0% income tax
• Access to over 3,000 business activities
• Freedom to trade anywhere in the UAE and overseas
• Ability to bid on government contracts and tenders
• Access to an unlimited number of visas
• Quick bank account opening approval

A mainland trade license is renewed annually. A free zone license, on the other hand, has a different validity period depending on the free zone authority. This can range from one to five years. 

A shareholder refers to an individual or a legal entity that owns shares in a company.

The UAE has introduced a low corporate tax rate of 9% on June 1, 2023. All businesses must do three things to comply with the new tax law:

1. Register for corporate tax from June 2023 onwards.
2. Keep proper accounting records.
3. File a corporate tax submission with the Federal Tax Authority (FTA).

While not all businesses will have to pay corporate tax, every business – including freelancers and free zone companies – must comply with these three steps.