Start with the activity, then the licence
Every Dubai company is licensed for specific business activities, and that list drives later decisions: which authority can issue the licence, whether a sector regulator must approve it, and how revenue is taxed. Each authority words its activity list differently, so founders should pick entries from the current list that match what the product does, such as selling subscriptions, building custom software or running a marketplace. Payments, lending, crypto and health data can bring in a financial or sector regulator, which adds approvals and time.
Since 2021, foreign investors can generally hold 100% of a mainland company, with exceptions for activities of strategic impact listed under Cabinet Resolution No. 55 of 2021.
Mainland or free zone
A mainland company is licensed by Dubai’s Department of Economy and Tourism (DET) and can trade across the emirate. A free zone company is licensed by its zone’s authority, such as DMCC, Meydan Free Zone or the Dubai International Financial Centre (DIFC), and has traditionally worked inside the zone and abroad.
| Point of comparison | Mainland (DET licence) | Free zone |
|---|---|---|
| Licensing authority | Department of Economy and Tourism | The zone’s authority (DMCC, Meydan FZ, DIFC and others) |
| Foreign ownership | Generally 100%; strategic-impact activities need special approval | 100% |
| Operating in mainland Dubai | Permitted directly | Needs a DET branch licence or permit under Resolution 11/2025 |
| Corporate tax | Standard regime (0% / 9%) | Standard regime, or 0% on qualifying income if all free zone conditions are met |
| Beneficial ownership filing | Required | Required; financial free zones apply their own rules |
Dubai Executive Council Resolution No. 11 of 2025, issued on 3 March 2025, lets a free zone company operate in mainland Dubai once DET grants one of three authorisations: a branch licence in the emirate, a branch licence operating out of the free zone (AED 10,000 per year), or a temporary permit for specific activities valid for up to six months (AED 5,000). The free zone authority must approve, and mainland activity needs separate financial records. Financial establishments licensed in DIFC are outside the resolution. The resolution does not address corporate tax. Under Federal Tax Authority guidance, a branch outside the free zone can be treated as a domestic permanent establishment, whose income is taxed at 9%.
Founders comparing these routes can start with this step-by-step guide to registering a company in the UAE before approaching a licensing authority.
Entity types and documents
On the mainland, a software business is usually a limited liability company (LLC), a sole establishment or a branch of a foreign company. Free zones use their own labels, such as FZ-LLC, FZE or FZCO. Minimum capital rules vary by zone.
Authorities commonly ask for:
- Passport copies of shareholders and managers
- A proposed trade name and the selected activities
- Articles or memorandum of association
- Proof of workspace, from a flexi-desk to a lease
- For a corporate shareholder, its incorporation documents and a board resolution, often attested
Beneficial ownership is a separate obligation. Under Cabinet Decision No. 109 of 2023, mainland companies and companies in commercial free zones keep a register of beneficial owners and submit it to the registrar within 60 days of licensing. A beneficial owner is anyone holding 25% or more of the capital or voting rights, directly or through a chain, or exercising ultimate control by other means. Financial free zones such as DIFC are exempt and apply their own rules.
One-off and annual costs
There is no single price for a Dubai software company. Fees differ by zone, package and number of activities. The figures below are from official pages as published in September 2026.
| Authority | What the published fee covers | Fee |
|---|---|---|
| DMCC | Application, registration, articles of association (one-off) | AED 1,035 + AED 9,020 + AED 2,020 |
| DMCC | Licence and establishment card (annual) | AED 20,285 + AED 1,825 |
| Meydan Free Zone | Licence, company registration and flexi-desk, up to three activity groups (annual) | AED 12,500 |
| DIFC Innovation Licence | Licence for technology companies, with coworking access and discounted visas | USD 1,500 per year, subsidised for 2 to 5 years |
DMCC adds an AED 20 Knowledge and Innovation Dirham fee to its charges, and its licence fee may rise with extra activities. DIFC lists AI, FinTech, gaming and e-commerce among eligible sectors. These fees leave out costs that often matter more:
- Residence visas, medical tests and Emirates ID for founders and staff
- Office space beyond the base package
- Bookkeeping, tax filings and, where required, audited accounts
- Legal work on IP assignments, customer terms and privacy documents
- Trademark filings and any DET licence for mainland activity
A bank account is a separate process with each bank’s own checks, and no licence guarantees one.
Tax: what applies to a software company
Corporate tax applies to financial years starting on or after 1 June 2023. The official UAE government portal sets the rate at 0% on taxable income up to AED 375,000 and 9% above that. Free zone companies register with the Federal Tax Authority and file returns too, even when they expect to pay nothing. Returns and payment are due within nine months of the tax period’s end.
The free zone 0% rate is narrower than it sounds: a qualifying free zone person pays 0% only on qualifying income. Ministerial Decision No. 229 of 2025 lists the qualifying activities, among them manufacturing, trading of qualifying commodities, fund management, headquarter services to related parties and logistics. Software development and SaaS subscriptions are not on that list. Under Cabinet Decision No. 100 of 2023, income from other free zone companies that are the beneficial recipients of a service can qualify, while income from mainland or overseas customers qualifies only when it comes from a listed activity. Transactions with individuals are generally excluded. Income from qualifying intellectual property, which covers copyrighted software, counts only in a proportion tied to the company’s research and development spending.
Non-qualifying revenue is tolerated only up to the lower of 5% of total revenue or AED 5 million, and a breach costs the status for that tax period and the next four. In practice, SaaS revenue from mainland, overseas or consumer customers should not be assumed to qualify, and the structure is worth testing with a tax adviser before the first invoice.
Other points to track:
- Small Business Relief. Companies with revenue up to AED 3 million can elect to be treated as having no taxable income. The Ministry of Finance extended the relief under Ministerial Decision No. 131 to tax periods ending on or before 31 December 2029. It is not available to qualifying free zone persons.
- VAT. The standard rate is 5%. Registration is mandatory once taxable supplies and imports exceed AED 375,000 and optional above AED 187,500.
- E-invoicing. The Ministry of Finance set out a phased timeline for B2B and B2G invoices. Businesses with annual revenue of AED 50 million or more implement from 1 January 2027, and smaller businesses appoint an accredited service provider by 31 March 2027 and implement from 1 July 2027.
Software IP and data
Federal Decree-Law No. 38 of 2021 protects software and databases by copyright without registration. Voluntary registration with the Ministry of Economy and Tourism adds an official record of the work and its owner.
Ownership still needs paperwork. Code written by founders before incorporation, or by freelancers and agencies, should be assigned to the company in writing, since investors check this chain of title and a free zone company claiming IP income must evidence its rights in that IP. Product names are protected separately by trademark registration with the same ministry, and trademarks do not count as qualifying IP for tax.
Personal data falls under the federal Personal Data Protection Law (Federal Decree-Law No. 45 of 2021), while DIFC applies its own Data Protection Law (DIFC Law No. 5 of 2020).
A short setup checklist
- Define the product’s revenue model and customer base (free zone, mainland, overseas, consumers).
- Pick activities from the authority’s current list and check whether any regulator must approve them.
- Compare mainland, free zone and DIFC options on fees, mainland access and tax position.
- Incorporate, file the beneficial ownership register and register for corporate tax.
- Put IP assignments, trademark filings and privacy documents in place before launch.
Sources
- Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities (Dubai Legislation Portal) — https://dlp.dubai.gov.ae/Legislation%20Reference/2025/Executive%20Council%20Resolution%20No.%20%2811%29%20of%202025%20Regulating%20the%20Conduct%20of%20Free%20Zone%20Establishments%E2%80%99%20Activities.html
- DMCC Schedule of Charges — https://www.dmcc.ae/members/support/schedule-charges
- Meydan Free Zone, Dubai Trade Licence for AED 12,500 — https://www.meydanfz.ae/dubai-trade-license-aed-12500
- DIFC Innovation Licence — https://www.difc.com/business/establish-a-business/innovation-licence
- Cabinet Decision No. 109 of 2023 Regulating the Beneficial Owner Procedures (Ministry of Economy and Tourism) — https://www.moet.gov.ae/documents/20121/0/Cabinet+Decision+109-2023+English+Version+06062024.pdf/f7138fc2-fe12-cef3-077b-b4c49c12eabd?t=1718181974877
- Corporate Tax (u.ae) — https://u.ae/en/information-and-services/finance-and-investment/taxation/corporate-tax
- Ministerial Decision No. 229 of 2025 Regarding Qualifying Activities and Excluded Activities (Ministry of Finance) — https://mof.gov.ae/wp-content/uploads/2025/09/EN-Ministerial-Decision-No.-229-of-2025-Regarding-Qualifying-Activities-and-Excluded-Activities.pdf
- Federal Tax Authority, Corporate Tax Guide on Free Zone Persons (CTGFZP1) — https://tax.gov.ae/Datafolder/Files/Guides/CT/Free%20Zone%20Persons%20-%2020%2005%202024%20final%20for%20GCD.pdf
- Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person (Ministry of Finance) — https://mof.gov.ae/wp-content/uploads/2023/11/Cabinet-Decision-No.-100-of-2023-on-Determining-Qualifying-Income-for-the-Qualifying-Free-Zone-Person.pdf
- Ministry of Finance, extension of Small Business Relief until 31 December 2029 — https://mof.gov.ae/en/news/ministry-of-finance-announces-extension-of-small-business-relief-for-corporate-tax-purposes-until-31-december-2029/
- Ministry of Finance, Value Added Tax — https://mof.gov.ae/en/public-finance/tax/vat/
- Ministry of Finance, e-invoicing scope and timelines — https://mof.gov.ae/en/news/ministry-of-finance-announces-the-issuance-of-two-ministerial-decisions-on-the-scope-of-obligations-and-the-timelines-for-implementing-the-electronic-invoicing-system-2/
- Ministry of Finance, targeted amendments to e-invoicing decisions — https://mof.gov.ae/en/news/ministry-of-finance-announces-targeted-amendments-to-einvoicing-system-decisions/
- Federal Decree-Law No. 38 of 2021 on Copyright and Neighboring Rights (UAE Legislation) — https://uaelegislation.gov.ae/en/legislations/1534
- Data protection laws (u.ae) — https://u.ae/en/about-the-uae/digital-uae/data/data-protection-laws
