What is a free zone company? UAE setup, VAT and corporate tax

The government portal counts 5 free zones in Abu Dhabi, 22 in Dubai, 3 in Sharjah, 2 in Ajman, 1 in Umm Al Quwain, 2 in Ras Al Khaimah and 2 in Fujairah. Company types include the Free Zone Company (FZCO), the Free Zone Establishment (FZE), the free zone limited liability company and branches of local or foreign companies. The main differences are the number of shareholders and whether they are individuals or companies, and not every zone offers every type.

• Free Zone Company (FZCO)
• Free Zone Establishment (FZE)
• Free zone LLC
• Branch of a local or foreign company

Two tax points catch new free zone owners. For VAT, only Cabinet-listed Designated Zones get special treatment, and only for certain goods; services supplied there are taxed as if in the UAE. For corporate tax, the Ministry of Finance confirms a qualifying free zone person can pay 0% on qualifying income, but Article 18 of the Corporate Tax Law sets conditions including adequate substance and arm's length pricing, and qualifying free zone persons cannot elect small business relief.

A consultancy licensed in a Dubai free zone that bills mainland clients therefore needs clear records of who its customers are and what each income stream is.

HelloBooks records each customer's location and zone, keeps VAT treatment per invoice line, and lets you tag revenue by stream or customer type so your adviser can assess qualifying income. The AI agent answers questions such as 'how much did we invoice mainland customers this quarter?' straight from the ledger. Multi-currency invoicing with FX gains and losses suits zones with many foreign customers.

Free zone businesses and their accountants can request a chart of accounts or reports built around qualifying and non-qualifying income by emailing hello@hellobooks.ai.

Terms that sit beside free zone setup.

• Designated zone
• Qualifying free zone person
• Mainland company
• Trade licence