Topic Summary
1. What an LLC Is
Governed by Federal Decree-Law No. 32 of 2021, it requires 2 to 50 shareholders and exists as a distinct legal entity that can contract, own property and employ staff.
2. Full Foreign Ownership
Since June 2021 the old requirement for a 51 percent Emirati shareholder no longer applies to most mainland activities.
3. UAE-Wide Trading Rights
Unlike a free zone company it sells directly across all seven emirates, and it is the only mainland entity able to hold a general trading licence covering multiple product categories.
4. Trade Licence Cost Components
DET approval, name reservation, MOA notarisation, licence issuance, knowledge fees and Ejari registration each contribute to the total.
5. Formation Timeline
This applies once all documents are complete and any required external approvals have been secured.
Over 450,000 active trade licenses operate across Dubai as of 2026 (Dubai Chamber, 2025). Most are held by limited liability companies. The UAE introduced 100% foreign ownership for most mainland activities in 2021 (u.ae, 2021). Corporate tax sits at 9% on profit above AED 375,000 (Federal Tax Authority, 2023). VAT is 5%, with a registration threshold of AED 375,000. Late VAT registration carries a fine of AED 10,000. Most LLC setups complete in 5 to 10 working days.
This guide explains what an LLC in Dubai means, how its structure works, what a trade license covers, and the exact steps to get yours issued. You will also learn how mainland and free zone LLCs differ, what you pay, and what rules apply once you are up and running.
What Is an LLC in Dubai and Why It Matters
An LLC in Dubai is a limited liability company where each owner's personal risk is capped at their share of the capital. It is the most common mainland company type in the UAE. Owners can hold between 2 and 50 shares. The company trades under a DET-issued trade license.
The Core LLC Definition
LLC stands for limited liability company. Each shareholder's loss is capped at what they put in.
An LLC is a legal person. It can sign contracts, own assets, and sue or be sued in its own name.
The company exists apart from its owners. Personal assets stay protected if the business has debts.
UAE Commercial Companies Law No. 2 of 2015 governs all mainland LLCs (Ministry of Economy, 2015, still accurate as of 2026).
Here is a practical example. A retail trader sets up an LLC with AED 300,000 in share capital. The company later owes AED 500,000 to a supplier. The owner's home and personal savings are not at risk. Only the capital inside the company is exposed.
Why Most Founders Pick an LLC
There are 4 clear reasons most founders choose this structure:
An LLC can trade directly with UAE customers and government bodies. No local agent is needed.
It suits a wide range of business activities in Dubai: trading, services, manufacturing, and more.
100% foreign ownership is now allowed on most mainland activities after the 2021 law change (u.ae, 2021).
An LLC trade license lets you apply for staff visas based on your office space.
A US-based logistics firm, for example, opens a Dubai mainland LLC to bid on government freight contracts. It holds 100% of the shares and trades without a local partner. That was not possible before 2021.
LLC Ownership Rules and Share Structure
A Dubai LLC must have between 2 and 50 shareholders. Each holds a defined share of the capital. Since 2021, most activities allow 100% foreign ownership on the mainland. Some restricted sectors still require a UAE national to hold at least 51% of shares.
Shareholder and Capital Rules
The key rules are straightforward:
The law sets a minimum of 2 shareholders and a cap of 50.
There is no mandatory minimum share capital for most activities. Some regulated sectors set their own floor.
Shares are not traded publicly. An LLC is a private company.
A shareholder agreement sets out how profits split, how shares transfer, and what happens if a partner exits.
Two partners from Germany and the US each take 50% of a Dubai LLC. They sign a shareholder agreement that locks in profit splits and sets a buy-out formula if one wants to leave. That document is not a legal requirement, but it protects both sides if the relationship changes.
Foreign Ownership After 2021
The 2021 reform to the Commercial Companies Law removed the 51% UAE national requirement for most activities (Ministry of Economy, 2021).
The Negative List still applies. Activities on it, such as oil, gas, and some defence sectors, need a UAE majority partner. Check your activity code against the Negative List before you assume full foreign ownership is possible.
A Canadian consultant wants 100% of a Dubai mainland LLC in management consulting. The activity is not on the Negative List, so full ownership is allowed. Free zone LLCs carry no Negative List at all. Every approved activity in a free zone allows 100% foreign ownership.
Factor | Mainland LLC (DET) | Free Zone LLC (DSBH) |
|---|---|---|
Foreign ownership | 100% on most activities; Negative List sectors require 51% UAE national | 100% on all approved activities; no Negative List |
Market access | Full UAE market; direct sales to consumers, retailers, and government | Mainly international clients; mainland sales need a licensed distributor |
Corporate tax rate | 9% on profit above AED 375,000 | 0% for Qualifying Free Zone Persons; 9% if conditions not met |
Office requirement | Physical office required; Ejari registration mandatory | Flexi-desk options available for most activities |
License issuer | Dubai Department of Economy and Tourism (DET) | Free zone authority (e.g. Dubai South Business Hub) |
Best for | Businesses selling to UAE customers or bidding on government contracts | International operations, exporters, and digital businesses |
Free Zone vs Mainland LLC in Dubai
A mainland LLC trades anywhere in the UAE and can bid on government contracts. A free zone LLC offers 100% foreign ownership, simpler setup, and potential corporate tax benefits, but trades mainly with international clients. The right choice depends on who your customers are and where they are based.
What a Mainland LLC Gives You
A mainland LLC is the right call when your customers are inside the UAE:
It can sell directly to UAE consumers, retailers, and government bodies.
Your trade license is issued by DET. It covers all of Dubai and the wider UAE.
You need a physical office address. Flexi-desk options are not accepted for most mainland LLCs.
Corporate tax at 9% applies once annual profit passes AED 375,000 (Federal Tax Authority, 2023).
A US food brand opens a Dubai mainland LLC to supply supermarkets across the UAE. It needs direct access to local retailers, so a mainland license is the right call. A free zone company in the same position would need a local distributor for every sale.
What a Free Zone LLC Gives You
A free zone LLC works differently. Here is what you get:
Setup inside a designated free zone, such as Dubai South Business Hub.
100% foreign ownership on all approved activities. No Negative List.
A potential 0% corporate tax rate. You only get that rate if you meet the Qualifying Free Zone Person conditions the FTA sets (Federal Tax Authority, 2023).
Ideal for companies serving international clients, exporting goods, or running digital operations.
To sell directly into the UAE mainland, a free zone LLC must use a licensed distributor.
A tech startup from the US sets up at Dubai South Business Hub to serve clients across Asia and Europe. It holds 100% of the shares and pays 0% corporate tax, provided it meets FTA qualifying conditions for that year. The cost of setting up a company in Dubai varies by zone and package, so check the figures before you commit.
How to Set Up an LLC in Dubai: 7 Steps
Setting up an LLC in Dubai takes 7 main steps: choose your activity, book a trade name, get initial approval, draft a Memorandum of Association, sign a lease, pay your license fee, and collect your trade license. Most setups complete in 5 to 10 working days.
Steps 1 to 4: Planning and Approval
The first 4 steps are about planning and getting government sign-off:
Step 1, pick your business activity: Each trade license covers a defined list of activities. Confirm your activity code before anything else. See the full list of business activities in Dubai to check what is available.
Step 2, book your trade name: Check name availability and reserve it with DET for a mainland company, or with your free zone for a free zone LLC. The name must be unique and follow DET naming rules.
Step 3, apply for initial approval: This is the government's confirmation that your chosen activity is allowed. You cannot sign a lease without it.
Step 4, draft your Memorandum of Association: This legal document names the shareholders, sets out their shares, and defines how the company runs.
A Dubai trading company checks name availability online before booking a consultant. The name is taken. They pick a new one and reserve it the same day. That small step saves a week of back-and-forth later.
Steps 5 to 7: Lease, Fees, and License
The last 3 steps move from paperwork to payment and collection:
Step 5, sign a lease: A mainland LLC needs a physical office. A free zone LLC may use a flexi-desk. The lease must be registered on Ejari for mainland setups.
Step 6, pay your license fee: Fees vary by activity, license type, and where you set up. Use the business setup cost calculator to get a figure before you commit.
Step 7, collect your trade license: Once all documents clear and fees are paid, the license is issued. You can then open a bank account and apply for staff visas.
A services firm completes all 7 steps in 8 working days at Dubai South Business Hub. On day 9, it applies for 3 investor visas tied to the new license. That timeline is realistic for a straightforward setup with no regulated activity approvals.
Is there a faster way to set up an LLC in Dubai?
For free zone LLCs, yes. Dubai South Business Hub bundles the trade name check, initial approval, and license issuance into a single process. Some setups clear in as few as 5 working days when all documents are in order and no additional regulatory approvals are needed from sector bodies such as the Dubai Health Authority or the Roads and Transport Authority.
What Your Dubai Trade License Covers
A Dubai trade license defines exactly what your company can do legally. It lists your approved business activities by code. You cannot trade outside those codes. Licenses come in 3 main types: commercial, professional, and industrial. Each covers a different set of approved activities.
The Three License Types
Picking the right type matters. Here is what each one covers:
Commercial license: Covers buying and selling goods. It suits traders, importers, exporters, and retailers. See the trading business license in Dubai page for approved activity codes.
Professional license: Covers services and skills-based work. It suits consultants, designers, and IT firms.
Industrial license: Covers making or processing physical goods. It suits factories and manufacturers.
Your LLC can hold more than one activity on a single license, but each activity must be approved. A US-owned company in Dubai wants to import electronics and also offer installation services. It applies for a commercial license with both a trading activity and a technical services activity listed on the same document. That is allowed, and it saves the cost of a second license.
License Renewal and Activity Changes
Renewal is annual. A trade license runs for one year. You renew it before expiry or face daily fines.
You can add or remove activities at renewal or at any time during the year. Some activities need extra approvals from regulators, such as the Dubai Health Authority or the Roads and Transport Authority, before DET adds them to your license.
Keep your Ejari lease active. An expired lease blocks license renewal on the mainland. A Dubai LLC adds a new logistics activity mid-year after winning a contract. It applies to DET, pays the activity fee, and gets an updated license within 3 working days.
Tax and Compliance Rules for Your LLC
A Dubai LLC must register for corporate tax with the FTA once it is formed. Corporate tax is 9% on profit above AED 375,000. VAT registration is required once annual turnover passes AED 375,000. Free zone LLCs may qualify for a 0% corporate tax rate if they meet FTA conditions.
Corporate Tax: What You Pay
The UAE introduced a 9% corporate tax in June 2023. It applies to profit above AED 375,000 (Federal Tax Authority, 2023).
You must register with the FTA once your company exists. Your turnover does not change that duty.
Free zone rate: A free zone LLC can pay 0% corporate tax. You only get that rate if you meet the Qualifying Free Zone Person conditions the FTA sets.
Keep records for at least 7 years. The FTA can request them at any time.
A free zone LLC at Dubai South Business Hub earns AED 2 million in profit from foreign clients. It pays 0% corporate tax because it meets all FTA qualifying conditions for that year. Miss one condition and the 9% rate applies instead.
VAT and Other Duties
VAT in the UAE is 5%. You register once annual turnover passes AED 375,000 (Federal Tax Authority, 2023).
Late registration fine: AED 10,000. Register on time.
Some free zone activities are zero-rated for VAT on goods moved between free zones.
Your LLC must also comply with MOHRE rules on employment contracts and Emiratisation targets if you hire UAE staff (MOHRE, 2024).
A Dubai LLC hits AED 400,000 in sales in its first year. The owner registers for VAT with the FTA straight away, avoiding the AED 10,000 late-registration fine. For help with bank account opening in Dubai and tax registration, DSBH offers a bundled service.
What happens if an LLC misses its FTA registration deadline?
Missing the corporate tax registration deadline triggers a penalty from the FTA. The amount depends on how late the registration is and the company's circumstances. There is no grace period. Register as soon as your company is formed, not when your first tax period opens. The FTA's online portal handles registration directly at tax.gov.ae.
Tax type | Rate | Threshold | Key rule |
|---|---|---|---|
Corporate tax | 9% | Profit above AED 375,000 | Register with FTA on formation |
Corporate tax (free zone) | 0% | Qualifying Free Zone Person conditions apply | FTA conditions must be met each year |
VAT | 5% | Annual turnover above AED 375,000 | Late registration fine: AED 10,000 |
Costs of Setting Up an LLC in Dubai
The cost of an LLC in Dubai depends on your activity, license type, and whether you set up on the mainland or in a free zone. Expect to pay for trade name booking, initial approval, the Memorandum of Association, the license fee, and office space. Free zone packages often bundle several of these fees.
Mainland LLC Setup Costs
A mainland LLC setup involves several separate fees:
Trade name reservation with DET
Initial approval fee
Notarised Memorandum of Association
License fee (varies by activity)
Ejari registration for your office lease
Office rent adds a big cost. A physical office is required for most mainland activities. Government fees also vary by activity. Some regulated activities carry extra approval fees from sector bodies. A mainland trading LLC in Dubai typically budgets AED 15,000 to AED 25,000 for the first year, covering license fees, notarisation, and a small office lease. Use the business setup cost calculator to get a full breakdown before you commit.
Free Zone LLC Setup Costs
Free zone packages work differently. Most bundle several costs into one payment:
License fee included in the package
Flexi-desk or office space bundled in
One visa allocation often included
Annual renewal fees apply. Budget for these from the start.
A startup at Dubai South Business Hub picks a package that covers the license, a flexi-desk, and one UAE residency visa. The all-in first-year cost is lower than a comparable mainland setup, mainly because office rents are more flexible. Some free zones also offer multi-year packages that cut the per-year cost further.
Cost item | Mainland LLC | Free Zone LLC (DSBH) |
|---|---|---|
License fee | Paid separately to DET; varies by activity | Often bundled in package price |
Office space | Physical office required; market rent applies | Flexi-desk options available; lower cost |
Visa allocation | Based on office size; each visa costs extra | One visa often included in starter package |
Annual renewal | License plus Ejari renewal each year | Package renewal; multi-year options available |
An LLC in Dubai gives you a legal company, personal liability protection, and a trade license that defines exactly what you can do. Mainland LLCs suit businesses that sell to UAE customers. Free zone LLCs at Dubai South Business Hub suit international operations and come with ownership and tax advantages. Either way, the 7-step setup process is clear, and most licenses are issued within 10 working days.
Use the cost calculator to see what your LLC setup will cost, or check the full list of business activities to confirm your activity code before you apply.
References
Dubai Chamber (dubaichamber.com)
u.ae (u.ae)
Federal Tax Authority (tax.gov.ae)
Ministry of Economy (moet.gov.ae)
MOHRE (mohre.gov.ae)
Frequently Asked Questions
