Reading the tax exemption claims literally
Some older free zone marketing still says free zone companies are exempt from corporate tax. That is out of date: the 0% rate is a status with conditions.
Business setup · IFZA
Set up with IFZA in Dubai Silicon Oasis, with the renewal rules clear from day one
Who IFZA suits, how its visa-linked office rule works, and what the company must file at every renewal.
We work with IFZA.
Who IFZA suits, and who it does not
IFZA is built for small, internationally owned companies that want a Dubai licence and are willing to start light.
IFZA, the International Free Zone Authority, has its headquarters in Dubai Silicon Oasis. It describes its offer as business setup for foreign investors and small and medium businesses. It offers commercial and professional licences and a branch route for foreign companies, and its packages are organised around how many visa allocations the company needs.
- Consultancies and service firms that want a professional licence and a small team.
- Trading businesses that import or export and want a commercial licence.
- Foreign companies that want to register a branch in Dubai.
- Owners who want to start with few visas and no office, and upgrade as the team grows.
It is a poorer fit if you need the single-owner establishment form or an LLC structure: the legal forms IFZA states are the FZCO and the branch. It is also a weak choice if most of your customers are on the Dubai mainland and you have not planned for the approvals that work needs, or if you intend to rely on a tax exemption, which does not exist.
Licence types and activities
IFZA issues a commercial licence, a professional licence and a branch registration. IFZA describes the commercial licence as covering import, export and local market trade, and the professional licence as for businesses that provide professional consultancy and multiple types of services. Foreign incorporated companies can register a branch.
Regulated activities need third-party approval. IFZA publishes a searchable activity list, and the licence is only as useful as the activity wording on it, so check the exact line against what your contracts will say.
Ownership, structure and capital
IFZA states 100% ownership for foreign entities and individuals from incorporation, with no requirement for a local sponsor or local service agent. Its licensees are FZCO companies and branches. Registration asks you to declare the ultimate beneficial owner, which is also a legal duty for every licensed UAE company at the 25% ownership level.
IFZA says there is no paid-up share capital requirement. That does not mean capital is irrelevant: a bank will look at what the owners have put in and how the company is funded, and an investor may ask for more than the zone does. Decide the share structure and the funding together.
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Office, facilities and visas
At IFZA the office question and the visa question are one decision.
IFZA has removed the requirement for mandatory office space on its basic licence packages. Registered office space is required when the business has 4 or more visa allocations. A company that plans a team of four or more therefore needs to price the office from the start, not as a later upgrade.
IFZA lists five facility types. A flexi desk is a shared workstation with ten hours of access a week, an IFZA address and one hour of meeting room use a month. A flexi desk plus gives a dedicated desk with unlimited access and five hours of meeting room use. A dedicated office is a private workspace for a set period within a year. Private offices add unlimited access, an individual address and meeting and conference room hours, and personalised offices add 24-hour access.
Visas depend on the allocation in the package and are typically valid for 2 years: confirm the validity with IFZA, because its September 2024 schedule of fees lists a two-year residence visa while its website describes visas valid for up to three years. IFZA says you can start with the fewest allocations and upgrade later. Buy for the headcount you expect in the first twelve months, because changing the allocation changes the package.
Banking
IFZA offers banking support through its own banking services arm, and says requirements vary by bank and by company structure. As with every free zone, the account decision belongs to the bank, which will ask for the licence, constitutional documents, beneficial owner details and an explanation of the business.
A company with no office, a single owner abroad and a thin description of its customers has a harder file than one with a clear contract pipeline. We help you present the business plainly, and we do not promise an outcome or a timeline.
Financial statements at renewal
This is the rule that most often surprises new IFZA companies.
From 30 September 2025, IFZA asks every FZCO and branch licensee to submit financial statements at each annual renewal, for the most recently completed financial year. The basis depends on turnover: cash basis at AED 3,000,000 or less, IFRS for SMEs above that and under AED 50,000,000, and full IFRS above AED 50,000,000.
A simplified statement on IFZA's template is allowed only if both tests are met: turnover at or below AED 3,000,000 and 9 employees or fewer at any point in the year. If either test fails, you need audited statements. Any registered UAE auditor may be used, the statements are signed electronically by an authorised signatory, and an audit report already prepared for the Federal Tax Authority for the same year may be reused.
Keep proper books from the first month. A company that has not kept its records cannot produce statements at renewal without a clean-up, and the clean-up costs more than monthly bookkeeping does.
Annual renewal
IFZA licences are issued annually and must be renewed on or before the expiry date. IFZA's renewal guide describes the process as a renewal application, the paperwork, a quotation and payment, and then receipt of the renewed documents, valid for another year. Plan the renewal together with the financial statements, since the statements now sit on the critical path.
Corporate tax, the Dubai permit and VAT
IFZA's own guidance is clear that a free zone company does not automatically get the 0% rate. We follow it.
An IFZA company is a resident person for corporate tax. It registers with the Federal Tax Authority within 3 months of incorporation, even if it expects to owe nothing, files within 9 months of the end of the tax period, and keeps records for 7 years.
Qualifying Free Zone Person status
IFZA's 2026 guide to Qualifying Free Zone Persons says a free zone company counts as one only if it meets all the qualifying conditions and does not opt into the standard regime. Qualifying income is taxed at 0% and other income at 9%. Non-qualifying revenue must stay within the lower of 5% of total revenue or AED 5,000,000, and a company that loses the status cannot requalify for the next four tax periods.
Working with the Dubai mainland
IFZA's own guidance says that business with the Dubai mainland needs the appropriate approvals and goes through the Department of Economy and Tourism. Dubai's Free Zone Mainland Operating Permit costs AED 5,000 for each six months. It is open to free zone companies that hold a Dubai Unified Licence, covers non-regulated activities such as technology, consultancy, design, professional services and trading, and applies through the Invest in Dubai platform. The announcement does not name individual free zones, so we confirm with IFZA and the Department whether your company can use it.
The tax consequence is the point. The announcement says free zone companies doing mainland activity are subject to 9% corporate tax on the related revenue and must keep separate financial records. A consultancy that earns most of its income in Dubai should model the permit and the tax together.
VAT
IFZA and Dubai Silicon Oasis are not on the Federal Tax Authority's list of Designated Zones, whose Dubai section names eight zones. An IFZA company therefore follows the standard VAT rules: register when taxable supplies pass AED 375,000, charge 5% and file within 28 days of each period.
When to choose IFZA over the mainland
Choose IFZA when you are a foreign-owned service or trading business, want to start with the lightest facility, expect a small team, and can keep most income outside the Dubai mainland or are ready to manage the permit and its tax cost. Its package structure also suits owners who want to grow the visa allocation in steps.
Choose the mainland when most customers are in Dubai, when you need a single licence for local trading without a permit, or when you want to bid for government contracts. Run the full tax model first: if the mainland income would be taxed at 9% either way, the free zone saving may be smaller than the permit and audit costs.
Common mistakes
Buying too few visas
With four or more allocations you need registered office space, and changing the allocation changes the package.
Missing the renewal statements
Statements are due at every renewal. The simplified route needs both turnover and headcount tests to be met.
Assuming the Dubai permit is automatic
It needs a Dubai Unified Licence and covers non-regulated activities, and the related revenue is taxed at 9%.
Costs
IFZA does not publish a fixed price list on its pages, so we quote from its current schedule.
IFZA licence
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Depends on licence type and visa allocations.
IFZA visas
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Depends on the allocation in the package.
IFZA facility
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Flexi desk, dedicated, private or personalised office.
An illustrative example
Illustrative example, not a client
A foreign-owned software consultancy with a four-person team
Two foreign owners plan a software consultancy in Dubai. They expect four people within a year, and a few customers will be on the Dubai mainland.
IFZA's professional licence fits the activity. With 4 visa allocations the company needs registered office space, so we price a flexi desk plus or a dedicated office from the start, and take the allocation that matches the hiring plan.
On tax, we model the income. Mainland customers produce income that is probably non-qualifying and that, with the Dubai permit, would be taxed at 9%. We compare the Qualifying Free Zone Person route with the standard rules and Small Business Relief at their forecast revenue. We also plan the renewal: with turnover under AED 3,000,000 but more than 9 employees, a simplified statement would not be available, so we budget for an audit.
Frequently asked questions
Where is IFZA and what does it offer?
IFZA, the International Free Zone Authority, has its headquarters in Dubai Silicon Oasis. It offers commercial and professional licences and a branch route for foreign companies.
What legal forms does IFZA offer?
IFZA states that its licensees are an FZCO or a branch. It states 100% ownership for foreign entities and individuals, with no local sponsor or local service agent required.
Is there a minimum share capital at IFZA?
IFZA says there is no paid-up share capital requirement. A bank or an investor may still ask about funding, so decide the capital with the business plan.
Do I need an office at IFZA?
Not on the basic packages. IFZA requires registered office space when a business has 4 or more visa allocations.
How long are IFZA visas valid?
Typically 2 years, but confirm with IFZA: its September 2024 schedule of fees lists a two-year residence visa, while its website says up to three years. The number of visas depends on the allocation in your package.
Do IFZA companies need audited accounts?
From 30 September 2025, financial statements are submitted at each renewal. A simplified statement is allowed only for turnover at or below AED 3,000,000 and 9 employees or fewer. Otherwise audited statements are needed, from any registered UAE auditor.
Is an IFZA company exempt from corporate tax?
No. It is a resident person and must register. It pays 0% only on qualifying income if it is a Qualifying Free Zone Person, and 9% on other income.
Can an IFZA company work with Dubai mainland customers?
IFZA's guidance says mainland business needs approvals through the Department of Economy and Tourism. Dubai's Free Zone Mainland Operating Permit costs AED 5,000 for each six months for eligible free zone companies, and the related revenue is taxed at 9%.
Is IFZA a VAT Designated Zone?
No. Dubai Silicon Oasis and IFZA are not on the Federal Tax Authority's list of Designated Zones, so standard VAT rules apply.
How often must an IFZA licence be renewed?
IFZA licences are issued annually and must be renewed on or before the expiry date.
General information based on UAE rules at the time of writing. It is not tax or legal advice for your situation. Speak to us before you decide.
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