What is the Cheapest Free Zone in the UAE?

Setting up a business in the UAE is becoming increasingly preferred due to the country’s dynamic economy, strategic location, and business-friendly policies. For many startups and Small to Medium-sized Enterprises (SMEs), the most cost-effective option is to form a company within one of the UAE’s many free zones, like RAKEZ, SHAMS, etc. 

 Free zones offer benefits like:

• 100% foreign ownership

• Full profit & capital repatriation

• Zero personal income tax

• (Potentially) favourable tax treatment/exemptions for corporate income, depending on the free zone and thresholds

However, with over 40 free zones, finding the most affordable option can be confusing. This blog will help you understand which is the cheapest free zone company in the UAE and how to navigate the costs associated with starting a business.

This blog is for anyone seeking to how to start a business in the UAE with a limited budget.

A free zone company is a business entity registered within a designated economic zone. The UAE has established these zones to promote specific industries by offering unique tax and regulatory benefits. They must comply with UAE regulations, have physical presence (office requirements), may hire staff, etc. 

The key advantages of a free zone company formation in uae include:

• No personal or corporate income tax: Companies in free zones enjoy a 0% tax rate on their income.
• 100% foreign ownership: Foreign entrepreneurs can own their companies entirely, without a local partner.
• Streamlined visa and licensing processes: Free zones are known for their quick and easy business setup procedures.
• Full profit repatriation: You can transfer all your capital and profits back to your home country without restriction.
• Access to international markets: Free zones are ideal for businesses focused on global trade and exports.

Common entity types you can register include a Free Zone Establishment (FZE) for a single shareholder, a Free Zone Company (FZC) for multiple shareholders, and a Branch Office of an existing company.

Free Zone Companies vs Offshore / Mainland

Choosing between a business setup in Mainland or the Free Zone has been a long-standing debate. Check out these factors before making your decision:

• Free zone companies are UAE legal entities registered in specific designated zones with their own regulatory authority. They are not necessarily offshore companies.

• They generally must have a physical presence (office, flexi-desk, virtual office, etc), depending on visa requirements.

• Unlike mainland companies, they often have restrictions if you want to trade directly with mainland customers – sometimes you need a local license or a distributor/agent.

When you look for the cheapest free zone company in the UAE, you will find several strong contenders. The costs listed below are approximations for a basic, zero-visa package. 

Prices may vary based on your specific business activity, visa requirements, and chosen package.

A Closer Look: Ajman Free Zone

Business Setup in Ajman Free Zone consistently ranks as the cheapest free zone company in the UAE. Its affordability, combined with a quick and straightforward setup process, makes it an ideal choice for budget-conscious startups and freelancers.

• Starting license cost: At approximately AED 5,555 for a zero-visa package, it offers one of the lowest entry points in the market.
• Wide activity list: You can choose from a broad range of business activities, including trading, consultancy, and e-commerce.
• Simple setup: The registration process is fully digital, meaning you don’t even need to be physically present in the UAE to get your license.
• Flexi-desk and virtual office options: These cost-effective solutions allow you to avoid high office rental fees, further reducing your initial investment.

Competitive Alternatives: SHAMS and RAKEZ

While Ajman Free Zone holds the top spot for the cheapest license in the UAE, other free zones offer compelling packages and specialized benefits.

• SHAMS (Sharjah Media City): With packages starting from around AED 5,750, SHAMS is a fantastic option for creative, media, and tech entrepreneurs. It offers a fully digital setup and a wide range of packages, including a dedicated freelancer license.
• RAKEZ (Ras Al Khaimah Economic Zone): RAKEZ is a strong contender, with packages starting at approximately AED 6,000. It is well-regarded for its support for a diverse range of sectors, from industrial to trading. RAKEZ Business Setup provides scalable infrastructure, from flexi-desks to large warehouses, making it a great long-term option.

Which is “Cheapest”? It Depends on Your Needs

If by “cheapest” you mean license only, zero visa, minimal facilities, then SHAMS (AED 5,750) and Ajman Free Zone (around AED 5,500-8,000) are among the lowest. But as soon as you need visas, an office, and more activities, the cost rises.

Also, “cheapest” might not always be best: other factors like ease of renewal, reputation, service quality, what your business does (do you need access to mainland clients?), banking, etc, matter.

The total cost of setting up a business in the UAE includes several components beyond just the license fee. A clear budgeting strategy should account for all mandatory and optional costs for a free zone.

The total cost of your business setup includes more than just the license fee. A transparent approach to budgeting means you must account for all components.

• License Fee: The annual fee for your chosen business activity. This is your primary cost.
• Registration Fee: A one-time charge for registering your company in the free zone’s registry.
• Office or Flexi-Desk Lease: Most free zones require a physical address, even if it’s a shared workspace. A flexi-desk is the most affordable choice, with annual costs often bundled into a package.
• Visa Quota & Establishment Card: If you need a residency visa for yourself or employees, you will pay for an establishment card and visa application fees. Each visa typically adds a cost of AED 3,000 to AED 7,000.
• Renewal Charges: You must renew your license and other documents annually. Be sure to check renewal fees, as some zones offer a low initial cost but have higher renewal rates.
• Hidden Fees: Watch out for extra charges for services like name reservation, attestation of documents, or bank account setup assistance.

Key Things to Know Before You Calculate Costs

When comparing free zones, consider:

• Whether your license is “zero-visa/no-visa” vs includes investor/employee visas.

• Office / facility requirements (desk / virtual office / physical office).

• Mandatory fees like establishment card, e-channel registration, medical test, Emirates ID, immigration card, etc.

• Renewal fees in subsequent years.

• Whether your business activity is covered under the free zone, and whether additional government approvals, permits are needed.

• Whether you are subject to corporate tax (depending on your profit threshold and free zone status).

Even with the cheapest free zone in the UAE, you can encounter unexpected costs. Entrepreneurs often make the mistake of only looking at the advertised starting price.

• Add-on Traps: Many free zone packages offer a low initial license fee but charge extra for services, like an establishment card (a mandatory requirement for visa processing) or even the right to apply for a visa.
• Renewal Surprises: Always ask for the renewal cost upfront. Some free zones use a “lowball” initial price to attract new businesses, only to significantly increase the fee in the second year. A rule of thumb is to assume the renewal fee will be at least the same as, or slightly higher than, the initial setup cost.
• Third-Party Markups: When using a business setup consultant, confirm that the quoted price is the actual fee charged by the free zone and not a marked-up bundled package. Always request an itemized breakdown.

Banks may charge a minimum balance of AED 25,000–AED 100,000 to maintain corporate accounts, depending on the institution. Some free zones charge separately for document amendments, share transfers, or ownership updates.

Selecting the right free zone goes beyond finding the absolute lowest price. You should match your business needs to the free zone’s specialization and regulations.

• Align your business activity: Choose a free zone that specializes in your industry. Suppose you are a freelancer in the media industry, SHAMS or Fujairah Creative City would be a better fit than a logistics-focused free zone like Dubai South.

For instance:

• Tech Startups: Dubai Internet City, RAKEZ.
• E-commerce: Sharjah Media City (SHAMS), SPC Free Zone.
• Consulting / Services: IFZA, Meydan Free Zone.
• Import/Export: JAFZA, UAQ Free Trade Zone.

If your target market includes the mainland UAE, check whether your chosen free zone allows you to partner with a local distributor or obtain a dual license.

• Consider visa needs: If you require multiple visas for yourself and your team, compare the visa costs and quotas offered by each free zone. Some have flexible options, while others have strict limits.
• Check bank account eligibility: While most free zones facilitate bank account opening, the final decision rests with the bank. Some banks prefer companies from certain free zones, so it’s wise to check this beforehand.
• Understand compliance obligations: Be aware of any audit requirements, which can add to your annual costs.

Use official cost calculators on the free zone’s website to get an accurate, up-to-date quote. This helps you avoid third-party pricing and ensures transparency.

Want a transparent, cost-effective free zone setup? Talk to our UAE business setup experts for a free cost comparison across Dubai, Sharjah, and Ajman zones.

Finding the cheapest free zone company setup in the UAE is a great starting point, but it’s essential to look at the complete picture. The best option for you is one that strikes a balance between affordability and your specific business needs. The UAE’s commitment to creating an attractive business environment means there are more low-cost options than ever before.

The UAE offers a variety of affordable options, from the Ajman Free Zone to the cheapest freezone in Dubai, IFZA. By understanding the full cost structure and aligning your choice with your business needs, you can make an informed decision and build a solid foundation for your company’s success. The right choice will not only save you money but also provide the ideal ecosystem for your business to grow and thrive.