Before you start your business journey in the UAE or consider setting up your company in one of its free zones, there’s a crucial step you can’t overlook: choosing the right business license for your activity.
It may seem simple, but your license actually defines your company’s legal structure, your rights and obligations, and even the privileges you’ll enjoy within the free zone.
With various license types commercial, service, and industrial and multiple free zones across the UAE from Dubai to Ras Al Khaimah, many investors face a key question: Which license is best suited for my business?
In this comprehensive 2025 guide, we’ll walk you step-by-step through the main types of business licenses in UAE free zones and show you how to select the one that opens the doors to success—without legal or financial hurdles.
What Are the Main Types of Business Licenses in UAE Free Zones (2025)?
UAE free zones offer a wide range of licenses designed to help investors establish their businesses easily and flexibly, according to the nature of their commercial, service, or industrial activities.
In general, business licenses in UAE free zones fall under four main categories:
- Commercial License
For companies engaged in trading activities—buying, selling, importing, and exporting goods within or outside the UAE. - Service or Professional License
Granted to businesses that provide consultancy, technical, marketing, educational, or other professional services not based on physical goods. - Industrial License
Designed for companies involved in manufacturing, packaging, or production activities within the free zone facilities. - E-Commerce License
Ideal for entrepreneurs running online stores or digital platforms within UAE free zones such as Ajman Free Zone (AFZA) or Dubai CommerCity.
What Is the Difference Between the Various License Types in UAE Free Zones?
The differences between license types in UAE free zones depend on the nature of your business activity, as each license comes with its own requirements and benefits. Understanding these differences helps you choose the right one and avoid legal or financial conflicts later.
- Commercial License – for businesses that buy, sell, import, or export goods inside and outside the UAE.
- Service (Professional) License – for companies providing consultancy, marketing, educational, or technical services that don’t involve trading physical products.
- Industrial License – for companies engaged in manufacturing, assembling, or packaging within the free zone.
- E-Commerce License – best suited for online businesses operating through digital platforms.
Can You Start in a Free Zone and Later Expand to the Mainland?
Yes, absolutely. Companies can start their operations in a free zone to benefit from advantages such as ease of setup, cost savings, and tax exemptions.
Later, if the investor wishes to expand into the UAE mainland market, they can open a branch or adjust their license in compliance with UAE laws.
This approach gives investors great flexibility—they can test their business model in the free zone before committing fully to the local market while still enjoying the privileges each free zone offers.
Which UAE Free Zones Are Best for Most Business Activities?
The UAE has more than 40 free zones, each specializing in different industries. However, some are particularly suitable for a wide range of business types due to their flexibility and straightforward setup processes.
Here are some of the most popular free zones:
- Ajman Free Zone (AFZA): Among the most flexible zones, offering hundreds of commercial, service, and industrial activities. Ideal for SMEs thanks to its competitive fees.
- Dubai Multi Commodities Centre (DMCC): Perfect for international trade, precious metals, and consumer goods businesses.
- Sharjah Publishing City Free Zone (SPC Free Zone): Ideal for creative, educational, and media-related businesses.
- Ras Al Khaimah Economic Zone (RAKEZ): Great for industrial and service-oriented companies seeking larger operating spaces at affordable costs.
- Dubai South: Excellent for logistics, transportation, and e-commerce companies.
If you need assistance with choosing the best free zone, obtaining your license, or handling residency and visa processes, we provide full setup services in direct collaboration with AFZA and Amer, ensuring a fast and reliable company formation experience.
What Documents Are Required to Obtain a Free Zone License in the UAE?
To obtain a business, service, or industrial license in a UAE free zone, several standard documents are typically required:
- Copy of passports for all shareholders or owners.
- Recent passport-sized photos of all company representatives.
- Completed and signed company formation application form.
- Activity approval letter from the relevant free zone authority (if required).
- Business plan or activity description outlining the company’s operations within the free zone.
- Memorandum and Articles of Association, depending on license type.
- Proof of office address within the free zone (e.g., office lease or flexi-desk agreement).
- Payment of applicable license and registration fees.
While requirements may vary slightly between free zones depending on activity type, it’s always recommended to confirm specific requirements beforehand to speed up the licensing process.
Can a Free Zone Company Import and Export Goods? What Are the Limitations?
Yes, companies registered in UAE free zones can fully import and export goods, allowing them to purchase from abroad, sell within the UAE, or re-export internationally.
However, there are a few important limitations to keep in mind:
- Selling within the UAE: Direct sales to the mainland are usually not permitted unless the company obtains an additional license or opens a mainland branch.
- Customs clearance: Businesses must comply with all customs procedures, fees, and security regulations applicable to their goods.
- Activity restrictions: Each license defines the scope of permissible trade activities—so the type of license determines what import/export operations are allowed.
Here we have also provided you with a comprehensive guide to corporate taxes in the UAE.
