A free zone licence is one of the most popular ways to start a company in Dubai, offering 100 per cent foreign ownership and quick set-up. What catches founders out is not the launch but the life of the licence afterwards: annual renewal deadlines, fees that vary sharply between free zones, and fines for trading beyond your licensed activities or letting the licence lapse. This guide explains the costs and dates that matter, with figures given only as guides — every free zone authority publishes its own schedule, and that schedule is what governs your company.
What a free zone licence costs
There is no single Dubai free zone price. Licence packages differ by authority — for example DMCC, Dubai Media City, IFZA, Meydan and Dubai South each price differently — and by activity, number of visas and whether you take a flexi-desk or a physical office. As a guide, entry-level packages with no visa allocation have typically started in the region of AED 12,000 to AED 15,000 per year, while packages with visas and dedicated space can run to several times that. Registration and licence fees, establishment card charges and immigration file fees may be bundled or separate, so compare the itemised first-year and renewal-year costs, not just the headline number. Incorporation can also involve one-off charges for name reservation, articles and share certificates.
The renewal deadline you cannot miss
Free zone licences are annual. Renewal is due on the licence anniversary, and the process usually involves paying the renewal package, confirming your lease or flexi-desk agreement is still valid, and keeping your establishment card and immigration file active. Many free zones send reminders, but the obligation is yours. If the licence expires, a grace period may be offered — commonly around a month, as a guide — after which late renewal fines begin and, more seriously, the company’s immigration file can be blocked, freezing new visas and renewals for existing staff. A licence left expired for a long period can be terminated, which makes later revival or liquidation far more complicated and expensive than renewing on time.
- Licence and package fee: varies by free zone, typically from around AED 12,000 a year as a guide
- Renewal due annually on the licence anniversary date
- Establishment card renewal is usually tied to the licence cycle
- Office or flexi-desk lease must be valid for renewal to proceed
- Audit and bookkeeping obligations may apply depending on the free zone
Fines and penalties inside free zones
Each authority publishes a fine schedule. Common penalties include late renewal fines that accumulate monthly, fines for operating from an unapproved location, trading in activities not listed on the licence, and employing staff without proper visas sponsored by the company. Amending the licence — adding an activity, changing a manager or shareholder — also carries fees, and making the change after the fact rather than before can attract penalties. As a guide, individual administrative fines in many free zones sit in the hundreds to low thousands of dirhams per breach, but serious breaches such as unlicensed activity can run much higher and risk suspension. Read your free zone’s current penalties table rather than relying on figures quoted by formation agents.
Other deadlines that run alongside the licence
The licence date is the anchor, but several clocks run in parallel. Residence visas for owners and employees follow their own two or three year cycle and depend on the licence staying valid. Corporate tax registration with the Federal Tax Authority has its own deadline for licence holders, and VAT registration applies if your taxable supplies cross the threshold. Some free zones, notably DMCC, require annual audited accounts within a set number of months of the financial year end, with fines or renewal blocks for late submission. Economic substance and anti-money-laundering registrations may also apply depending on your activity. Build a single compliance calendar covering all of these when the company is formed, not when the first reminder arrives.
Closing or moving a free zone company
If you decide not to renew, do it properly: licence cancellation and liquidation involve cancelling visas, clearing immigration and labour records, closing the corporate bank account and obtaining clearance certificates. Simply abandoning a licence leaves fines accruing and can affect the shareholders’ and manager’s ability to open future companies or visas. Liquidation has its own fees and typically takes several weeks to a few months as a guide. The cheapest exit is a planned one, started at least two to three months before the licence anniversary.
FAQ
Can a free zone company trade directly with the Dubai mainland?
Generally, a free zone company sells to the mainland through a local distributor or by obtaining the appropriate permits; mainland trading is a common reason businesses later add a mainland licence. Check your authority’s rules for your activity.
What happens to employee visas if the licence lapses?
Visas depend on an active licence and establishment card. A lapsed licence can freeze immigration services, putting staff renewals at risk, which is why renewal should never be left to the last week.
Are renewal fees the same as the first-year package price?
Not always. First-year packages often include one-off formation costs, so renewals may be lower — or higher if you added visas or space. Ask for the renewal breakdown in writing before you commit.
A free zone licence is simple to keep in good standing if the anniversary, the audit season and the tax dates live in one calendar. For more guidance on starting and running a business in the city, visit DXB Talk and browse the Dubai section.
