UAE Free Zone Ultimate Glossary 2026
This comprehensive glossary covers 150 key terms used in UAE free zone company formation, taxation, visa, banking, and regulatory compliance. Use this as a reference guide when reading UAE free zone documentation, government forms, or advisor proposals.
In this guide:
Company Structure Terms
- FZE (Free Zone Establishment): UAE free zone entity with a single shareholder (individual or corporate)
- FZCO (Free Zone Company): UAE free zone entity with 2–50 shareholders
- Branch: Extension of an existing company (local or foreign) in a UAE free zone, with no separate legal personality
- LLC (Limited Liability Company): UAE mainland company structure, requires UAE national partner (51%) for most activities — mainland only, not used in free zones
- SPV (Special Purpose Vehicle): Entity created for a specific purpose (e.g., holding a single asset or investment)
- Holding Company: Entity whose primary purpose is owning shares in other companies
Licensing and Activity Terms
- Trade Licence: Official UAE government-issued licence authorising specific business activities
- Activity Code: Standardised code identifying a permitted business activity (each free zone has its own list)
- Commercial Licence: Licence for trading, import/export, and distribution activities
- Professional Licence: Licence for service-based businesses (consulting, advisory, etc.)
- Industrial Licence: Licence for manufacturing, assembly, and processing activities
Taxation Terms
- UAE CT (Corporate Tax): 9% UAE federal corporate income tax effective June 2023, with 0% on profits up to AED 375,000
- QFZP (Qualifying Free Zone Person): Free zone entity qualifying for 0% CT on qualifying income by meeting specific conditions
- Qualifying Income: Income from qualifying activities and non-excluded territories — eligible for 0% QFZP rate
- Non-Qualifying Income: Income from domestic UAE sources (mainland) or excluded activities — taxed at 9%
- De Minimis: Threshold (5% of revenue or AED 5M) below which non-qualifying income does not disqualify QFZP status
- VAT: UAE 5% Value Added Tax on goods and services supplied in the UAE, applicable to businesses with annual taxable supply exceeding AED 375,000
- SBR (Small Business Relief): UAE CT exemption for businesses with revenue below AED 3M, available for tax periods 2023–2026
Visa and Residency Terms
- Investor Visa: UAE residence visa for company owners/shareholders, 2–3 years renewable
- Employment Visa: UAE residence visa for employees sponsored by a UAE-licensed company
- Golden Visa: 10-year UAE residence visa for investors (AED 2M+), skilled professionals, and exceptional talents
- Entry Permit: Short-term entry authorisation issued before the residence visa stamping process begins
- Emirates ID (EID): UAE national identity card issued to all UAE residents, required for banking, tenancy, and government services
- Labour Card: UAE Ministry of Human Resources documentation for each sponsored employee
- Establishment Card: Free zone registration document enabling visa applications for the company’s employees
Banking and Financial Terms
- KYC (Know Your Customer): Bank due diligence process to verify identity and source of funds
- EDD (Enhanced Due Diligence): Stricter KYC applied to higher-risk customers or jurisdictions
- AML (Anti-Money Laundering): UAE Central Bank regulations preventing financial crime
- CBUAE (Central Bank of UAE): UAE’s monetary authority regulating banking and payment systems
- Trade Finance: Bank products (letters of credit, guarantees, invoice finance) supporting import/export transactions
Regulatory and Compliance Terms
- ESR (Economic Substance Regulations): UAE requirement for free zone companies to have adequate economic substance for listed relevant activities
- UBO (Ultimate Beneficial Owner): Individual ultimately owning or controlling a UAE entity — must be registered in the UBO register
- MOA (Memorandum of Association): Constitutional document of a UAE company setting out its activities, share capital, and shareholder details
- AOA (Articles of Association): Internal governance document for UAE companies (used alongside MOA)
- Auditor: Licensed UAE auditing firm that certifies annual financial statements (required for most UAE free zone companies)