Guide to Meydan Free Zone Compliance

Understanding Meydan Free Zone Business Environment

The Meydan Free Zone (MFZ) is located in Dubai and operates under the Meydan City Corporation, which was established pursuant to Ruler’s Decree No. 5 of 2009. Its primary appeal is the premier business location, the flexibility to operate under a flexi-desk arrangement, and a fast online setup.

In most free zones, businesses spend anywhere between a few days and a couple of weeks just completing the registration and licensing process. However, Meydan Free Zone promotes a streamlined licensing process, with certain licenses issued within a day and Fawri licenses issued within 60 minutes.

All processes, including the application process, are fully digital and can be completed remotely. However, if you need clarity about whether MFZ is the right choice for you, you can set up a 30-minute consultation at Meydan Hotel or an online one.

A Meydan Free Zone company can generally contract with UAE mainland clients, subject to its licensed activities. However, if the company conducts activities outside the free zone within Dubai, it may need a DET branch license or permit under Dubai’s free zone mainland activity rule. One license enables you to conduct 3 business activity groups of your choice, out of a possible 2,500+.

A Meydan company may benefit from a 0% Corporate Tax rate on Qualifying Income if it meets the requirements to be treated as a Qualifying Free Zone Person (QFZP).

Registrants can access business banking support and introductions to banking partners, but final account approval remains subject to the bank’s KYC and compliance requirements.

Meydan Free Zone Regulations and Compliance Authority

Meydan Free Zone (MFZ) falls under the jurisdiction of Meydan City Corporation, the free zone authority that was created by the Ruler’s Decree no. 5 of 2009. In this free zone, the UAE Federal Law no. 32 of 2021 concerning Commercial Companies does not apply. Instead, the requirements for licensing and registration are defined under the Meydan Free Zone Companies and Licensing Regulations 2022.

Meydan City Corporation has the power to accept/reject applications for incorporation as well as to grant, refuse to grant, vary, or withdraw licenses.

However, this does not mean that you, your Meydan-registered business, its executives, or its investors can ignore other UAE regulations or the regulations of the Emirate of Dubai. You are required to comply with all applicable laws of the Emirate of Dubai and the UAE and abide by regulations and judgements issued by competent authorities, in addition to complying with the Meydan Free Zone regulations.

For instance, even if a good or service is not explicitly banned by the Meydan City Corporation, you cannot acquire, store, or bring said product in MFZ if it is boycotted by any competent authority or prohibited under the laws and regulations of the Emirate of Dubai or the UAE itself.

All MFZ companies are also required to adhere to the following laws:

1. UAE Federal Law No. 20 of 2018 – Anti-money Laundering and Combating the Financing of Terrorism and Illegal Organisations
2. UAE Federal Law No. 7 of 2014 – Combating Terrorism Crimes
3. Cabinet Decision No. 10 of 2019 – Executive Regulations of Federal Decree-Law No. (20) of 2018 On Anti-Money Laundering, Combating the Financing of Terrorism, and Illegal Organizations
4. Cabinet Decision No. 58 of 2020 – Beneficial Owner Procedures
5. Cabinet Decision No. 74 of 2020 – Regulating the Terrorist Lists and Implementing the Security Council’s Resolutions Regarding the Prevention and Suppression of Terrorism and its Financing and Proliferation of Armaments and the related Resolutions
6. Cabinet Decision No. 57 of 2020 – Requirements of Real Economic Activities
7. Ministry of Economy Circulars 1, 2, 3, 4, 5, and 7 of 2021 and any of its updates or amendments

Business Registration and License Establishment

Broadly speaking, there are three routes to setting up a Meydan company. You can opt for Dubai Company Formation, a Fawri license (60-minute processing time), or a non-resident license.

Under the Dubai license, you can conduct up to 3 of the 2,500+ approved activity groups. This is a limited liability company (LLC) license, which separates your business liabilities from your personal assets. Individuals who are currently employed can apply for this license without a no-objection certificate (NOC).

This license costs AED 12,500, which can be spread over monthly instalments over 3 to 12 months. This instalment plan is available only for UAE residents who hold credit cards issued by participating UAE banks.

This license is recommended for solo/first-time founders, international founders, freelancers, consultants, as well as serial entrepreneurs.

You can also establish and manage an MFZ entity remotely through a non-resident license. With this license, eligible applicants can begin and complete much of the business banking application process remotely, subject to bank approval and compliance requirements. The application process is fully online, there’s no need for UAE residency, and the KYC verification can be completed remotely. As part of the KYC process, the Meydan Free Zone requires businesses to validate their source of wealth.

The account may support multi-currency holdings, foreign exchange services, and international payments, subject to the terms and pricing of the banking provider.

This license is recommended for:

1. Solo founders managing multiple responsibilities
2. Startups building lean operations
3. SMEs that need admin and operational support
4. International business owners managing a Dubai company remotely
5. Consultants and service businesses handling ongoing client work
6. Growing companies that need more structure in daily operations

The remote license and the Dubai license cost AED 12,500. However, the remote license requires an additional fee of AED 1,500 for corporate bank account assistance, while the Dubai license does not.

The third and final type of MFZ license is the Fawri license, which costs AED 15,000. Its USP is the 60-minute application processing time. According to Meydan Free Zone promotional materials, applicants may be eligible for a refund if a qualifying Fawri license is not issued within 60 minutes, subject to applicable terms and conditions. Like the other licenses mentioned here, this license does not require local sponsors or offices and allows 100% foreign ownership.

However, if you choose this license, your choice will be limited to up to 3 business activity groups from 1,800+ approved activities, as opposed to the 2,500+ approved activities available under the regular license routes.

Businesses dealing in virtual assets must adhere to specific governance and licensing standards introduced by the Virtual Assets Regulatory Authority (VARA).

Initial Registration Process and Requirements

Here’s a breakdown of the MFZ entity registration process across the three license types:

Not sure which license to choose and how to prepare an application? As part of our PRO services, we assess your business setup needs, prepare documentation, submit applications, follow up with the authorities, and handle recordkeeping.

Free Zone Fees and Cost Structure

Let us go over the overall cost of different licenses.

Annual License Renewal Requirements

The maximum validity of an MFZ license is 6 years, but typically, trade licenses have a validity of 12 months. You will be notified before your license expires. The deadline to renew your trade license is 30 days after the license expiry date.

The license renewal process is completely online and can be completed within an hour in most cases. You can choose to renew visas connected to your trade license during the license renewal process. All you need to do is log in to your dashboard, confirm your details, and pay the renewal fee.

If you originally opted for the Fawri license, you can add additional shareholders at renewal, including those whose nationalities were previously restricted. If you wish, you can also add new business activities that are available under MFZ’s full list but not available to Fawri license holders at the time of registration.

Struggling to keep track of your deadlines for license renewal and other compliance matters like audits and tax return filings? Our compliance calendar tool calculates all relevant deadlines instantly!

Corporate Tax Obligations and Compliance

Businesses in Meydan Free Zone must register for Corporate Tax within 3 months of incorporation. All free zone persons are required to file tax returns and pay any Corporate Tax (CT) liabilities within 9 months from the end of the tax period.

Normally, the Corporate Tax rate for taxable income above AED 375,000 is set at 9% in the UAE, while taxable income below this threshold may qualify for a 0% rate. However, a Qualifying Free Zone Person (QFZP) typically pays 0% CT on Qualifying Income and 9% on Non-Qualifying Income. Qualifying Income is defined as business income earned through:

• Serving Free Zone Persons (except excluded activities)
• Qualifying activities that are not excluded activities
• Exploiting or owning Qualifying Intellectual Property
• Other income as long as the de minimis requirement is met

Here are some of the core conditions to be a QFZP:

1. You must have adequate assets, full-time employees, and incur an adequate amount of your operating expenditures in the free zone in connection with your income-generating activities.
2. If you outsource your income-generating activities to other persons in a free zone, you need to maintain adequate supervision.
3. You can outsource your qualifying intellectual property-related R&D activities to anyone in the UAE or outside the UAE as long as you maintain adequate supervision.
4. You must not elect to be subject to the standard CT rules.
5. You must comply with the arm’s length principle for transactions with related parties, the free zone parent, and permanent establishments, and maintain transfer pricing documentation.
6. You need to prepare and maintain audited financial statements.
7. Your total non-qualifying revenue should not exceed the lower of AED 5 million and 5% of your total revenue. Income attributable to permanent establishments is not considered in these calculations.

Non-qualifying income includes income from excluded activities, non-qualifying activities where the beneficiary is not a free zone person, and transactions with free zone persons where the beneficiary is not the free zone person.

Not sure if you can qualify as a QFZP? We recently released a detailed guide on Corporate Tax Law for QFZPs covering crucial concerns such as qualifying conditions.

Ultimate Beneficial Owner Registry and ESR

Companies in Meydan Free Zone must maintain and submit accurate Ultimate Beneficial Ownership (UBO) as per Cabinet Decision No. 58 of 2020. In general, if someone owns 25% or more of your business, their details must be compulsorily disclosed as part of UBO registration.

At the time of registration or whenever there are any changes to your ownership structure, you must provide the following details about your beneficial owners. Where a shareholder is a legal entity, ownership should be traced through the structure to identify the natural person who ultimately owns or controls the company.

Beneficial owners are defined as:

Economic Substance Requirements

Economic Substance Requirements (ESRs) prevent companies from shifting profits to low-tax jurisdictions where they do not have any real physical or business presence. The UAE repealed the Economic Substance Regulations from 2023 onward, although businesses may still need to address obligations relating to earlier reporting periods where applicable.

Financial Reporting and Accounting Standards

Even free zone entities need to comply with the financial reporting and accounting standards laid out in the UAE Corporate Tax Law and Value Added Tax Law. To start with, you must maintain all records and documents connected to Corporate Tax calculations for at least 7 years from the end of a tax period. On the other hand, the UAE VAT Law requires businesses to maintain detailed records comprising invoices, credit notes, records of supplies, records of exports, and various other documents for at least 5 years from the end of a tax period.

Broadly speaking, the VAT law defines how records regarding each transaction should be kept, while the Corporate Tax law defines how records regarding how your Qualifying Income is calculated.

Under Corporate Tax rules, you will need to prepare financial statements in accordance with International Financial Reporting Standards (IFRS). However, businesses with revenue up to AED 50 million can maintain financial statements as per IFRS for SMEs. If certain conditions are met, you may be allowed to prepare financial statements on a cash basis.

Finally, you need to file CT returns 9 months after the end of a tax period and settle all related dues.

Audits

A free zone business can be audited by the Federal Tax Authority (FTA) in connection with VAT and CT returns, and by the Free Zone Authority. Annual audits are required for most active companies in the Meydan Free Zone. Registered entities must provide audited financial statements within 30 days of any requests by the Free Zone Authority. These records must explain the company’s transactions and shed light on the company’s financial position at the time of the request with reasonable accuracy. You can appoint or remove an auditor through an ordinary resolution. Any changes to your choice of auditor (appointment, resignation, and removal) must be reported to the Free Zone Authority.

Meydan Free Zone Business Review and Assessment

Ongoing compliance reviews are essential for uninterrupted operations in Meydan Free Zone. Let us explore how you can prepare your business for the regulatory scrutiny you can expect in this region.

Periodic Compliance Review Process

The Meydan Free Zone Authority is responsible for verifying your compliance with the regulations regarding regulatory records, Anti-Money Laundering (AML), Ultimate Beneficial Owner (UBO), and Know Your Customer (KYC). However, the free zone authority doesn’t simply pass judgments. Instead, it also offers advice by helping you identify any compliance gaps.

Here’s a breakdown of Meydan Free Zone Authority’s ambit of activities across the compliance pillars:

Business Performance and Operational Review

In addition to compliance filings, businesses should review their operations to make sure the Meydan setup still matches real commercial needs. This includes reassessing whether the current license, business activities, and company structure will remain appropriate for the company’s day-to-day work. If you expect the business to expand, change its service model, or alter its ownership structure, license amendments may be required to keep the setup accurate and compliant.

Businesses should also review visa requirements on a periodic basis. If the number of employees, partners, or dependents changes, the company should assess whether existing visas remain sufficient or whether renewals, additions, or removals are needed.

FAQ