Start a Software or IT Company in the UAE (2026): Tech-Zone Matrix, Government Contracts and ICV, IP Ownership and Tax

To set up a software company in Dubai, choose your IT activities, pick a tech free zone (Dubai Internet City, Dubai Silicon Oasis, DMCC, IFZA or Meydan) for clients abroad or the mainland for government work, then get the licence, visas and bank account, and put IP ownership in writing.

This guide is for founders of software development companies, SaaS businesses, IT services and managed services firms, web and app agencies, and systems integrators. Each free zone has its own guide on this site covering its packages and fees, so this page compares the zones side by side instead. It also covers three points the zone guides do not: government contracts and the In-Country Value (ICV) certificate, who owns the code, and how free zone tax treatment changes once you sell onshore.

If you are still choosing a business type, start with our hub on how to start a business in the UAE. AI-first products follow the same set-up steps below. AI-specific licensing is covered in a separate guide.

Who regulates a software or IT company in the UAE?

For most software businesses, the licensing authority is the only body that approves the business itself: a free zone authority, or the Department of Economy and Tourism (DET) on the Dubai mainland. Other regulators come in only if your product touches their area.

Which free zone is best for a software or IT company?

The right zone depends on where your clients are and what you sell them. Each zone’s guide covers its packages, fees and visa allocation. The details below come from each zone’s own website, checked 3 October 2026.

The tech-zone matrix: who each option suits

These ratings are our reading of the rules on this page, not an official ranking. “Strong” means the set-up fits as it is. “Workable” means it fits once you add a permit, branch or second licence. “Weak” means you will probably need a different vehicle.

Many tech groups run two entities: a free zone company that owns the code and sells abroad, and a mainland company or DET branch that contracts with UAE clients and government. If you do this, plan the licence between the two companies, transfer pricing and the tax rules below from the start.

What approvals does a software company need?

• A trade licence whose activities match what you invoice for: development, consultancy, systems integration, hosting, and hardware trading if you resell equipment.
• A TDRA licence, only if you supply telecom services. The application fee is AED 10,000. Unless the TDRA Board approves otherwise, foreign shareholders may hold no more than 49%. Building software that runs over someone else’s network is not the same as supplying the network.
• A financial licence, only if the product handles money or gives financial services.
• Data protection filings in DIFC or ADGM, and supplier registration plus an ICV certificate if you want government work (both covered below).

Who owns the code: founders, employees and contractors?

Code ownership is usually tested during an investor’s due diligence or a buyer’s review of an acquisition. The rules are in Federal Decree-Law 38 of 2021 on Copyright and Neighbouring Rights. Its English text is an official translation, and the Arabic text prevails if the two differ.

Protection is automatic

Article 2 protects “smart applications, software and software applications, databases”. Under Article 4, failing to register a work does not affect its protection, although the Ministry’s registers serve as a reference for ownership. Ideas and procedures are not protected (Article 3).

Founders

If you wrote code before incorporating, you own it. Under Article 9 a transfer to the company has effect only if it is in writing and names the right transferred, its purpose, duration and place of use. The author keeps every right not expressly assigned. Sign a dedicated assignment that lists the repositories, rather than relying on a general clause in a shareholders’ agreement.

Employees

Unless agreed otherwise in writing, Article 28 gives the employer the economic rights in work an employee creates during employment if it relates to the employer’s business and was assigned to them. The same applies if they used the employer’s know-how, information or tools to create it. Put an IP clause in every employment contract anyway.

Contractors

Article 28 also attributes a work made “in favour of another Person” to that person unless agreed otherwise in writing. Do not rely on this default. An offshore developer’s own law may give a different answer. Every development contract should include a written assignment that meets Article 9 and a list of any open-source components.

Moral rights and registration

Moral rights, such as the right to be named as author, stay with the author and cannot be assigned (Article 5). MoET registers intellectual works for AED 50 per author or AED 200 per company, with an average time of 3 working days. Its page does not say how source code is kept confidential, so ask before you upload proprietary code.

Government contracts and the ICV certificate

The ICV certificate is issued through MoIAT’s ICV platform by a certifying body that MoIAT has authorised. It scores what you spend on local goods and services, your investment, and your hiring and development of Emiratis. MoIAT’s programme page lists 31 local and federal government entities and major national companies as participants, and says certified suppliers gain advantages when tenders are awarded. When ICV was applied to federal procurement in December 2021, MoIAT announced that federal suppliers would be asked to submit the certificate for tenders in its scope, with a 25% weighting in bid evaluation. Each tender sets its own criteria, so read the evaluation section of every request for proposals.

The Ministry of Finance’s Federal Supplier Register accepts domestic, free zone, foreign and freelancer suppliers. It charges no fee and takes 30 working days, and asks for a trade licence, a VAT certificate and the owner’s passport. Dubai government tenders run through eSupply, the procurement portal for about 40 Dubai government entities. A free zone licence can therefore register. Dubai’s Media Office also presented the Free Zone Mainland Operating Permit as opening government tenders to free zone firms that previously went only to mainland-licensed entities. Even so, the tender terms and a prime contractor’s ICV calculation may still favour a mainland entity.

How do you set up a software company, step by step?

What does it cost? Official government fees only

These fees are published by the authority itself, checked 3 October 2026. Zone packages, office rent and visa costs are in each zone’s guide. Fees charged by certifying bodies, auditors and agents are commercial fees, not government fees.

For a full quote covering the licence, visas and PRO work, see our business setup service in Dubai.

Visas and hiring developers

The number of visas you can get usually depends on the office you take, and each zone guide gives its own figures. Free zone visas are processed through the zone, and mainland work permits go through the Ministry of Human Resources and Emiratisation (MOHRE). Founders should decide early whether they will hold an investor, partner or employee visa. Our investor, partner and manager visa guide explains the difference. Salaries and training costs for Emirati staff also raise your ICV score.

VAT and corporate tax for software companies

VAT registration is mandatory once taxable supplies and imports exceed AED 375,000, and voluntary from AED 187,500. Every company, including free zone companies, registers for corporate tax. Our corporate tax registration guide covers the deadlines. The point that catches tech companies is how narrow the free zone 0% rate is:

• Software and IT services are not Qualifying Activities under Ministerial Decision 229 of 2025, which replaced Ministerial Decision 265 of 2023. Services to customers outside the free zones, whether abroad or on the mainland, are therefore non-qualifying revenue. Income from a free zone customer that is the beneficial recipient can qualify.
• Sales to individuals are an Excluded Activity, so a consumer app’s revenue does not qualify.
• The de minimis limit is the lower of 5% of revenue or AED 5 million. If you exceed it, you lose Qualifying Free Zone Person status from the start of that tax period and for the next four.
• Copyrighted software is the exception worth planning for. Income from “Qualifying Intellectual Property”, which includes copyrighted software, can qualify under a nexus formula that links your own research and development spending to that income. You must keep records proving ownership, spending and the link between them, and you should take tax advice.
• Qualifying status has costs. A Qualifying Free Zone Person does not get the 0% band on the first AED 375,000 of other taxable income, cannot claim Small Business Relief, and must keep audited accounts. Income from a mainland branch is taxed at the standard rate.

Small Business Relief applies where revenue is AED 3 million or less. In August 2026 the Ministry of Finance extended it to tax periods ending on or before 31 December 2029 (Ministerial Decision 131 of 2026). For a small software company that sells mostly outside the free zones, this route can work better than chasing qualifying status.

What data protection rules apply to software products?

Federal Decree-Law 45 of 2021 applies to controllers and processors in the UAE, and to those abroad that process the data of people in the UAE. It does not apply to companies in free zones that have their own data protection legislation (in practice DIFC and ADGM), or to health and banking data covered by their own laws. Data can be transferred abroad in listed cases, for example under a contract with equivalent safeguards, with explicit consent, or to perform a contract with the data subject. Detailed rules were left to Executive Regulations, followed by a six-month window to comply. Public sources disagree on whether those regulations are in force, so check the UAE Data Office’s current position.

Common mistakes that delay or block software and IT companies

• Licence activities that do not match invoices. Typical examples are reselling hardware, supplying telecom services or handling payments under a pure software licence.
• No written IP assignment from founders or offshore developers, which usually comes to light during a funding round.
• Assuming “free zone” means “0% tax” without checking the revenue mix.
• Serving mainland Dubai clients without the DET licence or permit required by Resolution 11 of 2025.
• Bidding with group accounts when ICV now needs stand-alone audited statements for the bidding entity.

Questions people ask