UAE Free Zone & Compliance Glossary

Free Zone

Designated economic area offering tax incentives, 100% foreign ownership, and simplified business regulations.

Designated Free Zone

Specific free zones treated as outside UAE VAT territory under defined conditions.

Mainland Company

Business licensed by UAE Department of Economic Development, permitted to operate anywhere in the UAE.

Offshore Company

Entity registered in UAE for international business activities without physical operations within the country.

Free Zone Authority

Regulatory body governing licensing, compliance, and operations within a specific UAE free zone.

Business License

Official authorization allowing a company to conduct specific commercial activities legally.

Commercial License

License permitting trading, import, export, and distribution activities.

Professional License

License issued for service-based businesses and professional consultancies.

Industrial License

License allowing manufacturing, processing, or industrial activities.

Branch Office

Extension of a foreign or local company operating under parent company control.

Subsidiary

Legally separate entity owned or controlled by a parent company.

Shareholder

Individual or entity holding ownership shares in a company.

Ultimate Beneficial Owner (UBO)

Natural person who ultimately owns or controls a company.

UBO Declaration

Mandatory disclosure of individuals exercising ultimate control over an entity.

Economic Substance Regulations (ESR)

Rules ensuring entities conduct genuine economic activities within the UAE.

ESR Notification

Annual filing declaring whether an entity undertakes relevant activities.

ESR Report

Detailed submission demonstrating adequate economic substance.

Relevant Activity

Business activity subject to ESR, such as distribution, headquarters, or holding company services.

Core Income Generating Activities (CIGA)

Key operational activities generating income under ESR rules.

Adequate Substance

Requirement for sufficient staff, premises, and expenditure within the UAE.

Corporate Tax

Federal tax imposed on business profits in the UAE.

Corporate Tax Registration

Mandatory enrollment with Federal Tax Authority for corporate tax purposes.

Qualifying Free Zone Person

Free zone entity eligible for 0% corporate tax on qualifying income.

Qualifying Income

Income eligible for corporate tax benefits under Free Zone rules.

Non-Qualifying Income

Income subject to standard corporate tax rate.

Transfer Pricing

Pricing of transactions between related entities following arm’s length principle.

Transfer Pricing Documentation

Records supporting compliance with UAE transfer pricing regulations.

Related Party

Entity or individual having control or significant influence over another entity.

Arm’s Length Principle

Standard ensuring related-party transactions reflect market conditions.

Country-by-Country Reporting

Transfer pricing disclosure for multinational groups meeting threshold requirements.

VAT Registration

Process of enrolling with FTA to collect and remit VAT.

VAT Deregistration

Cancellation of VAT registration upon cessation of taxable activities.

VAT Compliance

Adherence to VAT laws, filing requirements, and record maintenance.

Designated Zone VAT

Special VAT treatment applicable to designated free zones.

Customs Duty

Tax levied on imported goods entering the UAE.

Import Code

Registration required to import goods into the UAE.

Customs Clearance

Process of obtaining approval for imported or exported goods.

GCC Customs Union

Unified customs framework across GCC member states.

Excise Tax

Tax imposed on specific goods harmful to health or environment.

Tax Residency Certificate

Official document confirming tax residency status in the UAE.

Audit

Independent examination of financial statements to ensure accuracy and compliance.

Statutory Audit

Legally mandated audit required by regulators or free zone authorities.

Internal Audit

Legally mandated audit required by regulators or free zone authorities.

Compliance Audit

Assessment of adherence to laws, regulations, and internal policies.

Audit Report

Formal opinion issued by auditors on financial statements.

Financial Statements

Structured financial records including balance sheet and profit and loss statement.

IFRS

International Financial Reporting Standards adopted in the UAE.

Accounting Records

Financial documents supporting business transactions and compliance.

Bookkeeping

Systematic recording of financial transactions.

Annual Filing

Mandatory yearly submission of financial or regulatory information.

Trade Name

Registered name under which a business operates.

Memorandum of Association (MOA)

Legal document defining company objectives and ownership structure.

Articles of Association (AOA)

Document outlining company management and governance rules.

Share Capital

Funds invested by shareholders in a company.

Paid-Up Capital

Portion of share capital actually contributed by shareholders.

Business Activities

Approved operations permitted under a company license.

Office Lease

Rental agreement for physical premises within a free zone.

Flexi Desk

Shared workspace option fulfilling minimum office requirements.

Virtual Office

Registered address service without dedicated physical workspace.

Establishment Card

Immigration document allowing a company to sponsor employees.

Immigration Compliance

Adherence to UAE visa and labor regulations.

Employment Visa

Residence visa issued to foreign employees.

Labour Contract

Legal agreement defining employment terms and conditions.

Wage Protection System (WPS)

Electronic salary transfer system ensuring timely wage payments.

UAE Labour Law

Federal legislation governing employment relationships.

Compliance Calendar

Schedule tracking regulatory filing deadlines.

Regulatory Authority

Government body overseeing compliance within its jurisdiction.

Company Renewal

Annual process of renewing business licenses and registrations.

License Amendment

Modification of business activities or company details.

Company Liquidation

Formal closure of a business entity following legal procedures.

Liquidator

Authorized professional managing company liquidation process.

Due Diligence

Comprehensive review of legal, financial, and operational risks.

KYC (Know Your Customer)

Process of verifying client identity to prevent financial crimes.

AML (Anti-Money Laundering)

Regulations preventing money laundering and terrorism financing.

Compliance Framework

Structured system ensuring regulatory obligations are met.

Risk Assessment

Identification and evaluation of compliance and operational risks.

Corporate Governance

Framework of rules directing and controlling a company.

Board Resolution

Formal decision approved by company directors.

Power of Attorney

Legal authorization allowing representation on behalf of a company.

Legal Compliance

Adherence to applicable laws and regulatory requirements.

Regulatory Filing

Mandatory submission of information to authorities.

Business Restructuring

Reorganization of company operations or ownership.

Mergers and Acquisitions

Process of combining or purchasing business entities.

Compliance Outsourcing

Delegating regulatory compliance tasks to professionals.

Tax Compliance

Meeting tax filing, payment, and reporting obligations.

Free Zone Compliance

Adherence to free zone authority regulations.

Corporate Services Provider

Firm offering business setup, compliance, and advisory services.

Professional Services Firm

Company providing audit, tax, and advisory services.

Compliance Monitoring

Ongoing review ensuring continuous regulatory adherence.

Regulatory Penalty

Fine imposed for non-compliance with laws or regulations.

Business Continuity

Planning to ensure uninterrupted operations during disruptions.

Regulatory Inspection

Authority-led review of company compliance status.

Compliance Certification

Official confirmation of regulatory compliance.

Legal Advisory

Professional guidance on legal and regulatory matters.

Tax Advisory

Strategic advice on tax planning and compliance.

Audit Readiness

Preparation of records and systems for regulatory audits.

Corporate Secretarial Services

Administrative services ensuring statutory compliance and corporate governance.

Regulatory Risk

Exposure arising from non-compliance with laws.

Compliance Consulting UAE

Professional compliance advisory services in the UAE.

Free Zone Advisory UAE

Specialized guidance for free zone business setup and compliance.