Setting up a company in a UAE free zone can be a smooth and rewarding process—but only if you know what to watch out for. While the UAE is a business-friendly country with well-regulated free zones, the rising demand for quick company formation has opened the door to shady agents and misleading business setup services.
In this article, we’ll walk you through:
- Common types of business setup scams in UAE free zones
- Real stories from entrepreneurs who were misled
- How to spot red flags before you pay
- Tips to safely register your company and protect your investment
1. Scam 1: “Too Good to Be True” Packages
The Scam:
You see ads promising full company setup with residency, license, and bank account—all for AED 4,000 or less. These agents often use terms like “all-inclusive” or “government-approved.” But once you pay, the hidden costs begin.
Real Story:
Priya, an online coach from India, paid AED 3,800 to a so-called agent in Dubai. He promised a license and residency. What she got was a “freelancer permit” from a zone that didn’t issue visas. She couldn’t open a bank account and had to start over, losing both money and time.
What to Watch:
- Verify which free zone is being used. Some zones do not issue visas or support full business activities.
- Always request a detailed breakdown of costs.
- Check the license type: Is it a full business license or just a permit?
2. Scam 2: Fake Approvals and Licenses
The Scam:
Some rogue agents generate fake license documents or claim your company is registered when it’s not. They rely on your lack of access to UAE government portals to keep you in the dark.
Real Story:
Miguel, a freelancer from Spain, received a beautifully designed license via email. It had a fake signature and watermark. When he tried to apply for a visa using the license, it was flagged as invalid. He discovered the “agent” was using Photoshop and disappeared after payment.
What to Watch:
- Use the official UAE government portal to verify any license or registration.
- Never rely on just a PDF—ask for login access to the actual free zone portal where your company is registered.
- Confirm the free zone is officially recognized by the UAE government.
3. Scam 3: Visa Processing Lies
The Scam:
Agents claim they’ll get you a UAE residency visa “guaranteed in 24 hours,” even if you don’t meet the criteria. In many cases, they take your passport copy, collect fees, and vanish.
Real Story:
Jasmin from Germany paid AED 6,500 for a company setup and visa. Two weeks passed—no updates. The agent blamed government delays. Turns out, he never submitted her application. She had to file a police report.
What to Watch:
- There is no guaranteed visa in 24 hours unless your application is already approved and cleared for fast-track.
- Always ask for an application reference number you can verify independently.
- Never send your passport details or funds to individuals without contracts and verifiable credentials.
4. Scam 4: Unauthorized Resellers & “Middlemen”
The Scam:
Middlemen pose as representatives of popular free zones but are not officially affiliated. They’ll charge a fee, then outsource your application to someone else—often with errors or delays.
Real Story:
Ahmed, a tech consultant from Egypt, hired a consultant in a mall kiosk claiming to work with DMCC. He later found out the person was a freelancer with no link to DMCC. His business activity wasn’t registered properly, which affected his tax obligations.
What to Watch:
- Ask for the agent’s official authorization letter from the free zone they represent.
- Cross-check their office address with the free zone’s list of approved partners.
- Avoid agents operating out of coffee shops or co-working spaces unless verified.
5. Scam 5: No Support After Setup
The Scam:
The agent disappears once the license is issued, leaving you to navigate medicals, biometrics, Emirates ID, and banking alone—even if they promised “end-to-end support.”
Real Story:
David from South Africa was assured that all residency services were included. After his license was issued, the agent stopped responding. He spent another AED 3,000 to get help from another consultant to finish the residency.
What to Watch:
- Ask for a written scope of services, including visa processing, ID, medical, and banking.
- Ensure the package includes post-license support and mention of any extra government or courier fees.
- Read client testimonials and follow up with real references if possible.
How to Protect Yourself
Here are some actionable steps you can take to avoid getting scammed:
1. Do Your Research
- Look up the agent or agency online
- Check Google Reviews, Trustpilot, and LinkedIn presence
- Ask which free zone they’re registering your business under—and verify it independently
2. Use Government-Registered Channels
- Each free zone has an official website and list of licensed agents
- Confirm that the free zone supports your business activity and provides residency visas
3. Request Official Documentation
- Ask for a trade license application form, payment receipt, and login to the free zone dashboard
- Request a MoA (Memorandum of Association) and any visa application reference numbers
4. Never Pay in Cash or to Personal Accounts
- Always pay via company bank accounts
- Get an invoice with company name and TRN (Tax Registration Number)
5. Don’t Rush
- High-pressure tactics are a red flag
- If the deal sounds too good to be true—it probably is
What to Do If You’ve Been Scammed
- File a police complaint at the nearest Dubai Police station or use the online eCrime portal
- Contact the free zone authority directly and report the agent
- Alert the UAE Ministry of Economy and the Department of Economic Development
- Keep a record of all communications, receipts, and IDs
- Consider hiring a legal consultant to recover funds or lodge formal complaints
Final Thoughts
Dubai remains one of the most exciting and opportunity-rich environments for entrepreneurs. But where opportunity grows, so do opportunists. If you’re planning to set up a business in a UAE free zone, take your time, do your homework, and work only with verified partners.
A legitimate business setup may cost a little more, but it will save you from major losses and legal trouble down the road.