How to Start a Web3 Business in Innovation City (RAK DAO Rebrand)

Key Fact: The Innovation City, previously known as RAK DAO, in the Web3 free zone of Ras Al Khaimah, rebranded in 2025 to cover AI, digital assets, and next-generation technology, beginning with licenses as low as AED 6,600/year.

Introduction

The United Arab Emirates (UAE) is a global pioneer in digital transformation, next-generation technologies, and decentralisation. Ras Al Khaimah (RAK) gained worldwide recognition by establishing RAK DAO (Digital Assets Oasis), which was the first-ever free zone for virtual asset service providers and Web3 protocols.

Nevertheless, as part of a grand project of advanced technology development, RAK DAO has transformed into Innovation City. This guide covers all you need to know about creating companies, license packages, corporate tax, and substance under the Innovation City regime.

What Is Innovation City (Formerly RAK DAO)?

Formed as RAK DAO in 2023, the free zone provided a specific environment for Web3 initiatives without custody, DAOs, and tokenization systems.

RAK DAO (2023) ──► RAK Innovation City (2025/2026)

Focus: Web3 & DAOs ──► Focus: Web3, AI, Robotics, Gaming & HealthTech

The rebranded free zone has become more than just digital assets; now it focuses on Artificial Intelligence (AI), gaming, robotics, and digital healthtech. As opposed to free zones that try to change existing rules of commerce and apply them to tech businesses, Innovation City provides a native framework for them.

What Does the RAK DAO Rebrand to Innovation City Mean for Businesses?

The shift to Innovation City for existing licensees and future applicants includes the following structural modifications:

• Validity of Existing Licenses: The validity of licenses for business operations in RAK DAO remains legally valid until the end of their existing term. These licenses will be renewed every year.
• Corporate Documentation: Articles of Association, Memorandum of Association (MOA), and Certificate of Formation will be amended to carry the brand name of Innovation City.
• Package Upgrades: Existing organizations can upgrade themselves with the new workspace and visa packages provided by Innovation City.

Practical Note: It is recommended for existing organizations to check their license documents in relation to Innovation City or an authorized corporate service partner before executing structural changes.

Key Benefits of Setting Up a Business in Innovation City

Benefits of establishing a business in Innovation City include the following:

• 100% Foreign Ownership: Repatriation of capital and profits without the need for a local sponsor.
• Tailored Activity Codes: Natives activities including tokenomics, dApp development, artificial intelligence, and DAO governance.
• Remote Incorporation: Online company setup process without any physical presence in the UAE required.
• Cost-Efficient Packages: Cheaper startup rates compared to traditional UAE financial hubs.

Business Activities You Can Start in Innovation City

Founders can license a broad range of technology-driven operations:

• Web3 & Blockchain Software Infrastructure Development
• NFT Marketplaces & Minting Platforms
• DAO Governance, Tooling & Management Services
• Smart Contract Auditing & Advisory
• Decentralized Finance (DeFi) Protocols & Analytics
• Web3 Gaming Studios & Metaverse Economies
• Artificial Intelligence Development & Tech Consulting

Practical Note: Permitted activities will vary according to the licensing types. The regulated financial services (such as fiat-to-crypto exchange or custodial vault) need to obtain appropriate licenses.

Innovation City Business Setup Packages Explained

There are four well-defined business setup packages that are offered by Innovation City. These are:

Innovation City Business Setup Cost in the UAE

The calculation of the total cost of setting up the business in Innovation City involves the base package costs as well as the mandatory government administrative costs.

Estimated 1-Visa Setup Cost Breakdown

Below is a representation of the cost incurred when setting up a 1-Visa company in Innovation City:

Additional Visa Costs and Family Sponsorship in Innovation City

Knowing the difference between visa allocation and visa issuance will ensure that there are no surprises related to costs involved:

1. Visa Allocation: The quota offered by Innovation City that allows you to obtain residency visas via your corporate license.
2. Visa Processing & Passports: The cost of government processing involving an entry permit, health fitness test, Emirates ID typing, and residency stamping.
3. Family Sponsorship: Once a founder holds a valid UAE residency visa, they can sponsor spouse and dependent visas subject to standard income and housing requirements.

Step-by-Step Process to Set Up a Company in Innovation City

1. Select Business Activity: Select from the approved Web3, AI or technology activities.
2. Select Business Package: Decide on an Idea, Seed, Startup or Growth package.
3. Determine Legal Structure: Formulate a Free Zone Limited Liability Company (FZ-LLC) or Branch structure.
4. Submit Application & KYC: Submit passport copies and go through the required background check process.
5. Pay Applicable Fees: Pay the invoice raised by Innovation City.
6. Receive Business License: Obtain official Certificate of Formation and MOA.
7. Complete Post-License Setup: Open UAE corporate bank accounts and complete residency visa processing.

Documents Required to Register a Company in Innovation City

• Passport Copies: Clear color copies for all individual shareholders and directors.
• Proof of Address: Utility bill or bank statement issued within the last 3 months.
• Business Plan: Concise summary outlining operational goals and project scope.
• Compliance Questionnaire: Standard KYC documentation for digital asset or Web3 activities.

Existing RAK DAO Companies: License Migration and Package Upgrades

Existing companies registered before the rebrand should execute the following checklist during their renewal cycle:

• Verify current corporate license expiry dates.
• Confirm registered shareholder and director records with the authority.
• Request updated MOA documents reflecting Innovation City naming conventions.
• Review current workspace needs to evaluate upgrading from Seed to Startup/Growth packages.

Corporate Tax and Substance Requirements

In accordance with the UAE Federal Corporate Tax regime (UAE Federal Law No. 47 of 2022), a free zone business can be eligible for a 0% tax rate on qualifying income provided that it is recognized as a Qualifying Free Zone Person (QFZP).

Important Compliance Point: Being registered in Innovation City does not automatically make a company eligible for a 0% corporate tax rate. Economic substance must be ensured, together with the fulfillment of CIGA in the UAE.

Innovation City vs. Other UAE Free Zones

Frequently Asked Questions (FAQs)

What is Innovation City, formerly known as RAK DAO?

Innovation City is a special free zone in Ras Al Khaimah for Web3, digital assets, AI, games, and other advanced technology startups, previously known as RAK DAO.

Why was RAK DAO rebranded as Innovation City?

This name change is based on the new mandate of the platform, which also includes artificial intelligence, robotics, and digital health technologies in addition to Web3 and blockchain technologies.

Do existing RAK DAO companies need to change their licenses immediately?

No. All existing licenses will continue to be valid until their expiration date and then automatically be updated to Innovation City licenses.

How much does it cost to set up a company in Innovation City?

The starting package fees for Incorporation in Innovation City are AED 6,600 per year for 0 Visa Idea Package and AED 13,200 per year for the 1 Visa Seed Package.

Which Web3 activities can be licensed in Innovation City?

There can be licensing of dApp development, Smart Contract Auditing, DAO Management, NFT technology, and Non-Custodial Web3 solutions.

Conclusion

Rebranding of RAK DAO to Innovation City underlines the leadership of Ras Al Khaimah as an innovative global hub for Web3, AI, and digital assets startups. With the right package and compliance with UAE taxes and substance laws, founders of tech businesses can scale their operations easily.

References

1. Official UAE Government Portal – Free Zones Overview
2. UAE Federal Tax Authority – Corporate Tax Guidance
3. Ras Al Khaimah Free Zone Authority Guidelines