Key Takeaways
- Most founders can decide with six questions. They cover your customers, whether the activity is regulated, walk-in trade, visas and office space, the bank, and whether a 0% Corporate Tax rate is realistic.
- A free zone company can sell to Dubai mainland customers through a branch, a dual-licence branch (AED 10,000 a year) or a permit (AED 5,000). This only works in Dubai.
- Free zone companies don't get 0% Corporate Tax by default. It goes to a Qualifying Free Zone Person (QFZP), a free zone company that meets the conditions, and only on qualifying income. Too much other revenue costs the status for five tax periods.
- A mainland limited liability company (LLC) must appoint an auditor. The law sets no fixed minimum capital, and foreigners can own 100% except in seven strategic activity groups.
- Two u.ae pages, dated 16 July and 6 April 2026, disagree on whether a business fully owned by non-GCC nationals needs a local service agent. The Department of Economy and Tourism (DET, formerly DED) can tell you which one applies.
You'll often hear that free zones are cheaper. That may be true, but price is the last thing to look at when you weigh up a free zone vs the Dubai mainland. Start with where your customers are. Then think about how a bank will look at your company.
A quick word on the terms. Mainland refers to anywhere in the emirate that's outside a free zone. A free zone is an area whose own authority licenses companies and sets the rules they work under. The questions below, taken in order, settle most cases.
Six questions to answer before you compare prices
Go through them one at a time and write down each answer. Only then look at what the licences cost.
- Who pays you? Customers on the Dubai mainland, or in government, point to a mainland licence. The alternative is a free zone licence plus one of the three Dubai options covered further down. Customers abroad or inside the zone work with either licence.
- Is your activity regulated, meaning another government body has to approve it? In Dubai you can usually get the licence straight away and the permits afterwards. The exception is a list of activities set by the Chairman of the Executive Council. For those, the permit comes first (Executive Council Resolution 5 of 2024, Article 3). When you apply, you sign an undertaking, and selling before a required permit arrives breaks it. Check with DET whether your activity is on that list. Any free zone you're considering should explain how it handles permits for your activity.
- Do customers come to you? A shop or a restaurant serves the public from its premises. A free zone licence only covers activity under the zone's own rules. To trade on the mainland, a free zone company needs one of the Dubai options or a mainland licence.
- How many visas, and what kind of office? Mainland companies get their work-permit quota from the Ministry of Human Resources and Emiratisation (MOHRE). Before it sets one, the ministry needs a valid Ta'qeem report, which is MOHRE's check of your business. MOHRE said in February 2026 that it now issues quotas instantly. Free zones set their own allowance, based on your package or the space you rent.
- What will the bank make of you? Before a bank even reads the licence, it looks at how your activity is worded, who owns the company (including any companies in the chain) and where the money comes from.
- Can you really expect 0% Corporate Tax? Only a Qualifying Free Zone Person gets 0%, and only on qualifying income. Ordinary services to mainland customers don't qualify.
The difference between free zone and mainland, point by point
Use this table to check each point against your own plans. It reflects the rules as of October 2026.
| Question | Mainland | Free zone |
|---|---|---|
| Customers | The Dubai mainland. Other emirates need their own licences. | Customers in the zone and abroad. Dubai mainland customers through a branch, a branch run from the free zone office (a dual licence) at AED 10,000 a year, or a permit at AED 5,000. |
| Ownership | Foreigners can own 100%, except in seven strategic activity groups (Cabinet Resolution 55 of 2021). The government portal u.ae contradicts itself here. Its mainland guide (16 July 2026) says businesses fully owned by non-GCC nationals need a local service agent, a UAE national who handles government paperwork for a fee but owns no shares. Its foreign ownership page (6 April 2026) says that requirement was dropped for most activities. Get DET's answer in writing. | Each zone sets its own rules. Jafza, for example, says it has no foreign ownership restrictions. |
| Visas | MOHRE sets the quota. You need a valid Ta'qeem report, and there's no published formula that links visas to office size. | The zone sets the allowance. DMCC's Jump Start package is eligible for three visas, with one included. Basic Biz is eligible for one. |
| Office | Most licences need a leased address registered with Ejari, Dubai's official register of tenancy contracts. Reports say a virtual address is accepted in the first year, but only for the instant licence. | A flexi desk, a shared desk rather than a private office, can be enough. Meydan's standard licence includes one. |
| Audit | Every LLC needs an auditor (Commercial Companies Law, Arts 27 and 102, 2021 text; the wording may have changed with Federal Decree-Law 20 of 2025). | The zone's rules apply. A Qualifying Free Zone Person needs audited statements. |
| Tax | 0% on taxable income up to AED 375,000 and 9% above that (Cabinet Decision 116 of 2022). | 0% only on the qualifying income of a Qualifying Free Zone Person. Everything else falls into the same 0% and 9% bands. |
| Bank | The same checks on activity wording, owners and funds. | The same checks. On 25 December 2025 the Dubai Free Zones Council acknowledged that companies were having trouble opening accounts. |
The point about a virtual address in the first year comes from press reports in March 2025 that quote DET. Your adviser, or DET itself, can confirm the rule for your activity.
When a mainland licence makes sense
Pick the mainland when your customers, government buyers or walk-in trade are on the Dubai mainland. A trade licence is the document that lets your company do business, and on the Dubai mainland DET issues it. You apply on dubai.ae in three stages: initial approval, reserving a trade name, then the licence itself (dubai.ae, October 2026). The licence types are industrial, commercial, professional, e-trader and dual.
Most founders set up an LLC. It can have a single owner, or anywhere from two to fifty partners (Federal Decree-Law 32 of 2021, Article 71). For more on how this company form works, see the guide to the mainland company setup option. The licence itself is covered in the guide to the Dubai trade licence.
DET sets the fees, and they depend on the activity. For licences that need premises, the Invest in Dubai cost calculator adds about 5% of the annual rent to the licence fee, according to a Gulf News report from September 2026. Get an itemised quote of government fees and set it against the lease before you decide.
When a free zone licence makes sense
A free zone suits a business that sells abroad or to other zone companies, needs one or two visas and can work from a flexi desk. Zones publish package prices for exactly that kind of company. Meydan's standard licence, for example, starts at AED 12,500 a year (package price on Meydan's site, as of October 2026).
Those package prices leave out visas, medical tests and the Emirates ID, the identity card every resident has to carry. To compare zones fairly, list every fee.
A common problem: a founder picks a free zone because it's cheaper, then finds the customers are on the mainland. Dubai's Resolution 11 of 2025 lets a free zone company work outside its zone only through one of the three options in Article 4. Companies already trading onshore, meaning on the mainland, had one year from the date the resolution took effect to comply. The Director General can grant one extension (Article 13).
Each option has its own cost. The Dubai Media Office says 9% Corporate Tax applies to the revenue linked to the permit, and that non-qualifying revenue counts toward the Qualifying Free Zone Person limit. To see how two Dubai zones differ on company forms, prices and visas, compare the profiles of Jafza and IFZA. The overview of free zones in the UAE covers the others.
Offshore, DIFC and ADGM as alternatives
Jafza, RAK ICC (the Ras Al Khaimah International Corporate Centre) and Ajman Free Zone also register offshore companies. These are a different product from a free zone trading licence. An offshore company needs a licence of its own before it can trade in the UAE.
The DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market) offer another structure, the special purpose vehicle, a company used mainly to hold assets or shares. Registering a DIFC Prescribed Company costs USD 100, plus USD 1,000 a year (DIFC Table of Fees, Rev. 16, 30 July 2026). An ADGM special purpose vehicle costs USD 1,900 to set up (ADGM, 2025 schedule). ADGM's own page says you can't use one to run an operating business or to hire staff.
What switching later costs
Say your free zone company later wins customers on the mainland. You can add one of the Dubai options, or you can move the company. Adding means the branch or the permit. The Free Zone Mainland Operating Permit has been available since 8 October 2025. It costs AED 5,000 for six months and renews at the same fee. Companies with a Dubai Unified Licence can apply, starting with non-regulated activities (Dubai Media Office).
Moving the company is the other choice. Federal Decree-Law 20 of 2025, issued in October 2025, adds an article on re-domiciliation, which means moving a company's registration to another authority. A company may move its register entry between emirates, and between free zones and the mainland, without being liquidated. How this works in practice depends on implementing rules (Ministry of Economy and Tourism, January 2026). Have your adviser confirm that those rules cover your case before you plan around this.
Closing or transferring a company comes with fees that depend on the authority and the case. The licensing authority can quote the cancellation fee. Your bank can tell you whether the account moves with the company.
Three worked examples
A consultant with customers abroad
Picture a consultant working alone, with one visa and clients outside the UAE. A free zone with a flexi desk fits. Consulting isn't on the list of qualifying activities in Ministerial Decision 229 of 2025, though, so the company pays tax in the standard 0% and 9% bands. If a Dubai client turns up, the six-month permit at AED 5,000 is the first option to price. It's worth having a corporate tax consultant confirm the tax position before you send the first invoice.
An importer selling to UAE retailers
This business has mainland customers, stock and a warehouse, and its licence has to cover that trade. A mainland licence does so directly. A free zone such as Jafza also works, once a mainland option is added.
Find out whether the free zone is on the Federal Tax Authority (FTA) list of VAT Designated Zones, and what its lease and customs registration require. Being on that list doesn't by itself get you the special VAT treatment (FTA VAT guide, July 2018).
An online seller on a marketplace
Noon wants a valid trade licence with a sales, trading, manufacturing or distribution activity, plus a bank account in the company's name (Noon Seller Help Center, 2026). Mainland and free zone licences can both show that wording. The choice then comes down to the other five questions.
Two checks matter here. The activity on the licence should match the marketplace category, and the name on the bank account should match the licence.
Before you choose, put your answers to the six questions on one page and back each one with a document. That means the customer contract, the activity code, the lease or desk quote, the bank's reply and the tax computation. Then have the licensing authority confirm anything that depends on its rules.
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- Free zone company Dubai, choosing a zone, visas and tax
- Business setup in mainland UAE, LLC rules, ownership and cost
- UAE free zone list by emirate, with authorities and websites
- Company formation cost in Dubai and the UAE, fee by fee
- Trade license Dubai and the UAE, types and how to apply
- JAFZA trade license, company forms and the offshore option
- IFZA FZCO company setup and what the zone publishes
- DIFC registration, fees by structure and where DFSA decides
