Free zone vs mainland Dubai - which setup fits your business

The question behind most Dubai setups is simple: who are your customers, and where are they? A mainland company is licensed by the Dubai Department of Economy and Tourism (DET) and can work across the whole UAE. A free zone company is licensed by the zone's own authority and is designed around the zone, international trade and lower entry costs.

The gap has narrowed. Since the 2021 company law change, most mainland activities allow 100% foreign ownership, and since 2025 Dubai has had a formal route for free zone companies to work on the mainland. The table below shows what is still different.

Prices are typical market ranges for October 2026, not quotes.

Mainland and free zone side by side

Quick rule: Choose mainland if most of your revenue comes from UAE customers, shops, clients who want a mainland licence, or if you want to sell without extra permits. Choose a free zone if your clients are mostly abroad, you work online, or you want a lower licence fee and a flexi desk. If you are split, price both before deciding.

Can a free zone company work on the Dubai mainland?

Yes, within limits. Dubai Executive Council Resolution No. 11 of 2025 lets free zone companies licensed in Dubai operate on the mainland through DET, either with a branch licence (valid one year, renewable) or with an activity permit. Companies must keep separate financial records for the mainland activity.

In October 2025 Dubai launched a Free Zone Mainland Operating Permit: valid six months, AED 5,000 per period, open to free zone companies holding a Dubai Unified Licence and applied for online. The first phase covers non-regulated activities such as technology, consultancy, design, professional services and trading. DET states that mainland revenue earned this way is subject to 9% corporate tax.

• Free zone companies from other emirates need licences from that emirate's authorities
• Regulated activities may need approval from their regulator as well
• Check with DET that your activity is on the eligible list before you rely on this route

How much does mainland vs free zone cost?

On licence fees alone, free zones typically start lower: AED 6,500–15,000 against AED 10,500–18,000 on the mainland. The bigger difference is usually the office. A mainland licence needs a real, Ejari-registered office, typically AED 3,000–12,000 a year for a business centre office, while a free zone flexi desk typically costs AED 0–3,000 and is often part of the package.

Residence visas cost about the same either way, typically AED 3,400–6,500 each. Ask for year-one and year-two prices in writing.

Free zone vs mainland Dubai - which activities suit a mainland licence?

Businesses with a UAE customer base usually find the mainland simpler: retail and food outlets, contractors, agencies serving local clients, and companies that tender for local work. A free zone usually suits consultants, online businesses, holding structures and exporters whose customers are overseas.

• Mainland fits storefronts, local contracts and direct UAE sales
• Free zones fit remote consultants, e-commerce exporters and international trading
• Logistics and re-export businesses benefit from the 0% duty inside a zone

Do mainland and free zone companies pay different tax?

This is general information, not tax advice. UAE Corporate Tax applies at 9% on taxable income above AED 375,000. A free zone company can benefit from a 0% rate on qualifying income only if it meets the Federal Tax Authority's conditions, including adequate substance, and every free zone person must still register. Profits from mainland activity are taxed at 9%. Speak to a tax adviser before choosing a structure for tax reasons.

How to choose between mainland and free zone

1. 1

   List where your revenue will come from

   UAE customers, overseas customers, or both, and in what split.

2. 2

   Check your activity

   Some activities are restricted for foreign owners or need regulator approval wherever you set up.

3. 3

   Price the office, not just the licence

   Ejari-registered office on the mainland against a flexi desk or office in a zone.

4. 4

   Ask about the route to the other market

   A free zone company that wants UAE clients needs a distributor, branch or DET permit; a mainland company that wants duty-free storage needs a zone warehouse.

5. 5

   Get an itemised quote for both

   Every fee on its own line, for year one and year two.

Things to weigh up

• A free zone licence that later needs a mainland branch can cost more in total than starting on the mainland
• Zone rules differ, so a point that is true for IFZA may not be true for another zone
• Eligible activities for the Dubai free zone mainland routes can change; confirm them with DET
• Ownership limits for strategic sectors apply in both jurisdictions