Dubai Free Zone vs Mainland: One Question Decides It

Agents present this as a strategic decision because complexity is billable. Get it wrong one way and you pay double the licence fee you needed. Get it wrong the other way and you own a company that cannot legally invoice the customers you built it for. The Dubai free zone vs mainland choice is mostly one question, and everything below is what follows from your answer.

The short answer

Prices checked August 2026.

Free zone if your customers are outside the UAE. Mainland if they are inside it. The rest of this page is why, and what each one really costs once the licence fee stops being the only number on the invoice.

The question that actually decides it

A free zone company is licensed by its zone, not by the emirate. It can trade with the rest of the world and with companies in other free zones without restriction. What it cannot do is walk into the UAE domestic market and start invoicing, because that market sits outside the boundary its licence draws.

A mainland licence, issued in Dubai by the Department of Economy and Tourism, carries no such boundary. It is the licence that lets you open a shop, sign with a UAE corporate client, take a government contract, or run a restaurant in Jumeirah.

So the decision is not really about tax, ownership or prestige. It is about whether the people paying your invoices are in Berlin and Toronto or in Deira and Abu Dhabi.

If your clients are abroad, the mainland premium buys you access to a market you will never sell into. If your clients are here, a free zone licence buys you a company that has to ask permission to serve them. Every other difference below, including the reason one costs roughly half the other, follows from this single line.

What "cannot sell in the UAE" actually costs now

The mainland restriction used to be a wall with no posted price. The routes across it were a distributor agreement negotiated privately or a second company set up from scratch. Dubai now publishes a price.

Under Executive Council Resolution No. (11) of 2025, a free zone establishment may conduct its activities outside its free zone and inside the Emirate of Dubai, provided it holds the right permission from the Department of Economy and Tourism. There are two of them. A branch licence runs one year, renewable, at AED 10,000 a year. A temporary permit covers specific activities for a period not exceeding six months, at AED 5,000.

Three conditions matter before you treat that as a solved problem.

The resolution does not apply to financial establishments licensed in the Dubai International Financial Centre, so a DIFC entity is not on this route. The establishment must keep financial records for the activities conducted outside the free zone separate from the records it keeps for activity inside it, which means two sets of books and an accountant who understands why. And DET publishes the list of eligible activities, so whether your particular licence category is covered is a question with a specific answer rather than a general one.

The scope is also emirate-level. This is Dubai's own framework, governing activity within the Emirate of Dubai. A licence from a Sharjah or Ras Al Khaimah zone sits outside it, which is one more reason the zone you pick is not an interchangeable detail.

Priced honestly, a free zone licence plus a branch licence lands in the same territory as a modest mainland licence, without the mainland's premises obligation. Price that route before you assume you need a second company.

What a free zone licence costs

The licence is the smallest number in this decision, and it is the only one most agents will quote you.

Across the Dubai formation agents we price, headline licence fees run from about AED 5,750 for a freelance permit at SHAMS in Sharjah or at RAKEZ in Ras Al Khaimah, to roughly AED 12,500 at Meydan and AED 12,900 at IFZA, both of which carry a Dubai address. DIFC runs to AED 100,000 and beyond once offices and multiple visas are included, though its Innovation Hub licence is subsidised to around AED 5,500 to 6,000 for a first term.

That spread is not a quality ladder. It is mostly an address. The AED 5,750 permit and the AED 12,900 licence buy a similar legal entity with a similar activity list, and the difference is which emirate appears on your trade licence and how a bank or a client reads it.

Two things the headline fee does not include, on any zone, at any price. It does not include your residency, and it does not include the annual renewal, which behaves very differently from the way software pricing has trained everyone to expect.

The licence is not the bill, the visas are

Residency is where free zone pricing stops matching the brochure.

Before your company can issue a single visa it needs an establishment card, at roughly AED 1,500, and an immigration card, at roughly AED 1,500. Those are one-off, per company, and you pay them whether you are sponsoring one person or five. Then each residence visa itself runs roughly AED 4,000 to 5,000 per person, plus the medical fitness test and the Emirates ID.

Run the arithmetic on the cheapest licence in the market. A zero-visa permit at AED 5,750 is AED 5,750. The same permit with one person on residency is closer to AED 12,000 once the two cards, the visa, the medical and the ID are in. The headline price roughly doubles at the first human being.

Renewal is the second surprise. A formation package is not a discounted first year followed by a small maintenance fee. The licence renews at close to what it cost, the cards renew on their own cycle, and the visa renews per person. Over three years the total cost of holding a company is the number that decides whether Dubai was affordable, and it is roughly three times the number you were quoted.

This is also why the visa question should be answered before the licence question. If nobody needs UAE residency, you are buying a licence and the cheap zones are genuinely cheap. If somebody does, you are buying residency and the company is the mechanism that delivers it, which is a different purchase with a different budget.

What a mainland licence costs, and why the gap exists

A mainland licence starts around AED 12,000, and a realistic first year commonly lands between AED 12,000 and AED 50,000 depending on the activity and the office.

Foreign ownership is no longer the reason to avoid it. The old requirement for a 51% Emirati partner was lifted across most commercial and industrial activities, so a mainland company can be wholly foreign owned. A short list of strategic activities still carries restrictions, which is worth checking against your specific licence category rather than assuming in either direction.

The premises requirement is the reason for the gap. A mainland licence generally expects real leased space with a registered tenancy contract, and your visa quota scales with the area you lease rather than being fixed by a package. A free zone will sell you a flexi-desk and a quota of three to six visas and consider the matter closed.

That one difference explains most of the cost gap, and it explains why the gap narrows as you grow. A solo consultant comparing AED 5,750 against AED 12,000 is looking at a real difference. A six-person firm that needs an office either way is looking at two similar bills, one of which comes with the domestic market attached.

Choose the free zone before you choose the agent

There are more than forty free zones in the UAE, and most agents hold commercial relationships with a handful of them. Ask an IFZA partner which zone suits your business and the answer will be IFZA. The recommendation is not dishonest, it is just structurally incapable of being neutral.

The zone, not the agent, decides your address, your permitted activity list, your visa quota, your renewal terms and how a bank reads your file. The agent decides how much you pay to do the paperwork. Those are two separate decisions and the industry sells them as one.

So do them in order. Pick the zone on its own merits, then get three quotes from three agents for that same zone and watch the price move. Same zone, same activity, same visa count. That is the only comparison that means anything, and it is the comparison the market is structured to prevent you making.

The contrast with jurisdictions that publish their own numbers is stark. A Delaware LLC has a filing fee and a flat $400 annual tax due on 1 June, both on a government website, and Hong Kong publishes its incorporation and business registration fees the same way. In Dubai you are negotiating, and an agent who will not publish a renewal fee has told you something before you have spoken to them.

Tax is not the argument for a free zone that it used to be

The UAE charges federal corporate tax at 9% on taxable profits above AED 375,000. That applies to a mainland company straightforwardly.

A free zone company can reach 0% on qualifying income as a qualifying free zone person, but that is a defined regime with conditions attached, not an automatic consequence of holding a free zone licence. Whether your income qualifies depends on what you actually do, who you do it with, and whether you stay inside the regime's limits on non-qualifying revenue. Selling into the mainland is the classic way to fall out of it, which is worth thinking about before you buy that branch licence.

Then there is the relief that runs the other way. Small Business Relief lets a resident business under the revenue test be treated as having derived no taxable income for the period. A qualifying free zone person cannot elect it.

Read that against the sales pitch. At small scale, a mainland company under the threshold and a free zone company on qualifying income can both land at nothing payable. The free zone's tax advantage is real at size and thin at the bottom, which is precisely the stage at which it is sold hardest. Anyone still describing a Dubai free zone as unconditionally tax free is quoting marketing from before the corporate tax regime existed, and that tells you what the rest of their advice is worth.

VAT registration is a separate obligation and it lands on both licence types once you cross the registration threshold. Being in a free zone is not an exemption from the VAT system.

What each licence asks of you

Setup speed favours free zones. A free zone licence with clean documents commonly issues within a few days to a couple of weeks, and the zones compete on this openly. Mainland takes longer because premises, tenancy registration and activity approvals sit in the critical path. Neither timeline includes the visa process, which starts after the licence exists.

Banking is the step that actually delays people. UAE banks underwrite the substance behind the company rather than the licence itself, and they ask what your business does, where your customers are and what your expected flows look like. A Dubai address, a real activity and a resident signatory all help. A zero-visa licence in a low-cost zone with no local footprint is the hardest version of this conversation, whichever zone issued it.

Customs treatment differs. Goods sitting in a free zone are handled as outside the customs territory in practice, which is the whole point of the zones for traders. Duty falls due when those goods enter the mainland, so the free zone advantage is real for re-export and neutral for domestic distribution.

Government and semi-government contracts are mainland territory. If public sector work is part of the plan rather than a maybe, that settles the question on its own regardless of what the cost comparison says.

Which one to pick

Mainland if you sell to UAE consumers or UAE companies, need a physical location customers walk into, want government contracts, or plan a team large enough that you would lease an office anyway.

Free zone if your customers are outside the UAE, you are one to five people, you want the licence issued this month, and a flexi-desk is genuinely all you need.

Free zone plus a DET branch licence if your business is mostly international but a slice of it is local. It is cheaper than a second company and it now has a price.

Neither, if you are not moving to the UAE. Which is the case more often than this market admits.

When Dubai is the wrong question

Dubai works when you are relocating. The company is the by-product of the residence visa, and the visa is what delivers nil personal income tax. That is a strong offer and it is worth the money if you are actually going.

If you are staying where you are, you are paying five figures a year for a structure whose main benefit requires you to live somewhere you do not live. An Estonian company costs EUR 265 to register and asks for no physical presence at all. Registering in Georgia puts a solo operator into a regime taxed on turnover rather than profit. A Singapore company gives you a real domestic market and published government fees in the same package. A BVI company does the holding job for assets that never touch a domestic market anywhere.

None of them give you residency, and none of them pretend to. That is the honest trade, and the reason Dubai and Estonia solve opposite problems rather than competing for the same buyer.

Key takeaways

• A free zone company cannot sell directly into the UAE domestic market and a mainland company can. That single fact decides most cases.
• Dubai now prices the workaround. A DET branch licence is AED 10,000 a year and a temporary permit is AED 5,000 for up to six months, with DIFC excluded and separate books required.
• Free zone licences run AED 5,750 to 12,900 and mainland starts around AED 12,000, mostly because mainland expects real leased premises.
• The visas are the bill, not the licence. Two one-off company cards at about AED 1,500 each plus AED 4,000 to 5,000 per person turn a AED 5,750 licence into roughly AED 12,000, and renewal lands near setup cost.
• Pick the zone first, then price three agents on that same zone. Agents recommend the zones they are paid by.
• Corporate tax is 9% above AED 375,000. Free zone 0% is conditional, and a qualifying free zone person cannot elect Small Business Relief.

Frequently asked questions

Can a free zone company sell inside the UAE?

Not without permission. It needs a DET branch licence, a temporary permit, or a mainland distributor to reach customers in the UAE market. Trading with customers outside the UAE, and with other free zone companies, is unrestricted.

What does it cost for a free zone company to trade on the Dubai mainland?

A branch licence costs AED 10,000 a year and is renewable annually. A temporary permit for specific activities costs AED 5,000 and runs for up to six months. Financial establishments licensed in DIFC are outside this framework entirely.

Do I still need an Emirati partner for a mainland company?

Not for most activities. Foreign ownership was liberalised across the majority of commercial and industrial mainland activities, so a mainland company can be wholly foreign owned. A short list of strategic activities still carries restrictions, so check your specific licence category.

Which Dubai free zone is cheapest?

SHAMS in Sharjah and RAKEZ in Ras Al Khaimah, at around AED 5,750 for a freelance permit. Both carry a non-Dubai address, which some banks and clients weigh differently from a Dubai one. Meydan and IFZA buy the Dubai address at roughly double.

How much does a Dubai residence visa actually cost?

Roughly AED 4,000 to 5,000 per person, plus an establishment card at about AED 1,500 and an immigration card at about AED 1,500, plus the medical test and Emirates ID. The two cards are one-off per company. The visa is per person and renews on its own cycle.

Is a Dubai free zone company really 0% tax?

Only on qualifying income, and only if the company meets the qualifying free zone person conditions. Corporate tax is 9% above AED 375,000 otherwise. Selling into the UAE mainland is a common way to generate income that does not qualify.

Do I need a physical office for a free zone company?

Usually not. A flexi-desk or co-working arrangement satisfies most zones and is normally bundled into the licence package. Mainland licences generally expect real leased premises with a registered tenancy, and the visa quota scales with the space.

How long does it take to set up a company in Dubai?

A free zone licence with clean documents commonly issues within a few days to a couple of weeks. Mainland takes longer because premises, tenancy registration and activity approvals sit in the path. The visa process starts after the licence exists, not alongside it.

Can I convert from a free zone to mainland later?

Yes, but it is effectively a new licence rather than an amendment, with the cost that implies. Picking correctly at the start is cheaper, which means being honest now about where your customers will actually be in two years.

Is Dubai worth it if I am not relocating?

Rarely. The licence alone costs more than a company in most jurisdictions, and the headline tax benefit comes from personal residency rather than from the company itself. If you are staying put, price Estonia, Georgia and Delaware before you price a free zone.