How to read this guide. Points from law firm and regulator summaries are noted. Anything I could only confirm from licensing-company blogs is marked Confirm. Rules and costs differ by zone and activity, so confirm current terms before you commit.
A small Confirm tag means I could not verify that point on an official page yet. Please check it with the authority before relying on it.
In one minute
- Both options can now be 100% foreign-owned in most cases, so ownership is rarely the deciding factor.
- The real differences are where you can sell, how you are taxed, and what office you need.
- Since 2025, Dubai lets many free zone companies operate on the mainland through a permit or branch, so "free zone or mainland" is no longer always either/or.
- The right answer comes from your customers, your activity and your budget, not from the cheapest package.
The main differences
| Free zone | Mainland | |
|---|---|---|
| Where you can trade | Mainly inside the zone and abroad. Selling into the wider UAE usually needs an extra step | Anywhere in the UAE, including government contracts |
| Ownership | Full foreign ownership | The old local-partner rule has been dropped for most activities. Some strategic sectors remain restricted |
| Office | Often a flexible desk or virtual office | Usually a physical office, sometimes a minimum size Confirm |
| Visas | Depend on the zone's package | Often tied to office space Confirm |
| Licensing authority | The zone's own authority | The emirate's economic department (in Dubai, DET; in Abu Dhabi, ADDED) |
| Typical fit | Services to clients abroad, online, holding and trading businesses | Businesses that sell to UAE customers or work with local companies |
Tax: the part people skip
- The UAE has a federal corporate tax: 9% on taxable income above AED 375,000. Source: law firm and news summaries of Federal Decree-Law No. 47 of 2022, in force from 1 June 2023. Confirm the threshold with the Federal Tax Authority.
- A free zone company that qualifies as a Qualifying Free Zone Person can pay 0% on qualifying income, but only if it meets conditions, including real substance in the zone and limits on non-qualifying revenue. Income that does not qualify is taxed at 9%. One summary states the limit as the lower of 5% of revenue or AED 5 million Confirm.
- So "free zone means no tax" is not a safe assumption. It depends on what you earn and from whom.
Dubai's 2025 change
Source: Dubai Executive Council Resolution No. 11 of 2025, as summarised by KPMG and CMS. Free zone companies (other than DIFC entities) can work in mainland Dubai in three ways, overseen by DET:
- a branch or subsidiary licensed outside the zone;
- a dual licence, valid for one year and renewable;
- a temporary permit for specific activities, up to six months. The resolution took effect on 3 March 2025. DET was to publish a list of eligible activities, and regulated activities may need another regulator's approval. Confirm the current list and fees with DET.
Free zones near your markets
- Dubai has many free zones, including ones built around its airport and ports. One article counts roughly 27 to 30 in the emirate Confirm, so compare current options and permitted activities.
- Ras Al Khaimah has RAKEZ. One comparison article cites packages starting from about AED 6,000 Confirm, and such headline prices rarely include everything.
- Abu Dhabi licenses mainland companies through its Department of Economic Development and has its own free zones. Compare current terms directly.
Three questions that decide it
Tick them off as you go. Your ticks stay on this device only.
Questions to ask any licensing provider
- What is the total first-year cost, and what is excluded?
- What are the renewal costs in year two?
- How many visas are included, and what do extra ones cost?
- Does the licence activity match what I actually do?
- If I want to sell in the UAE later, what is the upgrade path and cost?
- Will I qualify for the 0% free zone corporate tax, or is that unlikely for my business?
- Is a bank account realistic with this licence and structure?
What I do, and do not do
I help you frame the decision and introduce licensed providers. I do not set up companies myself, and I do not give tax or legal advice. Ask an accountant about tax and a lawyer about structure.
Sources
- KPMG: Dubai resolution enabling free zone companies to operate on mainland
- CMS: Dubai Executive Council Resolution on free zone mainland access
- CMS: Qualifying income for free zone persons
- DMCC: Dubai mainland vs free zone companies (written by a company that sells setup services)
Not sure which licence fits your plan?
Tell me what your business does and who your customers are. I will help you compare the real options, introduce licensed providers, and make sure you are not paying for a structure you do not need.
- A shortlist built around your budget, your timeline and your family, not around what is trending.
- Every cost laid out in writing before you commit, including the ones people forget.
- Checks on the developer, the title, the payment plan and the paperwork.
- One point of contact from your first question to the keys, and after.
I reply to every message within 24 hours. No pressure and no obligation. I will tell you plainly if something is not right for you. Before we start, I tell you in writing how I am paid.