Mainland or free zone
Mainland vs free zone in Dubai: which one fits your business
The choice decides where you can invoice, how many visas you can hold and which authority you answer to. Your customers usually decide it, not the licence price.
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Written by Tabish Ahmed, Senior ManagerReviewed by Auj Afreen Ahmad, Founder and Chief Executive OfficerLast updated
The short answer
Mainland vs free zone in Dubai: which one fits my business?
A Dubai mainland company is licensed by the Department of Economy and Tourism and can trade anywhere in the UAE. A free zone company is licensed by its zone's authority and trades inside the zone and internationally; selling into the mainland needs a distributor, a branch or a permit. Both allow full foreign ownership for most activities.
The short answer
Free zone vs mainland Dubai: which is better for a new business?
If most of your customers are in the UAE, or you need a shop, a site or government contracts, mainland is usually the right route. If you serve clients abroad, consult, trade internationally or sell online across borders, a free zone is often simpler to run.
Neither is better in general. The wrong one costs you twice: once for the licence, and again for the branch, permit or second company you need later. Three questions settle most cases: where are your customers, how many visas do you need, and what exactly will you invoice for?
Side by side
What are the main differences between mainland and free zone in Dubai?
Mainly where you can trade: DET-licensed mainland companies trade anywhere in the UAE, free zone companies inside the zone and internationally. Mainland visas follow office size, free zone visas the package quota. As at November 2026, mainland corporate tax is 0% up to AED 375,000 and 9% above; qualifying free zone persons pay 0% on qualifying income.
Dubai mainland and Dubai free zones: the main differences
| Factor | Dubai mainland | Dubai free zone |
|---|---|---|
| Licensing authority | Department of Economy and Tourism (DET) | The individual free zone authority, such as DMCC, Meydan or JAFZA |
| Where you can trade | Anywhere in the UAE, including government contracts | Inside the free zone and internationally; the UAE market usually through a distributor, branch or permit |
| Foreign ownership | Up to 100% for most activities; strategic impact activities can carry restrictions | 100% |
| Office | Registered premises; business-centre options for some activities | From a flexi-desk to a warehouse, set by the package |
| Residence visas | Yes, linked to office size | Yes, set by the package quota |
| Employee permits | MOHRE work permits | Employment visas processed through the free zone authority |
| Dubai Chambers | Membership comes with the DET licence, with small-business exemptions | Voluntary |
| Audit | Activity dependent; corporate tax requires audited statements once revenue exceeds AED 50 million | Some zones ask for audited accounts at renewal; required to keep qualifying free zone person status |
| Corporate tax | 0% on taxable income up to AED 375,000, 9% above | Qualifying free zone person: 0% on qualifying income, 9% on the rest; otherwise the standard rates |
General guide as at November 2026. Rules change and vary by authority and activity; we confirm your position in writing before you commit.
Market access
Can a free zone company work with mainland clients?
Often yes, but on conditions: it can sell through a mainland distributor or agent, or open a mainland branch. Executive Council Resolution No. 11 of 2025 also lets it work in Dubai outside its zone with a DET branch licence or a temporary permit of up to six months, with its zone's approval and separate financial records.
Often yes, but on conditions. A free zone licence covers activity inside the zone and outside the UAE. To trade with the mainland market, a free zone company traditionally sells through a mainland distributor or agent, or opens a mainland branch.
Dubai added a third route in 2025. Executive Council Resolution No. 11 of 2025 lets a free zone establishment conduct activities in Dubai outside its zone if it holds a licence or permit from DET: a branch licence, a branch operating out of the free zone, or a temporary permit valid for up to six months. Each needs its free zone authority's approval, separate financial records for the mainland activity, and permits are limited to a list of activities set by DET. Financial establishments licensed in DIFC are outside the resolution.
Whether this works for you depends on your activity and your zone. We check it before you choose, not after the licence is issued.
Corporate tax
Corporate tax for mainland vs free zone: who is a qualifying free zone person?
A free zone company that keeps adequate UAE substance, derives qualifying income, follows transfer pricing rules and keeps audited financial statements; it pays 0% on qualifying income and 9% on the rest. Mainland companies pay 0% on taxable income up to AED 375,000 and 9% above. Both must register; confirm your position with a registered tax agent.
Mainland and free zone companies are both inside the UAE corporate tax system and both must register.
| Factor | Mainland | Free zone |
|---|---|---|
| Registration | Must register | Must register |
| Rate | 0% on taxable income up to AED 375,000 and 9% above it, under Cabinet Decision No. 116 of 2022 | 0% on qualifying income only for a qualifying free zone person; income that is not qualifying is taxed at 9% |
Under Article 18 of Federal Decree-Law No. 47 of 2022, a qualifying free zone person is one that:
- maintains adequate substance in the UAE;
- derives qualifying income;
- has not elected to be taxed at the standard rates;
- follows the arm's length and transfer pricing documentation rules;
- meets any other conditions the Minister sets.
Ministerial Decision No. 84 of 2025 also requires it to prepare and maintain audited financial statements.
Qualifying income is defined narrowly. Under Cabinet Decision No. 100 of 2023, income from other free zone persons generally qualifies, but income from mainland customers qualifies only for listed qualifying activities, and other income must stay within a small de minimis limit. Failing a condition at any time in a tax period removes the status from the start of that period.
This is the structure, not tax advice. Whether your income qualifies depends on your activities and customers; take advice from a registered tax agent before you rely on 0%.
Visas and premises
How many visas can a mainland or free zone company get?
Your space sets it: on the mainland, residence visas follow your registered premises and employees need MOHRE work permits, while in a free zone the quota comes from the package or office. Meydan Free Zone, for example, allows up to six visa allocations per licence. A flexi-desk keeps costs down but caps the quota.
| Factor | Mainland | Free zone |
|---|---|---|
| Visa quota set by | Your registered premises | The package or office |
| Work permits | Employees need MOHRE work permits | Not stated |
| Example | Not stated | Meydan Free Zone allows up to six visa allocations per licence |
| Growing the team | Bigger teams usually mean a bigger office, so we size the space to your hiring plan | A flexi-desk keeps costs down but caps the quota; adding visas later can mean a larger package or office |
Partners and investors in Dubai can apply for a five-year green residence permit through GDRFA if they meet the conditions. See the green visa and investor visa pages.
By business type
Mainland or free zone: which suits my type of business?
Mainland usually suits shops, restaurants, salons, clinics, contracting and consultancies with mainly UAE clients. A free zone usually suits consultancies with clients abroad and international trading or re-export. E-commerce can work on either, freelancers usually start in a free zone or on a freelance permit, and holding companies use offshore or a free zone holding licence.
Where each type of business usually starts
| Your business | Usually starts on | What to check |
|---|---|---|
| Shop, restaurant, salon or clinic serving walk-in customers | Mainland | Premises approval and any sector regulator |
| Contracting, fit-out or maintenance for UAE clients | Mainland | Government contracts are a mainland route |
| Consultancy or agency with clients mainly abroad | Free zone | Whether any UAE clients will need invoicing directly |
| Consultancy with mainly UAE clients | Mainland, or a free zone with a DET permit or branch | Whether your activity is on DET's list |
| International trading or re-export | Free zone | Customs, warehouse needs and whether goods enter the UAE market |
| E-commerce | Either | Who buys, where stock is held and how it is delivered; see e-commerce licence |
| Freelancer or solo professional | Free zone or a freelance permit | See freelance licence and professional licence |
| Holding shares or assets, no UAE trading | Offshore or a free zone holding licence | Visa and bank needs |
Not a fit for a free zone: a business whose customers are almost all in the UAE and who expect to buy from a local company. Not a fit for the mainland: an international consultancy that will never invoice a UAE client and wants the smallest office.
Third option
When does an offshore company fit better than mainland or free zone?
When you need a company to hold shares, intellectual property or certain property, and nobody needs a work visa through it. An offshore company cannot trade inside the UAE and has no office or visa quota. JAFZA Offshore and RAK ICC are the main registries, and Ajman Free Zone also lists an offshore option.
If you need a company to hold shares, intellectual property or certain property, and nobody needs a work visa through it, an offshore company may fit better than either licence. It cannot trade inside the UAE and has no office or visa quota. JAFZA Offshore and RAK ICC are the main registries, and Ajman Free Zone also lists an offshore option; see offshore company UAE.
Questions
Mainland vs free zone in Dubai: common questions
Anything else? Ask on WhatsApp and the person who handles it will answer.
Which is better, mainland or free zone in Dubai?
Neither is better in general. Mainland suits businesses selling mainly to UAE customers, needing premises or bidding for government work. A free zone suits businesses serving clients abroad, trading internationally or consulting with small teams. The deciding questions are where your customers are, how many visas you need and what you will invoice for.
Can a free zone company trade in mainland Dubai?
It can through a mainland distributor or agent, or by opening a branch. Since Executive Council Resolution No. 11 of 2025, a Dubai free zone establishment can also apply to DET for a branch licence or a temporary permit of up to six months, with its free zone authority's approval. Permits are limited to the activities on DET's list.
Is a free zone company tax-free in the UAE?
No. Free zone companies are within corporate tax and must register. A qualifying free zone person pays 0% on qualifying income and 9% on other taxable income, and must meet conditions including adequate substance and audited financial statements. A free zone company that does not qualify is taxed at the standard rates: 0% up to AED 375,000 and 9% above.
Can foreigners own 100% of a mainland company in Dubai?
For most activities, yes. The amendments to the Commercial Companies Law removed the requirement for a majority Emirati shareholder or a local agent for most mainland activities. Activities classed as having strategic impact can carry their own licensing conditions, including ownership limits, which we check before you commit.
Do I need an office for a mainland company?
Usually, yes. Mainland companies need registered premises, and the number of visas follows the space. Some activities can use business-centre premises. Free zones are more flexible, with flexi-desks and shared offices, but the desk caps how many visas you can hold.
Can I switch from a free zone to mainland later?
You can add a mainland presence later, usually as a branch, a DET permit or a new mainland company. Each is a new licence or permit with its own fees, premises and approvals rather than a simple transfer, so check with both authorities. If you expect UAE customers within the first year or two, plan for it from the start.
Sources
Where these facts come from
The official pages we checked. Rules and fees change; we confirm the current position before we advise you.
- Free zone establishments may operate in Dubai outside the zone with a DET licence or permit; DIFC financial establishments excluded — Executive Council Resolution No. 11 of 2025, Dubai Legislation Portal: dlp.dubai.gov.aeChecked 3 November 2026
- 100% foreign ownership of mainland companies; strategic impact activities — UAE Government portal: u.aeChecked 3 November 2026
- Removal of 51% Emirati ownership or local agent requirement for most activities — UAE Government portal: u.aeChecked 3 November 2026
- Corporate tax rates and qualifying free zone person conditions (Articles 3 and 18) — Federal Decree-Law No. 47 of 2022, Ministry of Finance: mof.gov.aeChecked 3 November 2026
- AED 375,000 threshold for the 0% rate — Cabinet Decision No. 116 of 2022, Ministry of Finance: mof.gov.aeChecked 3 November 2026
- Qualifying income and de minimis requirements — Cabinet Decision No. 100 of 2023, Ministry of Finance: mof.gov.aeChecked 3 November 2026
- Qualifying free zone persons must prepare audited financial statements — Ministerial Decision No. 84 of 2025, Ministry of Finance: mof.gov.aeChecked 3 November 2026
- Free zone entities are taxable persons and must register — Ministry of Finance: mof.gov.aeChecked 3 November 2026
- Dubai Chambers membership automatic for DET licensees, voluntary for free zones — Dubai Chambers Board Resolution No. 4 of 2023: dlp.dubai.gov.aeChecked 3 November 2026
- MOHRE work permits for recruiting a worker from overseas — MOHRE: mohre.gov.aeChecked 3 November 2026
- Meydan up to six visa allocations per licence — Meydan Free Zone: meydanfz.aeChecked 3 November 2026
- Green residence permit for partners and investors — GDRFA Dubai: gdrfad.gov.aeChecked 3 November 2026
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