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CHOOSING A JURISDICTION

Mainland or Free zone?

Two ways to establish a business in the UAE. The right choice depends on your activities, customers, premises and growth plans.

MainlandFree zoneComparisonHow to choose
01 / MAINLAND

Mainland

A company licensed by the economic department of the relevant emirate. In Dubai, this is the Department of Economy and Tourism (DET).

Advantages

  • Access to the local market. A practical basis for a shop, salon, restaurant or services with a physical presence outside a free zone, subject to the appropriate licence and permits.
  • Choice of location. You can choose mainland premises to suit your customers, logistics and activity requirements.
  • Foreign ownership. Many activities allow 100% foreign ownership without a local partner. Special conditions apply to strategic activities. Source: Ministry of Economy & Tourism

Limitations and considerations

  • Premises, their registration and sector-specific approvals can significantly increase the setup budget.
  • A licence does not replace approvals from the relevant authorities or automatically allow outlets in every emirate.
  • Hiring requires consideration of labour file requirements, work permits and available quotas.

Consider this option when: a city location, on-site customer service and your own operational infrastructure are important to the business.

More about mainland: Invest in Dubai ↗
02 / FREE ZONE

Free zone

A company registered in a free zone. Each zone has its own permitted activities, rules, infrastructure and fees.

Advantages

  • 100% foreign ownership. The ability to structure a company for foreign shareholders.
  • Infrastructure options. Depending on the zone and activity, options include workspaces, offices, warehouses and production premises.
  • Industry environment. Choose a zone suited to logistics, trading, technology or other sectors.
  • Tax treatment. A 0% rate may apply to qualifying income if the conditions are met; this requires a separate tax assessment.

Limitations and considerations

  • Operating outside the zone may require additional permits, a branch or another permitted structure.
  • Permitted activities, visa numbers and office requirements depend on the specific zone and package.
  • Renewal, amendment and office expansion costs should be compared separately from the initial setup price.
  • Preferential tax treatment requires compliance with conditions and reporting obligations.

Consider this option when: international services, trading or a specialist project suits the infrastructure and licence of the selected zone.

More about free zones: Invest in Dubai ↗

Can a free zone company operate on the mainland?

A contract with a mainland customer is different from actually conducting business outside the zone. The type of goods or services, place of performance and required permits must be assessed. In Dubai, Resolution No. 11 of 2025 provides for DET licences and permits for activities outside free zones, subject to approvals and separate financial records for those activities. This framework does not apply to financial institutions licensed in the DIFC.

Dubai Resolution No. 11 of 2025 ↗
KEY DIFFERENCES

Compare the options for your business.

CriterionMainlandFree zone
LicensingThe emirate's economic department and relevant sector regulators.The selected free zone authority and relevant sector regulators.
Operating locationMainland premises suitable for the licensed activity.Free zone infrastructure; additional conditions must be checked for activities outside the zone.
Office and visasDepend on the activity, premises and approvals.Depend on the zone, package, premises and approvals.
BudgetLicence, rent, permits, visas and annual maintenance.Free zone package plus renewals, visas, office and additional permits.
Bank accountIn both cases, the bank separately assesses the business model, owners, counterparties and documents. The registration type does not guarantee account opening.

Free zone does not mean tax-free

For a Qualifying Free Zone Person, corporate tax is 0% on qualifying income and 9% on other taxable income. The regime's conditions must be met, including adequate substance in the zone; having a foreign customer alone is not enough for the 0% rate. Companies that do not meet the preferential regime's conditions are subject to the general corporate tax rules. The tax model should be assessed separately from the licence choice.

Federal Tax Authority guidance ↗
WHERE TO START

Business model first.
Jurisdiction second.

A practical approach: compare options against your actual operations and the full cost of ongoing services.

  1. What do you do?Specific goods and services, required licences and sector permits.
  2. Where are your customers and operations?Counterparty countries, where services are delivered, supply routes and UAE sales.
  3. What infrastructure do you need?Office, shop, warehouse, production facilities and employee numbers.
  4. What is your annual budget?Registration, renewal, rent, visas, accounting and additional permits.
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