DMCC vs DAFZA
If you have settled on a free zone, these are the two premium Dubai options.
Free zone vs mainland
Free zone vs mainland is the decision that comes before choosing a zone at all — and one question settles it before any of the others matter.
Customer accessCorporate taxCost and exit
The short answer
Answer one question and the rest usually follows: where will your revenue actually come from? If it comes from customers inside the UAE — businesses, government, or retail — you want mainland, because a free zone licence restricts exactly the trade you are trying to win. If it comes from overseas clients, a free zone is cheaper, faster and entirely sufficient. Be honest about the mix, because "mostly international with maybe some local work" almost always becomes more local work than you expected.
Free zone vs mainland, side by side
| Mainland (DED) | Free zone | |
|---|---|---|
| Licensed by | Department of Economy and Tourism | One of 40+ free zone authorities |
| Sell to UAE customers | Yes, unrestricted | Restricted — distributor or branch usually needed |
| Government tenders | Yes | Generally not directly |
| Foreign ownership | 100% for most activities | 100% by default |
| Corporate tax | 0% to AED 375,000, then 9% | Potentially 0% on qualifying income — conditional |
| Typical year-one cost | From around AED 18,500 | From around AED 12,500 |
| Setup time | 7–14 working days | 3–7 working days |
| Office requirement | Physical office with Ejari | Flexi-desk usually sufficient |
| Visa quota | Scales with office size | Tied to package tier |
| Audit | No blanket annual filing; often needed in practice | Required by most zones at renewal |
| Remote incorporation | Generally requires attendance | Commonly available |
1. Who are your customers?
This decides it, and everything below is secondary.
Free zone companies face genuine restrictions on trading directly into the UAE domestic market. To reach local customers you would need a mainland distributor or a separately licensed mainland branch — and both take a permanent cut of your margin, forever. That cost dwarfs the licence saving within the first year for most businesses.
If your customers are overseas, none of that applies and a free zone is the sensible choice.
2. What does each cost you in corporate tax?
Mainland is simple: 0% up to AED 375,000 of taxable income, 9% above. No free zone relief.
A free zone company may access 0% on qualifying income as a Qualifying Free Zone Person. But that is conditional on adequate substance in the zone, income falling within prescribed qualifying categories, non-qualifying revenue staying inside the de minimis limits, transfer pricing compliance, and audited financial statements — every period, cumulatively. Fail one and you are taxed at 9% on everything above the threshold, for that period and subsequent ones.
The honest framing: free zone 0% is a real advantage for businesses genuinely structured to qualify, and an assumption that costs people money when it is not tested. Work through the conditions and model both positions in the corporate tax calculator.
3. What does it actually cost?
Free zone is usually cheaper in year one — entry packages from around AED 12,500 against roughly AED 18,500 for a mainland LLC. Mainland requires a physical office with an Ejari tenancy contract, which is the largest single driver of the difference.
But cheaper is not the same as correct. If a free zone licence blocks the work you want to win, you will pay again to restructure — and the second bill is larger than the first saving. Our cost calculator itemises both.
4. How many people will you sponsor?
Mainland visa quotas scale with your office space, so growing headcount means taking more space. Free zone quotas are tied to your package tier, which is simpler but has a ceiling.
Plan two years out rather than for today. Hitting a quota ceiling mid-growth is disruptive and the fix is rarely quick.
5. What happens when you exit?
Rarely considered at setup and worth thirty seconds now. Both structures require formal liquidation — appointing a liquidator, obtaining authority clearances, a final audit and licence cancellation. Neither is something you can simply walk away from, and an abandoned licence accrues penalties.
Free zone liquidation is generally faster and cheaper. Mainland involves more authorities and takes longer. If your venture is deliberately time-limited, that is worth factoring in — see company liquidation.
The advice most people get, and why
Free zones pay commission to agents who bring them companies. Mainland formation generally does not work the same way. That is not a conspiracy, but it does mean a large share of the advice available online is structurally biased towards free zones — and it explains why so many businesses whose customers are UAE-based end up with a licence that blocks them.
We form both and are paid the same either way. If your customers are here, we will tell you to go mainland even though the free zone would have been a faster sale.
Keep comparing
Once you have chosen
The next decision, and the tools to price it.
IFZA vs Meydan
The budget end of the market, and the year-two costs neither quotes upfront.
Estimate your setup cost
Mainland, free zone and offshore priced side by side, government fees shown separately.
Questions
Free zone vs mainland
The questions that come up on almost every first call.
Tell us who your customers will be and we will settle this in twenty minutes, at no charge.
It comes down to who your customers are. If revenue will come from businesses inside the UAE, from government entities or from retail customers, you want mainland. If your customers are overseas, a free zone is usually cheaper, faster and perfectly sufficient. Everything else is secondary to that question.
Not directly, in most cases. Free zone entities trade freely with other free zone companies and internationally, but selling into the domestic market generally requires a mainland distributor, a mainland branch, or a dual-licence arrangement. Each takes a permanent cut of your margin.
No, not for most activities. Amendments to the Commercial Companies Law removed the general 51% Emirati shareholding requirement, and the DET maintains a positive list of activities open to full foreign ownership. Some strategic activities still carry requirements.
Potentially the free zone, but conditionally rather than automatically. Mainland pays 0% to AED 375,000 then 9%. A free zone company may access 0% on qualifying income by meeting six cumulative conditions every period. Fail one and you pay 9% above the threshold, exactly like a mainland company.
Yes, and it is common. It requires careful sequencing so there is no gap in licensing, visa validity or bank account status. Entirely doable — simply more expensive than choosing correctly at the start.
Not sure which side you fall on?
One conversation is usually enough. Tell us who your customers will be and we will tell you which structure fits — and say so if it is the one that earns us less.