Free zone or mainland in Dubai: which company suits you?
How a Dubai free zone company differs from a mainland company: the market you can sell to, office, visas, tax, cost, and the structure that fits your activity.
The first decision in forming a company in Dubai concerns structure: a free zone company or a mainland company. The market you can sell to, the office requirement, the visa quota and the total cost all follow from this decision. This article compares a Dubai free zone and the mainland heading by heading and assesses which structure suits four types of activity. The whole formation process is covered in the guide to forming a company in Dubai. The information is current as of 10 October 2026.
What is the difference between a free zone and the mainland in Dubai?
A Dubai free zone company is registered within the boundaries of a particular free zone and takes its licence from that free zone's authority. A mainland company is registered in the part of Dubai outside the free zones, and its licence is issued by the Dubai Department of Economy and Tourism (DET). The official UAE portal states that free zone companies operate under a legal framework separate from mainland companies. In practice this means the following: a mainland company can operate freely anywhere in the UAE, whereas a free zone company's direct sales to the UAE domestic market are subject to rules.
There are also differences between the two structures that are smaller than commonly assumed. A free zone company can be wholly owned by a foreign shareholder; mainland companies have also allowed 100% foreign ownership since 2021, and the local partner requirement has been removed. Activities classed as having a strategic impact are outside this rule. Both structures are subject to the same corporate tax and VAT rules.
Dubai free zone company and mainland company compared
| Topic | Free zone company | Mainland company |
|---|---|---|
| Licensing authority | The free zone authority | Dubai Department of Economy and Tourism (DET) |
| Foreign ownership | 100% | 100%, except strategic-impact activities |
| Who it can sell to | Freely within the free zone and outside the UAE; to the UAE domestic market through a distributor, a branch or a DET permit | Freely across the whole UAE and outside the UAE |
| Office | A shared office address is sufficient | A physical address and a registered lease are required |
| Visa quota | Depends on the licence package and the office type | Grows with the leased office |
| Corporate tax | 0% up to AED 375,000, 9% above | 0% up to AED 375,000, 9% above |
| VAT | 5% | 5% |
| Audit | Depends on the free zone's own rules | A limited company appoints an auditor every year |
| Formation | Remote, with a digital signature | With a lease and, depending on the activity, additional approvals |
| Total cost | Lower | Higher because of the office rent |
Source: official UAE portal (u.ae), Dubai Executive Council Resolution No. 11 of 2025, UAE Commercial Companies Law. The free zone column applies to general commercial free zones such as IFZA, Meydan and DWTC; financial centres are subject to separate rules.
Can a Dubai free zone company sell inside the UAE?
A Dubai free zone company can sell freely to companies inside the free zone and to customers outside the UAE. The rule for the UAE domestic market is different: according to the official UAE portal, a free zone company's direct sales on the mainland are generally not permitted. A free zone company that wants to enter the local market works with a licensed mainland distributor, or opens a branch or a company on the mainland. Customs duty applies when goods move from a free zone into the mainland market. A summary of the rule is on the official UAE portal. In practice, free zone companies are able to sell services and products to customers inside the UAE; opening an office or shop in the domestic market, or running permanent staff and operations on the mainland, requires a separate permit or licence.
The permit route Dubai introduced in 2025
Dubai relaxed this limitation in 2025. Under Dubai Executive Council Resolution No. 11 of 2025, free zone companies can also operate in the part of Dubai outside the free zones with a licence or permit from DET. The resolution provides three routes: a branch licence inside Dubai, a branch licence operated from the free zone, and a temporary permit for certain activities. Branch licences are valid for 1 year and can be renewed; a temporary permit is granted for up to 6 months. The fee for a branch licence operated from the free zone is AED 10,000 a year, and the fee for a temporary permit is AED 5,000.
This Dubai resolution also places an obligation on the company: the financial records of the activity carried out outside the free zone are kept separately. Financial institutions licensed in the DIFC are outside its scope. Which sales need a permit depends on the activity and the form of the sale; if you will have customers inside the UAE, sharing this before formation is enough to choose the right structure. The text of the resolution is on the Dubai legislation portal.
How do the office requirement and visa quota differ between the two structures in Dubai?
A Dubai free zone company is not required to rent a physical office. In the free zones Ortac Global works with, a shared office address is included in the licence package and is sufficient for formation. A mainland company, by contrast, must have a physical address: the official UAE portal states that every business on the mainland must have a physical address and that, in Dubai, the lease is registered in the Ejari system. This rent is usually the item that takes the total cost of the mainland above that of a free zone.
The visa quota is set together with the office. How many people a Dubai free zone company can obtain visas for depends on the licence package and the office type; a shared desk gives a limited quota. In a mainland company the quota grows with the leased office, so businesses that will build a large team lean towards the mainland. In both structures the shareholder visa is valid for 2 years, and you have to come to the UAE once for the medical test and biometrics. The application steps are on the Dubai residence visa page.
Does a Dubai free zone company pay tax?
Yes. Both a Dubai free zone company and a mainland company are corporate taxpayers: a rate of 0% applies to net profit up to AED 375,000 and 9% to the part above it. In both structures the tax registration is completed within 3 months of formation and a return is filed every year. VAT is 5% in both structures, and registration is mandatory if taxable supplies exceed AED 375,000 in 12 months. The rates are on the official UAE portal.
Who is the 0% rate in a free zone for?
The UAE Corporate Tax Law provides a 0% rate on the qualifying income of companies treated as qualifying free zone persons. The conditions are demanding: adequate substance and employees in the free zone, income derived from the qualifying activities listed in the law, audited financial statements, and non-qualifying income not exceeding the lower of AED 5 million and 5% of total revenue. If any one of the conditions is breached, the company loses its status from the start of that period. Most small and medium-sized companies do not meet these conditions; when choosing a free zone in Dubai, the budget should be prepared on the basis of the 9% rate. The rules are explained on the Dubai tax page; to calculate on your own profit you can use the UAE corporate tax calculator.
Do cost, audit and banking differ in Dubai?
Forming a free zone company in Dubai takes a lower budget than the mainland. At Ortac Global, free zone formation is offered from USD 5,120, including a 1-year licence; a visa costs USD 1,953 per person, and the amounts exclude VAT. This article gives no figure for the mainland: the cost depends on the office rent and the approvals the activity requires. A breakdown of the free zone items is in the cost items of forming a company in Dubai.
Keeping accounting records is mandatory in Dubai in both structures. There is a difference on audit: the UAE Commercial Companies Law requires mainland limited companies to appoint an auditor every year, while in the free zones the audit requirement is set by the free zone's own rules. On the banking side, the structure alone does not determine the outcome. In both structures the bank assesses the activity, the ownership structure, the source of funds and the expected transaction volume, and the decision to open an account belongs to the bank alone. Details are on the Dubai accounting and Dubai bank account pages.
Which activities suit a free zone and which the mainland in Dubai?
Free zone or mainland for e-commerce?
If you sell through a Dubai company to customers outside the UAE, from your own site or on marketplaces, a free zone company is suitable: the cost is low, formation is carried out remotely and card collection channels can be set up. The position changes if the goods are stored in Dubai and sold to consumers inside the UAE; the domestic sales rule and customs legislation then come into play. Details for the sector are on the e-commerce page.
Consulting and agency work
Consulting, design and agency companies in Dubai are formed in a free zone when their clients are abroad; because the activity is carried out digitally, no physical office is needed. If most clients are companies or public bodies inside the UAE, a mainland licence or a DET permit comes into play. Details are on the consulting sector page.
Software and SaaS
For companies in Dubai operating on software and subscription revenue, a free zone is the most common choice. Customers are in different countries, collection is through Stripe or PayPal and the team works remotely. Because the need for visas is mostly limited to the founders, a low quota is sufficient. Details are on the software and technology page.
Restaurants, shops and other physical businesses
A restaurant, café or shop serving customers on the street in Dubai needs a mainland licence: the activity is carried out in the part of Dubai outside the free zones and is directed at local customers. For these activities the lease is part of the formation, and additional approvals are requested depending on the activity. The activity areas in which companies are formed in Dubai are covered in business ideas in Dubai.
Can a Dubai free zone company be converted to the mainland?
There is no procedure in Dubai that converts a free zone company into a mainland company; moving from a free zone to the mainland means forming a new company. A new licence, new formation costs and a new bank application are needed, and the visas have to be moved to the new company. The existing company is either closed or the two companies are run side by side.
For free zone companies in Dubai that open up to the domestic market as their activity grows, the interim solution is the DET branch licence or permit described above. This route is not as extensive as a new formation, but it brings an obligation to keep separate financial records and to pay an annual fee. Information on post-formation transactions such as share transfers, adding activities and branches is on the Dubai corporate advisory page.
Which free zones are there in Dubai: IFZA, Meydan and DWTC
There are many free zones in Dubai, and each has its own authority, activity list and price. Ortac Global is a partner of three free zones: IFZA, Meydan and DWTC. All three are open to general trading and service activities; the differences lie in location, licence term options and price.
IFZA
IFZA is headquartered in Dubai Silicon Oasis. IFZA issues trading and professional licences, allows different activities to be combined in a single licence and does not require physical presence during formation. At Ortac Global, IFZA formation is USD 5,120 including a 1-year licence; this is the lowest starting price among the three free zones. When a licence is bought upfront for several years, a discount of 15% applies for 2 years, 20% for 3 years and 30% for 5 years. You can look up the code for your activity in the IFZA activity code tool.
Meydan
At Meydan Free Zone all application and payment steps are carried out remotely; meetings are held at Meydan Hotel or online. Meydan's list includes more than 2,500 activities, and three activity groups can be written into a single licence. At Ortac Global, Meydan formation is USD 5,300 including a 1-year licence; a 15% discount applies to 2-year and 3-year upfront licences. It suits companies with limited need for a physical office that operate digitally.
DWTC
The DWTC free zone is in Dubai World Trade Centre, in the area stretching from Rashid Tower to One Central, in Dubai's business district. DWTC licenses more than 1,200 activities and offers different office options, from a co-working space to a commercial office. At Ortac Global, DWTC formation is USD 5,820 including a 1-year licence. There is no multi-year licence at DWTC; the licence is renewed every year. It suits companies looking for a central address and a corporate image.
You can make a preliminary assessment of whether Dubai suits your activity with the fit test; a comparison of Dubai with the UK and Northern Cyprus is on the country comparison page. The steps and price calculation for free zone formation are on the company formation in Dubai page; for your questions, you can contact us.
Frequently Asked Questions
What is the difference between a free zone company and a mainland company in Dubai?
In Dubai, a free zone company takes its licence from the free zone authority and a mainland company from DET. A mainland company can sell freely anywhere in the UAE; a free zone company's direct sales to the domestic market are subject to rules.
Is a local partner needed to form a mainland company in Dubai?
No. Mainland companies in Dubai have allowed 100% foreign ownership since 2021. Activities with a strategic impact, as determined by the UAE Cabinet, are the exception to this rule.
Can a Dubai free zone company invoice a customer inside Dubai?
According to the official UAE portal, a free zone company's direct sales on the mainland are generally not permitted. Since 2025, operating outside the free zone has been possible in Dubai with a DET branch licence or a temporary permit. In practice, free zone companies are able to sell services and products to customers inside the UAE; opening an office or shop in the domestic market, or running permanent staff and operations on the mainland, requires a separate permit or licence.
Is a Dubai free zone company exempt from tax?
No. A Dubai free zone company is also a corporate taxpayer: 0% up to AED 375,000 and 9% above. The 0% rate in the law is subject to demanding conditions, and most small companies do not meet them.
Can a free zone company in Dubai be moved to the mainland?
A free zone company in Dubai cannot be converted into a mainland company; moving across means a new formation. For a free zone company that wants to open up to the domestic market, the interim solution is a branch licence or permit from DET.
What is the difference between IFZA, Meydan and DWTC in Dubai?
At Ortac Global, formation starts from USD 5,120 at IFZA, USD 5,300 at Meydan and USD 5,820 at DWTC. IFZA offers discounted multi-year licences of up to 5 years and Meydan up to 3 years; at DWTC the licence is renewed annually only, and the free zone is in Dubai's business district.
Related serviceGuide to forming a company in DubaiRequirements, documents, the step-by-step process, visa, bank and first-year cost.View the ServiceThe free zone and mainland rules are taken from the official UAE portal (u.ae) and Dubai Executive Council Resolution No. 11 of 2025; tax information comes from texts of the UAE Ministry of Finance and the Federal Tax Authority. Information on the free zones comes from the websites of IFZA, Meydan and DWTC; prices are Ortac Global's own. The information is current as of 10 October 2026.
This article is for general information only and is not personal tax or legal advice. Free zone rules and fees can be changed by the authorities; prices are Ortac Global's prices dated 10 October 2026 and exclude VAT.
