100%
Foreign ownership is available on both mainland and free zone routes since the 2021 company law reforms.
Not as either/or as it once was
Mainland vs Free Zone in Dubai
Ownership, tax, market access, and the March 2025 rule that lets free zone companies operate onshore too, without a second company.
Cited to the actual laws, not blog talk.
Federal Decree-Law No. 47/2022 & Res. 11/2025
Mainland vs Free Zone
What's the real difference?
Both allow 100% foreign ownership. The split is reach and tax: mainland sells direct at 9%, free zone sells indirectly at 0% on qualifying income.
100%Foreign ownership, both routes
9% / 0%Mainland tax vs. free zone qualifying income
Mar 2025Free zones can now also operate onshore
Start here
Where the two routes actually differ
At a glance
9% / 0%
Mainland profit above AED 375,000 is taxed at 9%. Qualifying free zone income can stay at 0%, conditions apply.
30+
The number of active free zones in Dubai, each run by its own authority with its own rules.
Mar 2025
When Dubai's dual-licensing rule took effect, letting free zone companies add an onshore permit.
Three ways to set up in Dubai
Choosing where to register
DET Licensed
Mainland
Full access to the UAE market and government contracts, with the ability to trade directly, anywhere in the emirate.
Authority
Department of Economy and Tourism (DET)
Market access
Direct, anywhere in the UAE
Ownership
100% foreign ownership, most activities
Since March 2025, mainland licensing has also become the route free zone companies use to add onshore activity, through a branch or permit issued by DET.
Best for: Retail, government contracts, and any business that needs to sell directly to UAE customers.
0% Qualifying Income
Free Zone
100% ownership in a dedicated zone, with 0% tax on qualifying income and the option to add onshore activity without a second company.
Authority
The individual free zone (DMCC, DIFC, JAFZA, etc.)
Tax
0% on qualifying income (QFZP conditions apply)
Onshore option
Branch or permit under the 2025 dual-licensing rule
0% isn't automatic. It depends on meeting the Qualifying Free Zone Person conditions, and breaching the de-minimis threshold can push the whole year's income to 9%.
Best for: International trade, consulting, e-commerce, and businesses that don't need daily walk-in customers.
Holding & IP
Offshore
Built for holding assets or structuring internationally, not for trading inside the UAE or sponsoring visas.
Purpose
Holding companies, IP, international structuring
UAE trade
Not permitted
Visas
Cannot sponsor residence visas
If the goal is actively doing business inside the UAE, offshore isn't the right structure. It's a vehicle for ownership, not operations.
Best for: Asset holding, international structuring, and businesses that won't operate day-to-day in the UAE.
Which is right for you
Mainland vs Free Zone
Both are legitimate, and since March 2025 they're less mutually exclusive than they used to be. Here's the honest side-by-side, feature by feature.
Balanced comparison
Comparison point
MainlandDET license
Free ZoneZone authority license
OwnershipWho can hold the shares
100% foreign, most activities
100%, always
Local market accessSell directly to UAE clients
Full access, no restrictions
Indirect, or via 2025 permit
Government contractsBid for public-sector work
Fully eligible
Not eligible directly
Office requirementPhysical space rules
Physical office required
Flexi-desk options available
Visa capacityHow visas are calculated
Scales with office size (sq ft)
Set quota by desk or office type
Corporate tax9% above AED 375k
9% standard rate
0% on qualifying income
Onshore flexibilityCan it operate both ways?
Native to mainland
Possible via 2025 dual license
RegulatorWho you deal with
One body, DET
One per zone, 30+ options
Best for
Local-facing businesses, retail, government contracts.
International trade, consulting, and lean teams.
The honest verdict
If your customers are mostly in the UAE, mainland usually wins outright. If you sell internationally, a free zone is often cheaper and just as capable, and since 2025 it doesn't have to be a permanent limitation either.
The fit check
Which structure actually fits your business?
Match your situation to the structure, rather than picking whichever sounds cheaper.
Recommended
Local access4 signs
Choose mainland if
- You sell directly to UAE consumers or businessesRetail, F&B, and services all need mainland market access.
- You want to bid on government contractsOnly mainland companies are eligible, without exception.
- You need a large, visa-heavy team onshoreVisa capacity scales with your leased office size.
- You're free zone but need UAE customersA 2025 dual license adds this without a second company.
International4 signs
Choose free zone if
- You sell mainly to international clientsFree zones fit export, consulting, and remote work.
- You want the lowest entry costFlexi-desk options start well below a mainland office.
- You qualify for 0% tax on your income typeConfirm the QFZP conditions before you assume this.
- You run a fully remote teamA flexi-desk covers the office requirement at lower cost.
The 2025 rule
How to add an onshore permit to your free zone
Under Executive Council Resolution No. 11 of 2025, in force since 21 March 2025, three routes let a free zone company reach the mainland.
Establish a mainland branch
A physical branch outside the free zone, licensed by DET directly.
Or keep HQ in the zone, add a dual permit
Your headquarters stays in the free zone; DET authorizes onshore work.
Or take a temporary permit
Up to six months, for a specific activity, without a full branch.
- Critical stage
Get free zone authority sign-off first
Your existing free zone authority approves the move before DET does.
- Critical stage
Keep separate financial records
Onshore and free zone income must be tracked apart for tax purposes.
Pay the DET fee
AED 10,000/year for a branch or dual permit; AED 5,000 for six months.
- Critical stage
Regularize if you're already operating onshore
Unauthorized onshore activity needed to be fixed by March 2026.
Who regulates each option
Four different bodies shape this decision, and a fifth joined in 2025 to make it less either/or.
| Authority | What they do | When you meet them | Key output |
|---|---|---|---|
| DET | Issues mainland licenses and administers the 2025 onshore permit. | Mainland or dual licensing | Trade license or permit |
| Free zone authority | Licenses free zone companies under its own rules. | Free zone formation | Free zone license |
| FTA | Confirms qualifying income status and collects tax. | After incorporation | Tax registration |
| Ministry of Finance | Issues the Cabinet decisions behind tax penalties. | Policy-level, rarely direct | Tax framework |
| Bank | Assesses shareholder residency, activity, and substance. | After licensing | Corporate account |
- DETLicenses mainland companies and dual-licensed branches.You meet them:Mainland or dual licensing
- Free zone authorityDMCC, DIFC, JAFZA, and 30+ others, each independent.You meet them:Free zone formation
- FTARuns corporate tax registration and QFZP enforcement.You meet them:After incorporation
- Ministry of FinanceSets corporate tax policy and penalty schedules.You meet them:Policy-level, rarely direct
- BankRuns its own review, separate from your license type.You meet them:After licensing
Stay compliant
The tax obligations both routes share in 2026
Two rules apply whichever structure you choose.
Even a missed deadline has a fix.
A one-time waiver cancels the AED 10,000 fine if you file within 7 months.
Qualifying Free Zone Person (QFZP) status
RequirementMeet FTA conditions to keep 0% on qualifying income
Governed byFederal Decree-Law No. 47 of 2022
Risk: Breach the de-minimis threshold and the whole year's income moves to 9%, not just the excess
ActionTrack qualifying vs. non-qualifying income separately, all year
Corporate tax registration on EmaraTax
RequirementEvery taxable person registers, mainland or free zone, regardless of revenue
Governed byCabinet Decision No. 10 of 2024
Risk: AED 10,000 flat penalty for missing your registration deadline
ActionIf you missed it, file your first return within 7 months of your tax period end, the penalty can be waived
Straight answers
Myths about mainland and free zone
The misreadings that cost founders time, money, or a wrong structure.
Myth
Free zone companies can never sell to UAE clients
Reality
True until March 2025. A dual license under Resolution No. 11/2025 now allows it, without a second company.
Myth
Free zone income is automatically tax-free
Reality
0% only applies to qualifying income under the QFZP regime. Breach the conditions and it's 9% on everything.
Myth
Mainland is always the pricier option
Reality
It depends on visa count and office size. A small mainland team can cost less than a large free zone one.
Myth
DED and DET are two different bodies
Reality
Same authority. DET (Department of Economy and Tourism) is the current name; DED was the older one. Older guides still say DED.
Myth
A dual license solves your banking too
Reality
No. Banks assess shareholder residency, activity, and substance, the license type doesn't change their process.
Myth
Offshore is a third option for running a business
Reality
Offshore structures hold assets or IP. They cannot trade inside the UAE or sponsor visas, so they are not an operating option.
Banking
Does jurisdiction affect your bank account?
A dual license doesn't pre-clear your banking. Banks assess shareholder residency, activity clarity, and business substance the same way, regardless of licensing status. DIFC and ADGM companies tend to see smoother approval; newer, lower-cost free zones can add weeks to the process.
01
Match the bank to your profile
Resident shareholders, a clear activity, and real substance move approval faster than jurisdiction type does.
02
Prepare the full file upfront
License, MOA, UBO declaration, and signatory documents, assembled to what the bank's compliance desk expects.
03
Submit and manage to approval
The bank runs its own KYC regardless of mainland or free zone status. A clean file moves faster either way.
Banks commonly used by mainland and free zone companies
The structure you choose shapes your license. It doesn't decide your bank's answer.
Real scenarios
Which structure fits your actual business?
Six situations that usually settle the mainland-versus-free-zone question fast, once you see where your business actually sits.
Retail or F&B outlet
Walk-in customers, physical storefront
ScenarioYou need a shop or restaurant that UAE residents can walk into directly.Why it fitsOnly mainland gives unrestricted local retail access.Risk noteFree zone retail is generally confined to the zone itself.
International consulting
Clients outside the UAE, remote-first
ScenarioYour clients are mostly abroad and you don't need a UAE storefront.Why it fitsFree zone gives 100% ownership and 0% on qualifying income.Risk noteConfirm QFZP conditions before assuming the 0% rate applies.
Government contractor
Public-sector tenders and projects
ScenarioYou want to bid on UAE government contracts.Why it fitsOnly mainland companies are eligible for government tenders.Risk noteFree zone status disqualifies you here, with no workaround.
E-commerce selling to the UAE
Online sales, UAE-based customers
ScenarioYou sell online but your buyers are inside the UAE.Why it fitsA mainland license, or a 2025 dual permit, covers direct UAE sales.Risk noteA pure free zone license alone won't cover this legally.
Import and export trading
Goods moving through customs
ScenarioYou import or export goods rather than sell to UAE end customers.Why it fitsFree zones offer customs duty exemptions on qualifying activity.Risk noteSelling into the mainland still requires clearing customs.
Outgrowing your free zone
Already set up, want UAE customers too
ScenarioYou're established in a free zone but demand is coming from the mainland.Why it fitsA 2025 dual license adds this without forming a second company.Risk noteRequires free zone authority sign-off before DET will act.
Holding company or IP structure
Not an operating business
ScenarioYou want to hold shares, property, or IP rather than trade daily.Why it fitsOffshore is built for exactly this, cheaper than a trading license.Risk noteOffshore can't sponsor visas or trade inside the UAE.
Choose your structure
The entity within your chosen route
Mainland or free zone is step one. Here's the actual entity type.
If you areTwo or more partners, mainlandRecommendedLLCIf you areSingle owner, mainland, limited liabilityRecommendedOne Person Company (LLC)If you areFree zone, one or more shareholdersRecommendedFree Zone Company (FZCO)If you areExpanding a foreign company in, not incorporating freshRecommendedBranch OfficeIf you areHolding assets or IP, not tradingRecommendedOffshore Company
Why choose us
The comparison, cited not claimed
We cite the law, not the trend
Every claim on this page traces to the actual Cabinet decision, Executive Council resolution, or Federal Decree-Law behind it, not a rewritten blog post.
We flag the QFZP risk before you file
Breaching the de-minimis threshold is the single most expensive mistake a free zone company can make. We check your income mix before it becomes a problem.
We handle dual licensing end to end
If a 2025 onshore permit fits better than a second company, we coordinate both your free zone authority and DET, so nothing stalls between them.
One desk for either route
Mainland, free zone, or both, the same team carries you from structure decision through licensing, tax registration, and banking.
No obligation, no sales pressureEvery figure checked against current lawMainland, free zone, or both, same desk
Still deciding between mainland and free zone?
Tell us who you sell to and how many visas you need, and we'll confirm the right structure, including whether a 2025 dual license beats forming a second company.
No obligationTransparent pricing, zero hidden fees100% privacy guaranteed
Related reading
Explore mainland, free zone, and offshore formation
Real results from our clients
What our clients say about working with us
Real Google reviews from founders we have set up and kept compliant on the Dubai mainland.
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Abdul Sami3 months ago
Thank you to the team for supporting us with our company setup. Our case was not straightforward, especially the bank account opening, but they stayed committed and got it done.
P
Paolo Chua8 months ago
I had a great experience opening a corporate bank account. The process was smooth and efficient. The staff were friendly, professional, and explained everything clearly.
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Amy Elliott Dunne4 months ago
The accounting and bookkeeping service has been exceptional. Attention to detail is impressive, and communication is always clear. Tasks are handled promptly.
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Rashed Al Falasi5 months ago
They confirmed our activity grouping before filing and flagged an issue the bank would have raised. Licensed in under two weeks with no surprises on the invoice.
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Marwa Khalil2 months ago
We came for a mainland LLC and stayed for renewals and PRO work. The same team answers the phone after the license is issued, which is rare here.
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