Free Zone vs Mainland in the UAE

Almost every published comparison of these two options opens with a table of dirhams. That is the wrong end of the problem. The fee side is the one part of this decision that no authority publishes in comparable form, while everything that actually binds you — which companies law applies to your entity, whether you can invoice a customer in Deira, whether you must file audited accounts — is written down and can be read.

So work the decidable questions first. Four of them settle the choice for most businesses, and the order matters, because an earlier answer can foreclose a later one.

This is the difference the marketing never mentions and the one that outlasts every fee.

Article 3 of Federal Decree-Law No. 32 of 2021 applies the Commercial Companies Law to commercial companies established in the State. Article 5(1) then takes free zone companies back out of it — conditionally, and with a second sentence that most summaries drop:

"The provisions of this Decree-Law shall not apply to companies incorporated in the free zones of the State where a special provision to this effect is stipulated in the laws or regulations of the relevant free zone. Notwithstanding the foregoing, these companies shall be governed by the provisions of this Decree-Law if such laws or regulations permit them to conduct their activities outside the free zone in the State."

Read together, the switch runs both ways. Your zone's regulations disapply the federal statute; the same regulations permitting the company to operate outside the zone put it back. Article 5(2) then provides that the Cabinet "shall issue a decision" specifying the conditions for free zone companies wishing to conduct activities inside the State and outside the zones. We could not find a published federal decision under that clause. What a Dubai reader actually gets is an emirate-level instrument instead. Statement dated 17 August 2026.

Two consequences follow that are worth having in front of you before signing anything.

Three routes exist to a mainland customer, and this site sets them out with what each is priced at on the free zone companies page. What belongs here is the part that bears on the comparison rather than on the mechanics.

Dubai is the only emirate with a single codified instrument. Executive Council Resolution No. 11 of 2025, issued 3 March 2025, gives three routes under Article 4(a): a licence for a branch within the Emirate, a licence for a branch serving the Emirate from free zone premises, and a permit for specific activities that Article 7 caps at six months. Article 12 prices the second at AED 10,000 a year to issue or renew and the third at AED 5,000. Article 3(b)(2) requires separate financial records for the activities conducted outside the zone — which is a corporate tax point as much as a licensing one, because those are the records a qualifying free zone person's de minimis and qualifying income analysis is built from.

Then return to Article 5(1) of the Commercial Companies Law. Buying mainland access is not only a licensing transaction. Depending on how your zone's regulations are drafted, permission to conduct activities outside the zone is capable of pulling the entity back under the federal statute in full. That is a question for the zone's regulations and for advice on your specific entity, and no fee schedule answers it. Ask it before the branch is bought, not after.

Outside Dubai there is no equivalent published instrument that we could read, checked 17 August 2026. Abu Dhabi's Department of Economic Development lists a dual licence among its licence types, and the UAE Government Portal records seven Abu Dhabi licence types against eight on the Invest in Dubai list, but neither is a gazetted schedule of routes and prices.

Most of what a business actually does in a year is federal, and federal law does not care which licence you hold. Working out what is genuinely jurisdiction-dependent shortens this decision considerably.

Corporate tax registration is required of both. The 9% rate above AED 375,000 in Article 3 of Federal Decree-Law No. 47 of 2022 applies to both. VAT is federal, and its registration thresholds apply to a free zone company exactly as to a mainland one. Ultimate beneficial owner filings, anti-money-laundering registration where the activity requires it, and the electronic invoicing regime reach both. So does the Labour Law: Article 3(1) of Federal Decree-Law No. 33 of 2021 applies it to the whole private sector, with no free zone exclusion in the scope article — DIFC and ADGM sit apart because they are financial free zones with their own legislation, not because zones are generally outside federal labour law.

Two things are widely assumed to be jurisdiction-dependent and are not:

• 0% corporate tax is not a free zone benefit. It is a status tested entity by entity in every tax period against Article 18 of the Corporate Tax Law, and lost for that period and the four that follow if a condition fails. A free zone licence is a precondition, not a grant. The conditions are set out in full elsewhere on this site rather than restated here.
• A free zone is not automatically a VAT Designated Zone. The Designated Zones are the ones named in the list annexed to Cabinet Decision No. 59 of 2017 — not 2023, a date that circulates widely — as amended by Cabinet Decision No. 35 of 2018. Holding a free zone licence puts you nowhere near that list on its own, and the regime it governs is a goods regime in any case.

One official page to read with care. Abu Dhabi's Department of Economic Development still lists "Exemptions on import, export, corporate, and personal taxes" among the advantages of free zones on its mainland-and-free-zones page, last updated 24 July 2026. The import and export half is a customs statement and is sound. The corporate tax half predates Federal Decree-Law No. 47 of 2022 and should not be relied on by anyone choosing between the two options today.

The received wisdom is that free zones are the light-touch option. On audit, for the entities most people are actually comparing, it runs the other way — and there are two separate obligations, from two different laws, that get collapsed into one.

Under company law, Article 27(1) of the Commercial Companies Law requires every joint stock company and every limited liability company to have one or more auditors auditing its accounts on a yearly basis. There is no revenue threshold anywhere in the article. That reaches a mainland LLC from its first financial year. A free zone company sits outside Article 27 to the extent Article 5(1) disapplies the statute, so its company-law audit obligation is whatever its zone's regulations impose — which differs by zone and is a question for the zone, not for federal law.

Under tax law, Ministerial Decision No. 84 of 2025 sets out who must prepare and maintain audited financial statements for corporate tax purposes. Article 2(1)(a) catches a taxable person whose revenue exceeds AED 50,000,000 in the relevant tax period. Article 2(1)(b) catches a qualifying free zone person at any level of revenue.

Put those side by side. A free zone company with AED 2,000,000 of revenue that wants the 0% rate must produce audited financial statements for tax purposes. A mainland company with identical revenue has no tax-law audit requirement at all. The 0% rate is not free: its price includes an audit that scales all the way down to zero revenue, and that audit is a recurring cost which belongs in any honest comparison of the two routes.

These are the headline differentiators in almost every comparison published on this query. Two of them are no longer differentiators, one is inverted, and the last is not what it is usually claimed to be.

Ownership. Full foreign ownership of a mainland company has been available for most activities since Cabinet Resolution No. 55 of 2021 came into force on 1 June 2021. What survives is narrower than it is usually described: seven activities of strategic impact are referred to their own regulators, and Article 10(3)(a) of the Commercial Companies Law preserves an emirate's power to set a percentage of national participation in companies within its competence. That is a per-activity, per-emirate question rather than a general 51% rule. "100% foreign ownership" is therefore no longer a reason to prefer a free zone, and it is worth noticing how much published guidance still leads with it — including Abu Dhabi's own economic department, which lists it first among free zone advantages on a page last updated 24 July 2026.

Share capital. Inverted from the usual telling. Article 76(1) of the Commercial Companies Law fixes no federal minimum for an LLC; the capital must be sufficient to achieve the object of the company. Abu Dhabi's economic department advertises "no minimum capital requirement for most business activities" on the mainland side. Free zones set their own capital rules in their own regulations, and some require the amount to be shown or deposited. Check the zone's number, because there is no federal one to weigh it against.

Visas. There is no federal formula on either side. For free zones the UAE Government Portal states that the number of visas a business can get "depends on various factors such as the package they have signed up for", and directs you to the zone for eligibility and for the scope to increase the quota; that page was updated 16 April 2026. Because the package is the facility, a free zone quota is effectively sized by the space leased, which is why the facility and the hiring plan cannot be decided separately. Any "one visa per X square feet" rule quoted to you is one zone's own allocation rule and belongs in writing from that zone before a lease is signed. This site publishes no visa-per-area figure for either jurisdiction, because none is published federally. And the staffing consequence cuts the same way as the customer question: a residence visa sponsored by a free zone entity is granted for employment by that entity, so a free zone employee cannot simply be stationed with a mainland client — in Dubai the company itself has to take one of the Executive Council Resolution No. 11 of 2025 routes first, and Article 8 of that Resolution then lets it engage its existing zone-registered workforce under the mainland licence or permit.

Premises. Required in both. The UAE Government Portal states that all businesses in the UAE must have a physical address to operate, that the premises must comply with the requirements of the emirate's economic department and municipal land planning regulations, and that in Dubai the rental agreement must be registered with Ejari. "No office needed" is a description of a particular zone's flexi-desk product, not of the free zone route in general.

"Free zone or mainland" sounds like a federal question. It has emirate-level answers, and the two emirates people ask about most differ in ways that matter.

Dubai licenses the mainland through the Department of Economy and Tourism and has codified the free-zone-to-mainland routes in Executive Council Resolution No. 11 of 2025, which expressly does not apply to financial establishments licensed in the DIFC. The UAE Government Portal records eight licence types on the Invest in Dubai list, including a dual licence.

Abu Dhabi licenses the mainland through the Department of Economic Development, which lists seven licence types — among them the Abu Dhabi trader licence, a dual licence, a freelancer licence and a virtual licence — and names six free zones on its own competitive-landscape page: Abu Dhabi Global Market, Khalifa Economic Zone Abu Dhabi, Masdar City, Abu Dhabi Airports Free Zone, twofour54 and Industrial City of Abu Dhabi. There is no Abu Dhabi equivalent of Executive Council Resolution No. 11 of 2025 that we could locate, checked 17 August 2026, so the route from an Abu Dhabi free zone to a mainland customer has to be confirmed with the department and the zone rather than read off a gazetted schedule. On the mainland proposition itself the department is direct: the primary advantage is "the flexibility to conduct business throughout the UAE", with "access to the local UAE market without restrictions".

And then the fact that ought to change how anyone treats this choice. In Abu Dhabi the boundary itself moved. UAE Cabinet Resolution No. 41 of 2023, enacted 24 April 2023, expanded the jurisdiction of Abu Dhabi Global Market to include Al Reem Island alongside its existing jurisdiction on Al Maryah Island. The ADGM Registration Authority's guidance note for Al Reem applicants records what followed: from 1 November 2023 the Department of Economic Development stopped issuing new commercial licences for Al Reem Island addresses and new businesses there had to obtain a commercial licence from ADGM, while existing businesses had until 31 December 2024 to comply with ADGM's registration and licensing requirements. Those businesses had chosen the mainland. They did not move; the jurisdiction moved over them.

The migration table in that guidance note is the plainest illustration on this page of what "which companies law governs you" means in practice — an existing mainland LLC does not stay an LLC.

Every competing page on this query carries a table with two columns of dirhams. This one does not, and the reason is not caution.

There is no source from which a like-for-like comparison could be built. Dubai's Department of Economy and Tourism prices per activity inside its own e-services rather than publishing a tariff table; the last gazetted Dubai licensing schedule is Executive Council Resolution No. 13 of 2011, amended since, which is not current pricing. On the free zone side there is no common tariff at all. Each zone prices its own packages, revises them without notice, and bundles the facility, the licence and the visa allocation together in ways that are not comparable between two zones, let alone against a mainland licence that prices those three things separately. Two free zone fee figures previously carried on this site were withdrawn once it emerged they were not in the zone's own document they had been attributed to; treat any free zone fee you have not read in that zone's current published schedule as unsourced, wherever you found it.

What can be said honestly is what drives the number, and it is the same on both sides: the activity, the facility, the number of visas, and whether the activity needs an approval from a regulator. Two businesses in the same zone can differ by a multiple on all four.

So when a comparison table tells you a free zone is cheaper, read what is being compared. It is almost always one firm's own package price for one specific zone, set against a mainland estimate assembled by the same firm. That is a quotation, not a schedule of fees, and no authority will honour it.

Three further things this page will not state. Which option is "best" or "cheapest", because the answer is entity-specific and no general answer is sourceable. How many free zones there are in the UAE, because the published figures are approximations that disagree with each other. And anything about this firm's own clients, results or track record, none of which is published.