3 months — under both regimes
Registration with the FTA is mandatory within three months for Mainland and free zone companies alike; late registration costs AED 10,000. “No tax in free zones” is a myth: corporate tax covers every UAE company.
Company Registration in the UAE and Abroad
Since the 2021 reform, the difference between mainland and free zone is no longer about ownership — 100% is possible in both. It is about where you can operate, what office you need, how many visas you get and how your income is taxed. Let’s go through it point by point.
In short
You can own 100% both on the mainland and in a free zone; they differ in clients, office, visas and tax. Mainland serves the entire UAE market; a free zone company pays 0% only on qualifying income, with non-qualifying revenue within 5% or AED 5 million. FTA registration: 3 months in both regimes.
Checked 4 November 2026 · Kermen Tserenkeeva
Cost of a mistake
5 tax periods
If a free zone company breaches any condition of its 0% status, it loses the status from the start of that period and for the four following ones.
How to avoid itThe right question is not “which is better” but where the money will come from. Revenue from UAE clients argues for the mainland; revenue from abroad argues for a free zone.
Ownership is no longer a factor
The mainland used to mean a local partner holding 51%. Since 2021, a foreigner can own 100% of a Mainland company for most activities.
The mainland is the whole market
Private clients, companies, government contracts, shops and warehouses in any district. In return — an office with Ejari and, as a rule, a longer registration.
A free zone means speed and 0%
A fast start, flexible office packages and the possibility of 0% tax on qualifying income. But working with mainland clients comes with restrictions.
A mixed model can be split
If revenue comes from both, a combination works: a free zone company for some revenue streams, and Mainland or a branch for others.
Expert tip
Before choosing, break your revenue down by source and estimate the share of mainland clients. If it is significant, a free zone will get in the way on both licensing and tax.
Kermen TserenkeevaSenior Lawyer · Company registrationBenefits
Comparison
The general picture. Individual zones and emirates have exceptions — we check them for your activity.
Entering the mainland
In Dubai, since 2025 a free zone company can obtain DET licences and a DET permit under Resolution No. 11 of 2025; other emirates have their own rules, and the resolution does not cover DIFC financial firms. Fees as of October 2026. The main difference is how mainland income is taxed.
The distributor
Not needed
Goods — 0% possible
distribution from a designated zone to a reseller; services are usually non-qualifying income
Click an option to highlight it across every parameter
How to choose
Answer them honestly — and the choice usually becomes obvious.
If most of your revenue will come from individuals and companies on the UAE mainland — Mainland. If from foreign clients and other free zones — a free zone.
A shop, showroom, warehouse in the city, work on client sites, specialists making call-outs — all of this is simpler and more lawful on the mainland.
One to three visas at the start — a free zone with a flexible package. A team of ten or more — cost out both options: a mainland office may work out cheaper than a chain of packages.
Manufacturing, processing, commodities trading, logistics, distribution from a designated zone to resellers, holding shares — a free zone can give you 0%. Services to mainland and foreign clients, sales to individuals — more likely 9% above AED 375,000, and tax stops being a factor.
If yes — Mainland, sometimes with an ICV certificate. A free zone company generally doesn’t take part in such procurements.
If your revenue streams differ, it sometimes makes sense to have a free zone company for exports and Mainland or a branch for the local market. It costs more to maintain but is cleaner on taxes and licensing.
Quick match
The questions follow the same criteria as above. The result is a guide: for mixed models and regulated activities, we calculate using your numbers.
01Where will most of your revenue come from?
02Do you need a shop, a warehouse in the city or work on client sites?
03What brings in most of your income?
04How many visas do you need at the start?
05Do you need government contracts and large local corporates?
Answer the questions — we will show what fits and why.
Mainland
A mainland company: clients across the UAE and government contracts
Free zone
A fast start and 0% on qualifying income
Offshore
A company for holding assets — no office or visas
Fits
Mainland
A mainland company: clients across the UAE and government contracts
from 2 weeks
to licence
up to 100%
foreign ownership
the entire market
UAE clients
Why
If the revenue streams differ, two structures sometimes make more sense: a free zone company for exports and Mainland or a branch for the local market. It costs more to maintain but is cleaner on taxes and licensing.
Services to free zone companies can qualify for 0%, while services to mainland and foreign clients usually can’t: then it is 0% on profits up to AED 375,000 and 9% above under either regime, and tax stops being a factor.
A team of ten or more — cost out both options: a mainland office may work out cheaper than a chain of free zone packages.
In Dubai, according to the emirate government’s announcement of 8 October 2025, a DET permit also opens government procurement to free zone companies; we check the requirements of each specific tender in advance.
Fits
Free zone
A fast start and 0% on qualifying income
from 5 working days
licence
100%
ownership
40+
zones to choose from
Why
Selling goods to end customers is not distribution: 0% requires a buyer who resells or processes the goods.
Fits
Offshore
A company for holding assets — no office or visas
from 5 working days
registration
100%
ownership
no visas
and no office
Why
Let’s discuss the details
Mixed models are common. Send us revenue by channel and your hiring plan, and we’ll cost both options using your numbers.
Process
Every step is visible in the client portal: what’s happening now and whether we need anything from you.
Steps on your side: 2 of 7
You describe what you sell, to whom, in which countries and how many people need visas. We clarify how payments and counterparties are set up.
Step 1 of 7
You describe what you sell, to whom, in which countries and how many people need visas. We clarify how payments and counterparties are set up.
Documents
To compare the options
For registration — under either option
Additionally for Mainland
Timing and budget
What you should compare is not the registration price but the cost of ownership. On the mainland the main item is the office; in a free zone it is the package and visas. Here is what we include in both estimates.
Tax
Both regimes give zero tax, but on different conditions — and they cannot be combined: a company with Qualifying Free Zone Person status cannot elect Small Business Relief.
What it gives: 0% corporate tax
Condition: transactions with free zone companies that use the goods or services themselves, and activities on the list: manufacturing and processing, commodities trading, logistics, holding shares, distribution from a designated zone to resellers
Does not cover: transactions with individuals — with rare exceptions; income of a branch outside the zone; income from real estate outside the zone
What it gives: also 0% while within the limit; exceeding it means losing the status
Condition: non-qualifying revenue — services outside the list to clients outside free zones, transactions with individuals — no more than 5% of total revenue or AED 5 million, whichever is lower
Does not cover: income of a mainland branch and from real estate — 9% from the first dirham, as a company with the status has no AED 375,000 threshold; branch revenue doesn’t count towards the limit
What it gives: mandatory conditions: without them, there is no status
Condition: assets, full-time employees and expenses in the zone that match the core activities; audited financial statements at any revenue; related-party transactions at arm’s length and documented
What it gives: the standard rates — 0% on profits up to AED 375,000 and 9% above
Condition: the status is lost from the start of the period in which any condition is breached or the company itself opts for the standard regime, and for the four following periods
Registering in a free zone does not by itself give 0%: a company on a flexi-desk with no employees, or with non-qualifying revenue above the limit, puts its status at risk — and then pays the standard rates for that tax period and the next four.
What it gives: the company is treated as having no taxable income: no tax is paid, the return is simplified, and no transfer pricing documentation is needed
Condition: revenue of no more than AED 3 million in the current and all previous tax periods; the relief is elected in the return for each period
Does not cover: companies with Qualifying Free Zone Person status and members of multinational groups with revenue above AED 3.15 billion
What it gives: the same relief for Mainland and for a free zone company without Qualifying Free Zone Person status
Condition: the company is a UAE tax resident, is registered with the FTA and files a return
What it gives: a duty to monitor revenue: the relief is lost for good
Condition: revenue exceeded AED 3 million in at least one period — no relief from then on, even if revenue later falls
Does not cover: a business artificially split into companies to stay under the threshold: the FTA will assess additional tax and penalties
What it gives: a restriction, not a relief: a loss in a year with the relief is disregarded and not carried forward
Condition: losses from earlier periods without the relief are preserved and carried forward
The relief was extended in August 2026: Ministerial Decision No. 131 applies it to tax periods ending no later than 31 December 2029. FTA registration and the tax return remain mandatory.
Getting it right
Click a card to see how to do it right · 0 of 6 open
01 What people often do
Choosing a free zone “because it gives 100% ownership” without checking where your clients are.
02 What people often do
Setting up a free zone company and invoicing mainland clients directly.
03 What people often do
Choosing a free zone for 0% tax when the business earns non-qualifying income.
04 What people often do
Comparing a free zone package price with DET fees and forgetting about mainland office rent.
05 What people often do
Setting up Mainland for one local client when 90% of revenue is exports.
06 What people often do
Treating the choice as final and fearing a permanent mistake.
FAQ
Kermen Tserenkeeva — Company registration
At the start with one or two visas, a free zone is usually cheaper: a flexi-desk package versus renting a mainland office. As the team grows, the gap narrows, and sometimes the mainland comes out ahead — you need an office anyway. Calculate the three-year cost of ownership for your headcount.
Kermen Tserenkeeva · Company registrationDeadlines, amounts and rules are based on these sources as of the check date. Rules change: check with us before deciding.
Next step
Describe what you sell, to whom and where, and how many people need visas. We’ll map your model against these criteria, show where the mainland wins and where a free zone does, and send a budget breakdown for both options.
Kermen TserenkeevaSenior Lawyer · Company registration
Company Registration in the UAE and Abroad
