Dubai free zone or mainland: what the choice actually decides

By Meet Patel · 2026-10-03 · 6 min read

For a startup in Dubai, the free zone versus mainland choice decides three things: which regulator licenses the company, where the company can operate without extra permission, and where its visas and office come from. Ownership is a weaker differentiator than it first appears, because the Dubai government portal says most mainland activities allow 100% foreign ownership, with some strategic sectors excluded, and free zones also offer it. This post covers what each term means, what has changed since 2025, and the questions I would answer before choosing. Every rule below carries the date of the official page it comes from, and rules in this area change, so check the current position with the authorities named before you act.

What the two terms mean

The Dubai government's business set-up page (dubai.ae, last modified 14 April 2026) defines mainland as all areas of Dubai outside the free zones. It states that the Dubai Department of Economy and Tourism (DET) manages registration and licensing of mainland companies. Free zones are designated areas within Dubai, and the same page notes that each zone has its own rules, regulations and regulatory authorities.

The practical consequence is that the choice also picks a rulebook. A mainland company deals with DET. A free zone company deals with its own zone authority, whose terms, fees and procedures differ from the next zone's. When someone says "the free zone requires X," the sentence is only true for one zone at a time.

Where you can sell

Executive Council Resolution No. 11 of 2025, issued on 17 March 2025 and reported by the Dubai Media Office, provides that a company licensed by a free zone authority may operate outside the free zone and within Dubai, as long as it obtains the necessary licences or permits from DET. The routes listed in the release are a branch licence within the emirate, a branch licence with the headquarters remaining in the free zone, and permits for specific activities. Licences are valid for one year and are renewable. The resolution also requires separate financial records for operations outside and inside the free zone, and it excludes financial institutions licensed by the Dubai International Financial Centre.

On 8 October 2025 the Dubai Media Office reported the launch of the Free Zone Mainland Operating Permit, run by the Dubai Business Registration and Licensing Corporation, part of DET, with the Dubai Free Zones Council. Per that release the permit is valid for six months at AED 5,000, renewable for the same fee each six months, and is open to free zone companies holding a Dubai Unified Licence, applying through the Invest in Dubai platform. The initial phase covers non-regulated activities, and the release lists technology, consultancy, design, professional services and trading, with plans to extend to regulated sectors.

The release also states that related revenues are subject to 9% corporate tax and that separate financial records must be kept in line with Federal Tax Authority requirements. I only report what the release says. How it applies to a given company is a question for a registered tax adviser.

The sensible reading, as of those two dates, is that a free zone company that meets the conditions has an official route to serve mainland customers in Dubai, and that route has a price. For a company whose activity is on the initial list, a hypothetical year of continuous permits costs AED 10,000, which is two six-month periods at AED 5,000. That is a planning figure from the release's stated fee, and the fee and activity list may change.

Visas and office

On visas, the UAE government portal (u.ae, page showing an update of 28 September 2026) states that for a free zone company you apply for an employee's work permit and residence visa with the respective free zone authority. It adds that the number of visas a business can get depends on factors such as the package it signed up for. The practical question is therefore how many visas the package includes and what it costs to increase the number.

On premises, the Dubai business set-up page says costs vary with requirements, including office space and visa numbers. It also describes dual licensing, which allows companies operating in specific free zones to extend their presence to the mainland without leasing additional office space or partnering with a local shareholder. The page says dual licensing is, as of 14 April 2026, available in collaboration with five free zones. The page does not give the office rules for a mainland licence, so I do not state them here. DET or the licensing portal is the place to confirm them for your activity.

Six questions to answer before choosing

The decision is smaller than it looks because the two routes now connect, and that makes it a good candidate for a short checklist. My list:

1. Who are the first ten customers? Ask three of them whether they require a particular licence type from a supplier. Their answer is evidence, and it costs a phone call.
2. Is the activity on the permit's initial list? Technology, consultancy, design, professional services and trading were named on 8 October 2025. If your activity is regulated, confirm with DET whether a route exists today.
3. How many visas in year one? Count founders, the first hire and any contractor who needs residence. Then ask the zone what the package includes.
4. Do you need a customer-facing premises? If meetings can happen at the customer's office or online, an office requirement matters less.
5. What is the all-in annual cost of each route? Request written quotes covering licence, office or desk, visas and any permit, then compare the totals instead of the headline licence fee.
6. What does moving later cost? Ask what it would take to add a branch, a dual licence or a permit later, and what records you would have to keep.

The last question is the easiest to skip. If an upgrade path exists and the price is known, a year in a free zone is a reversible choice, and a reversible choice deserves less deliberation than an irreversible one. Fewer options win when each option can be changed later, because the cost of choosing wrongly shrinks to a known fee.

A hypothetical example

Take a four-person design studio with three founders who need residence visas in year one. Design is on the permit's initial list as of 8 October 2025. The studio's clients are mid-sized Dubai companies, and the founders call three prospects to ask whether a supplier's licence type matters in their contracts.

If none of the three cares, the studio can start in a free zone whose package covers three visas and plan to add the operating permit if mainland work arrives. Over a full year that permit would cost AED 10,000 at the fee announced in October 2025. If two of the three say their procurement needs a mainland licence, the permit would become a recurring cost on the busiest part of the revenue, and a mainland licence from the start may be the cheaper path. I cannot price either route here, because I have not sourced any zone's fees. The step that decides it is the written quotes from question five, and I would leave that figure blank until they arrive.

What I would check on each authority's site

The rules change, so the work is to confirm each item with the authority that owns it, and to write down the date you did so. The Dubai Department of Economy and Tourism owns mainland licensing and the permit framework. The free zone authority owns its own package, visa quota and fees. The Federal Tax Authority administers tax registration. For how free zone income is treated, ask the Federal Tax Authority or a registered tax adviser. Write the three answers into a note with the date and the page address, because the answer you read today may differ in a year.

For a company at the stage of its first customers, the lesson I take from the 2025 changes is that licence type matters less than knowing who you will sell to and what that requires. A founder who has the answer to the first question can usually pick the cheapest compliant route and revisit it at the next renewal.

A choice between two licensing routes is a choice between two sets of dated rules, and the useful habit is to record the date next to each rule you rely on.

Written by Meet Patel — startup operator and growth strategist in Dubai.

Read on themeetpatel.com