How to Set Up a Company in Dubai: Mainland vs Free Zone (2026)

Nearly every Dubai company follows one of two paths. The Department of Economy and Tourism licenses mainland companies; many people still call it by its former name, the Department of Economic Development (DED). A free zone company registers with one of dozens of independent free zone authorities, each with its own registry, rules and licence packages.

The real difference is where you may do business. A mainland licence lets you trade across the whole UAE domestic market, take local clients, open shops or offices anywhere in the country and compete for government tenders. A free zone company is set up to trade with other free zone firms and with markets outside the UAE. To sell directly into the local market, it needs a mainland distributor or a separate mainland branch.

Neither route wins by default. Your customer base and budget decide it, along with how you weigh mainland flexibility against free zone speed and packaged convenience.

For many years a mainland company needed a UAE national to hold 51% of the shares. Reforms from 2021, following amendments to the Commercial Companies Law, removed that requirement for most activities. Foreign investors can now own 100% of a mainland company across the vast majority of commercial, professional, industrial and consultancy activities.

Free zones have always allowed 100% foreign ownership and still do, so on ownership alone the two routes are now broadly level for most businesses.

Exceptions remain. A limited set of strategic activities, reported at around a dozen sectors, keeps ownership or special approval conditions. These include oil and gas exploration, defence and military supply, certain security services, and some banking and telecommunications activities. The approved lists change over time, so confirm that your specific activity qualifies for full foreign ownership before you file.

Choose mainland if you want to serve the UAE market directly. You can sell to local consumers and businesses without a distributor, open branches across the emirates and bid for government and semi-government contracts, which are effectively closed to pure free zone entities. You will need a physical office registered on the Ejari tenancy system. That adds cost, and it also supports a larger visa allocation.

Free zones are built for speed and simplicity. Setup is faster and cheaper, often through bundled packages with a flexi-desk, a set number of visas and a single point of contact. Many zones group businesses by sector, such as technology, media, commodities, healthcare or logistics, which puts you closer to peers, regulators and customers in your field.

Customs is the other free zone advantage. You can import goods into a free zone, store them and re-export them without local customs duty, which suits trading, warehousing and re-export businesses. Selling those goods into the UAE market means paying the standard import duty and routing through a mainland channel.

The sequence is the same on both routes. First, pick your business activity or activities from the relevant authority's approved list. This sets your licence type: commercial, professional, industrial or tourism, for example.

Second, choose a legal form. On the mainland that is commonly a limited liability company (LLC). In a free zone it is a Free Zone Company (FZC) or Free Zone Establishment (FZE). Branches of existing companies are also possible.

Third, reserve and register your trade name under the UAE's naming rules, and obtain initial approval confirming the authority has no objection to you starting the business.

Fourth, arrange premises and documents. For a mainland company that means signing an office lease and registering it on Ejari; in a free zone you select a flexi-desk or office package. Then prepare the memorandum of association and any activity-specific external approvals.

Fifth, pay the fees and collect your trade licence. Last, apply for your establishment card and residence visas, which involves medical testing and Emirates ID registration for you and any staff you sponsor. A simple free zone licence can be issued in a few working days, with visas taking a few more weeks.

Cost depends on the activity, the authority, your office and the number of visas, so treat all figures as indicative. As a rough 2026 guide, a budget free zone package with one visa and a flexi-desk falls around AED 12,500 to AED 25,000 in the first year, and the most cost-conscious packages start lower still.

Premium zones and financial centres cost considerably more, running into tens of thousands of dirhams once you add offices and several visas. Mainland setup is often quoted from around AED 15,000 upward, but the mandatory physical office and Ejari registration add meaningfully to that, and larger premises unlock more visa slots.

Beyond the headline licence fee, budget for recurring items: annual licence renewal, office rent, visa issuance and renewal every few years, an establishment card, medical and Emirates ID fees, and any external regulatory approvals your activity needs. Your all-in first-year figure will almost always exceed the advertised starting price, so ask each provider for a full written quote.

Your company licence makes you eligible to sponsor UAE residence visas. As an owner you can apply for an investor or partner visa, and your licence and office size set how many staff visas you can issue. Many entrepreneurs and relocating families set up a company for exactly this: it gives them residence, an Emirates ID and the right to sponsor family members. A separate 10-year Golden Visa route exists for qualifying investors and specialists, with its own criteria.

Federal corporate tax applies to financial years starting on or after 1 June 2023. Taxable profits up to AED 375,000 are taxed at 0%, and profits above that at 9%. A temporary Small Business Relief lets eligible resident businesses with revenue at or below AED 3 million elect to be treated as having no taxable income, but it is currently set to cover only tax periods ending on or before 31 December 2026.

Free zones can offer a 0% rate, but only to a Qualifying Free Zone Person earning Qualifying Income, with adequate economic substance and transfer pricing compliance in place. Non-qualifying income is taxed at 9%. The rules are detailed and change over time, and this is general information, not tax advice, so speak to a licensed tax adviser and a business setup specialist before you decide.