The free zone versus mainland decision is usually presented as a question about ownership. In 2026 it is mostly a question about money, and the gap between the two is larger than the brochures suggest.
The short answer
A single-founder free zone setup with one visa realistically costs AED 22,000 to 32,000 in year one, then AED 18,000 to 24,000 a year.
A mainland LLC runs AED 50,000 to 70,000 in year one and AED 35,000 to 50,000 to renew. The gap is mostly the compulsory physical office.
In DMCC, office space also controls how many visas you get: one visa per nine square metres.
What each route really costs
Licence fees are quoted everywhere. Total first-year cost rarely is, and that is the number that decides whether a plan works.
| Free zone | Mainland LLC | |
|---|---|---|
| Licence | AED 10,000 – 12,900 in Dubai zones | AED 15,000 – 25,000 |
| Total government fees | Included in most packages | AED 25,000 – 35,000 with DET, Ejari, market fee |
| Realistic year one, one founder one visa | AED 22,000 – 32,000 | AED 50,000 – 70,000 |
| Annual renewal | AED 18,000 – 24,000 | AED 35,000 – 50,000 |
| Physical office | Flexi-desk usually sufficient | Mandatory, with registered Ejari |
IFZA licences start around AED 11,900 with digital onboarding. Northern emirates free zones go lower still, from about AED 5,500, at the cost of distance from Dubai and, sometimes, of how clients perceive you.
Most of the mainland premium is not the licence. It is the compulsory leased office and its registered tenancy contract. If you are one person with a laptop, you are paying tens of thousands of dirhams a year for a room you may barely use.
What you actually get for the difference
Mainland lets you trade directly with the UAE market and take government contracts without a local service agent arrangement. Free zone companies are set up for international trade and for serving clients outside the UAE, and trading into the local market usually means working through a distributor or opening a branch.
If your customers are UAE businesses and consumers, mainland is often worth the money. If your customers are anywhere else, paying mainland prices buys you very little.
Office space controls your visa quota
This catches founders out. In DMCC, residence visa allocation is tied to the physical area you lease, at roughly one visa per nine square metres. A flexi-desk package typically allows one to three visas depending on the package, and getting more means leasing a bigger office.
Plan the team you expect in eighteen months, not the team you have today. Upgrading mid-year is possible and always more expensive than starting correctly.
Where to put the desk
| Location | Rent |
|---|---|
| JLT and Uptown Dubai | AED 1,200 – 2,500 per m² per year |
| JLT, mid-sized fitted space | around AED 189 per ft², roughly AED 223,000 a year |
| Free zone flexi-desk | Bundled into most licence packages |
JLT sits in the middle of the market and is the pragmatic answer for most small companies: DMCC licensing, a metro line, and rents well below DIFC. DIFC and Downtown cost considerably more and buy you an address that matters in finance and law, and matters much less everywhere else.
How to choose
- Where are your customers? UAE-based means mainland deserves serious thought
- How many residence visas will you need in eighteen months, not today
- Do you genuinely need a physical office, or a business address and a desk
- Is your sector restricted in free zones, since some activities are mainland-only
- What is the renewal cost, not just the setup cost, because you pay it every year
The honest default for a first company serving international clients is a Dubai free zone with a flexi-desk. It is cheap enough to be wrong about, which matters more than people admit in year one.
Whichever you choose, the 9 percent corporate tax applies to profits above AED 375,000. Our tax guide explains where that line sits.
The four mistakes that cost the most
Setup advice is everywhere. What is harder to find is the list of decisions people regret eighteen months later.
- Choosing the cheapest zone without checking the activity list. Every free zone licenses a defined set of activities. Discovering yours is not on the list after you have paid means starting again elsewhere.
- Under-sizing the visa quota. Office area controls how many residence visas you get. Hiring your third employee and finding you can only sponsor two is an expensive surprise mid-year.
- Ignoring the renewal. The setup fee is quoted loudly and the annual renewal quietly. Over three years the renewals cost more than the setup did.
- Assuming free zone means no tax. Free zone companies can qualify for a zero rate on qualifying income, but the conditions are specific and real. Assuming the exemption applies without checking is how a 9 percent bill arrives unannounced.
The pattern in all four is the same: the visible cost is the setup, and the expensive decisions are about what happens afterwards.
Questions we get asked
- Can I own 100 percent of a mainland company now?
- For most activities yes, following reforms that removed the general local-partner requirement. A limited set of strategic activities still carries conditions, so confirm for your specific activity rather than relying on the general rule.
- Is a flexi-desk a real office?
- It is a real, registered business address with a desk you can use, and it satisfies free zone requirements. It does not satisfy mainland requirements, which need a leased office with a registered Ejari.
- Do free zone companies pay corporate tax?
- Free zone companies can qualify for a zero rate on qualifying income if they meet the conditions, but the regime is specific and the conditions are real. Take advice on your particular activity rather than assuming the exemption applies.
- What happens if I close the company?
- There is a formal liquidation process with its own cost and timeline, and it must be completed properly or the licence and visas remain your responsibility. Budget for the exit as well as the entry.
- DMCC on free zone licensing and visa quotas
- UAE Government portal (u.ae) on employment and business rules
- UAE Federal Tax Authority on VAT and corporate tax
- Dubai Land Department on property and commercial leases
Torn between a free zone and mainland for your specific activity? Tell us what you sell and to whom.
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