Introduction:
The “Analysis Paralysis” Ends Here If you are planning to start a business in Dubai in 2026, you likely face one major hurdle immediately:
“Should I choose a Free Zone or Mainland license?”
For years, the answer was simple: Free Zone for 100% ownership, Mainland for local trading.But in 2026, the lines have blurred.
With the UAE government now allowing 100% foreign ownership on Mainland licenses and the introduction of Corporate Tax across both jurisdictions, the “old rules” no longer apply.
At Consult To Us, we have helped over 150 entrepreneurs navigate this choice.
This guide breaks down the real differences that impact your bottom line.
1. The “Dealbreaker” Question: Where are your customers?Before you look at costs, look at your client list.
This is the single biggest factor in your decision.
The Mainland License (Department of Economy & Tourism)Scope: You have zero restrictions.
You can trade with consumers in Dubai, sell to the government, and open a physical shop or office anywhere in the city.
Best For: Retail stores, restaurants, real estate agencies, and B2B contracting firms.
The Free Zone License (e.g., DMCC, Meydan, IFZA)Scope: You are legally restricted to trading within the Free Zone or internationally.
The Catch: To sell goods to a company on the Dubai Mainland, you must work through a local distributor (3PL).
You cannot issue a direct invoice for “goods sold” to a local Mainland company without an intermediary.
Best For: Digital nomads, consultants, e-commerce (dropshipping), and holding companies.
2. The 2026 Tax Reality: Is Free Zone Still Tax-Free?This is the most common misconception we see.
Mainland: You pay 9% Corporate Tax on profits above AED 375,000.Free Zone: You may pay 0% Tax, but ONLY if you are a “Qualifying Free Zone Person” (QFZP).
The Trap: If your Free Zone company provides services to clients on the Mainland (e.g., a marketing agency in Meydan serving a client in Business Bay), that income is often considered “disqualifying” and taxed at 9% anyway.
Expert Tip: Don’t choose a Free Zone just for tax reasons without speaking to a consultant.
For many startups, the Small Business Relief (0% tax for revenue under AED 3 Million) applies to both Mainland and Free Zone, leveling the playing field.
3. Visas & Office Space: The Hidden Costs are not just about the license fee; they are about the “total cost of operation.”Feature Free Zone Setup Mainland Setup Office Requirement Flexible.
You can use a “Flexi-desk” (virtual office) forever.Physical. You usually need a leased office (Ejari) of at least 200 sq. ft.Visa Allocation Fixed Packages. You buy a “1-Visa Package” or “3-Visa Package.”Space-Dependent. You get approx. 1 visa per 9 sq. meters of office space.Cost to Start Lower.
Starts from approx. AED 12,500 (License + Virtual Office).Higher. Starts from approx. AED 25,000+ (License + Office Rent).
SpeedFast. License issued in 3–5 working days.Moderate.
License issued in 1–2 weeks (requires approvals).
4. Scenarios: Which One Fits You?
Scenario A: The Digital Entrepreneur You: An SEO Consultant or Dropshipper from Mumbai.
Clients: Mostly in India, USA, or Europe.
Recommendation: Free Zone (e.g., Meydan or IFZA).Why: You don’t need a physical office, and your clients are international.
It’s the cheapest, fastest route to a UAE residency visa.
Scenario B: The Local Trader You: A Textile Trader or Interior Design Firm.
Clients: Hotels and shops in Dubai and Abu Dhabi.
Recommendation: Mainland.Why: You need to legally deliver goods and invoices to local businesses.
A Free Zone license would force you to hire a distributor, eating into your margins.
Scenario C: The Tech Startup You: A SaaS platform looking for VC funding.
Clients: Global.Recommendation: DIFC or ADGM (Specialized Financial Free Zones).
Why: These specific zones operate under English Common Law, which international investors prefer over local UAE civil law.
Conclusion: Don’t Guess, Calculate.Choosing the wrong jurisdiction is expensive.
Switching from Free Zone to Mainland later involves canceling your visas, closing your bank account, and starting over.
Ready to start?
At Consult To Us, we don’t just sell licenses; we build roadmaps.
Whether you need the global flexibility of a Free Zone or the local power of Mainland, we handle the paperwork while you focus on the business.
