Free Zone vs Mainland Company: Real Cost Comparison 2026
Free zone setups start from AED 5,500 with 0 percent tax up to AED 375,000 profit. Mainland costs more but gives direct access to local clients. Here is the 2026 cost breakdown.
License and Setup Fees
Free zone company formation begins at AED 5,500 for a single-activity license in zones such as IFZA or SPC. Mainland licenses through DED cost AED 15,000 to AED 25,000 depending on activity and emirate. Both routes require a trade name reservation of AED 300 and initial approval from MOHRE when hiring staff.
Office and Visa Costs
Free zones offer flexible desk packages from AED 12,000 per year that cover the minimum 100 square feet needed for two visas. Mainland setups need a physical tenancy contract stamped by Ejari, averaging AED 18,000 to AED 30,000 for a small office in Dubai or Abu Dhabi. Each visa, whether free zone or mainland, adds AED 4,800 in medical, Emirates ID, and stamping fees in 2026.
Tax and Profit Rules
Both company types pay 0 percent corporate tax on the first AED 375,000 of taxable profits. Free zones keep 0 percent on qualifying income when all substance rules are met. Mainland companies face 9 percent on profits above the threshold but can sell directly to government entities and consumers without a local distributor.
Banking and Compliance
Free zone firms open corporate accounts in 5 to 10 days with documents from the free zone authority. Mainland firms require an additional DED activity list and may wait 2 to 3 weeks. Annual audit costs for either structure start at AED 4,500 once revenue exceeds AED 1 million.
Which Structure Fits Your Plans
Choose a free zone if you trade internationally or need fast setup and lower fixed costs. Choose mainland if you need walk-in customers, government contracts, or plan to open branches across multiple emirates. Renewals repeat the same fee pattern each year, so calculate three-year totals before deciding.
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Frequently asked questions
Can a free zone company sell inside the UAE?▾
Yes, but most free zones require a local distributor or 100 percent mainland subsidiary for direct local sales.
What is the minimum capital for each option?▾
No minimum capital is required for most free zone or mainland LLCs in 2026.
How long does mainland licensing take?▾
Mainland licensing takes 7 to 14 working days once all documents are approved by DED and MOHRE.
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