Mainland vs Free Zone Licensing in Dubai: Which Structure Fits Your Business and Premises

The difference is who issues the licence, and what territory that licence lets you trade in. Mainland companies are licensed by Dubai Economy & Tourism (DET, formerly the Department of Economic Development) and can operate across the UAE, bid for government contracts, and take premises in any mainland location. Free zone companies are licensed by one of Dubai's independent free zone authorities. There are a lot of them, and that is a planning fact rather than trivia: u.ae's own directory names more than twenty Dubai zones individually, running from the large multi-sector authorities — DMCC, Jebel Ali, Dubai Airport Free Zone, Dubai South — through the DDA cluster of Internet City, Media City, Studio City, Design District and Knowledge Park, to narrow sectoral zones such as Dubai Science Park, Dubai Maritime City, Dubai HealthCare City and the Gold and Diamond Park. Each sets its own permitted activities, premises options and visa allocations, so "free zone" is a category, not a specification. Historically all of them have been scoped to their own zone plus international and re-export trade.

That territorial split is the root of every downstream difference, including the property one. It is also the thing the 2025 reform changed, without abolishing.

For the wider dependency chain that licensing sits inside — activity, approvals, Ejari and power — start at the Licensing & Utilities hub.

Yes, but only through a DET-issued authorisation, and only with its own free zone authority's prior approval. Executive Council Resolution No. (11) of 2025 is dated "Issued in Dubai on 3 March 2025", and Article 15 provides that it "will be published in the Official Gazette and will come into force on the day on which it is published." The instrument itself does not name the gazette date, so the two dates coincide only if publication happened on the day of issuance. KPMG's briefing states in a footnote that the Resolution was published in the Official Gazette on 3 March 2025, and Reed Smith's note likewise treats 3 March 2025 as the effective date. We adopt that date on their authority rather than the Resolution's, and it matters: every deadline below, including the grace-period expiry, is measured from it. Article 4 sets out three ways DET may authorise an establishment to conduct activities within the Emirate outside its free zone: a licence to establish a branch of the establishment within the Emirate; a licence to establish a branch of the establishment operating out of the free zone; or a permit to conduct specific activities within the Emirate.

Article 2 excludes financial establishments licensed to operate in the Dubai International Financial Centre, so DIFC-licensed financial firms cannot use these routes.

Read the fee column carefully, because the gap in the first row is easy to misread as "free". Article 12 names its own scope — it collects fees "in return for issuing Licences to an Establishment to establish a branch operating out of the Free Zone and for issuing Permits" — and then lists exactly two amounts. The in-Emirate branch is simply not priced there. Article 5 makes clear it is still chargeable: among its conditions is that "the prescribed fees must be paid to the DET in accordance with applicable legislation". The number exists; it lives in DET's schedule, not in this instrument.

The distinction between the first two rows is the one that matters for property, and it turns on what each article does and does not require. Article 5(a)(5) states in terms that "the branch of the Establishment must be located within the Emirate", which puts you back into mainland premises territory — a real unit, a rental agreement, Ejari. Article 6 carries no equivalent condition: under it, DET licenses the establishment to set up "a branch in the Free Zone for the purposes of conducting its Activities within the Emirate". Be careful with the shorthand here. The familiar description of this route as one where the registered office stays in the free zone comes from the practitioner briefings — Reed Smith calls it "a branch operating in the mainland but from a registered office located in a free zone", and CMS describes a branch "with its headquarters in the free zone" — not from the text of Article 6, which speaks only of a branch established in the free zone. CMS reads the route as a departure from the previous position, under which a free zone company wanting onshore trade generally had to maintain physical business premises onshore. The practical upshot is the same either way: one route needs a mainland lease and one may not.

The activity list this all depends on

Article 9 states that DET, "in coordination with the relevant Licensing Authority, will issue, within a period not exceeding six (6) months from the effective date of this Resolution, a list of Economic Activities." Measured from 3 March 2025, that six-month window closed in September 2025.

Something did follow, though not in the form of a published schedule. On 8 October 2025 the Government of Dubai Media Office announced that the Dubai Business Registration and Licensing Corporation, part of DET, had launched the Free Zone Mainland Operating Permit with the Dubai Free Zones Council, expressly "under the Dubai Executive Council Decision No. 11 of 2025". The announcement says that "in its initial phase, the framework covers non-regulated activities including technology, consultancy, design, professional services, and trading, with plans to extend to regulated sectors", that eligible companies holding a Dubai Unified Licence "can apply digitally via the Invest in Dubai (IID) platform", and that the permit "is valid for six months at a cost of AED5,000 renewable for the same fee every six months" — a figure consistent with Article 12.

Read that for what it is. It tells you the Article 7 permit route is operational and gives the first tranche of eligible activities in broad categories. It is not the itemised Article 9 list, which would have to say, activity by activity, which of the three routes each activity requires. No such itemised list could be confirmed as published. Notably, KPMG's briefing still described it in the future tense as something DET "will issue" — and that briefing's page metadata dates it 15 October 2025, a week after the permit launch and six weeks after the Article 9 deadline lapsed. That is reasonable evidence the full list had not appeared by then, though it says nothing about the position today.

So do not assume your activity qualifies. The permit route expressly requires the activity to be on the prescribed list, and the branch routes are shaped by it too. If your activity is regulated, the Media Office's own wording puts you outside the permit's initial phase. Ask DET directly for the current Article 9 position, in writing, naming your specific activity code — and treat any activity list you find on a company-formation agent's website as marketing until DET confirms it.

Three parties. The Resolution lists these as conditions rather than as an order of operations — it prescribes no sequence — but the practical ordering below follows from which consent gates which. Every route in the Resolution requires the prior approval of the licensing authority — that is, the free zone that issued the parent licence — as an express condition. Each route then requires the approval of the government entities in charge of supervising the activity, where required. And DET issues the licence or permit itself. KPMG's briefing describes the same structure: prior approval from the free zone licensing authority and, where applicable, other government entities supervising the activity.

Two consequences follow for anyone underwriting a lease. First, a free zone tenant's ability to occupy a mainland unit is contingent on a consent it does not itself control. Second, if the activity is regulated — healthcare, education, food — the sector regulator assesses the premises, not just the company. Free zone status has never exempted a regulated activity from sector regulation; it only changes which authority issues the underlying trade licence. The detail of who signs off what is set out in our guide to external government approvals for Dubai business licences.

The Resolution also confirms that these establishments are subject to audit and inspection under applicable federal and local legislation, and that existing legislation — including its administrative penalties — applies to them. It does not create a separate penalty regime of its own.

The one-year window under Article 13 ran from the effective date of 3 March 2025, so it closed on 3 March 2026 unless extended. Article 13 requires all establishments that were conducting activities outside the free zone and within the Emirate by the effective date to comply within one year, and gives the Director General power to extend the grace period once for the same period.

Whether that discretionary extension was actually exercised is not something this guide can tell you, and it is worth being exact about why. The Dubai Legislation Portal publishes the Resolution — its copy is the source for everything quoted above — but its English legislation search runs its queries entirely in the browser, so the portal's post-2025 instruments have not been reviewed one by one here, and DET's own channels, where an extension would most likely surface first, are not sourced in this guide. Treat this as an open item rather than as evidence that no extension exists.

Either way, this is live exposure rather than a technicality. If you are relying on a legacy cross-jurisdiction arrangement that predates March 2025, get the current position from DET or UAE-qualified counsel before you renew a lease or commit capital against it. The downside of assuming grandfathering and being wrong is a licensing problem attached to premises you are already paying for.

One practical point in the establishment's favour: Article 8 allows it to engage its existing workforce registered on the free zone portal and to continue benefiting from free zone employment privileges. Staffing is not the obstacle; licensing and premises are.

Largely, for most activities. Federal Decree-Law No. 26 of 2020 came into effect in early 2021 and permits 100% foreign ownership of mainland commercial companies. The exclusions are specific and published: security, defence and military activities; telecommunications; banking, exchange, financing, insurance and currency production; commercial agencies; Hajj and Umrah organising; Quran recitation institutes; and fish, natural pearl and marine animal catching. The law also authorises the Cabinet, on a committee's recommendation, to identify activities of "strategic impact" and set licensing requirements for them that may include foreign-ownership restrictions.

Free zones have offered full foreign ownership as a structural feature for far longer. The residual differences are in the detail — visa allocation, permitted activities, share transfer rules — and those vary by authority rather than following a single rule. For the strategic backdrop to Dubai's free zone build-out, see our guide to Dubai's free zones and government initiatives and the reporting on DMCC's H1 2025 registration figures.

Mainland licensing is anchored to a registered physical address in a way free zone licensing is not. Official guidance on starting a mainland business lists "selecting a location to conduct business" as a formal step, states that businesses must have a physical address to operate, requires an office or warehouse rental agreement, and specifies that in Dubai the agreement must be registered with Ejari. The full official sequence is: identify a business activity; select a legal form; apply for a trade licence; register the trade name; apply for initial approval; draft a Memorandum of Association and local service agent agreement where applicable; select a location; obtain additional government approvals; and submit documents and pay fees.

The official wording is deliberately open on size. It says only that "all businesses in the UAE must have a physical address to operate" and that "the business premises and location must comply with the requirements defined by the respective emirate's Department of Economic Development, as well as the land planning regulations of the local municipalities" — a pointer to DET's rules rather than a stated rule.

A minimum office area, usually tied to visa quota, circulates widely in the market. No figure for it is repeated here. No minimum floor area appears in the official mainland guidance, and Resolution No. (11) of 2025 contains no premises, office or floor-area requirement at all. DET's service pages, where such a rule would live, are not sourced in this guide. An earlier version of this guide carried such a figure and it has been removed. Get any area requirement from DET in writing, against your specific activity and visa count, before you size a unit around it — and be aware that a company-formation agent quoting you a square-metre minimum may be describing one authority's practice, or nothing at all.

Free zone tenancies work differently: they are arranged and registered through the zone's own system rather than through Ejari. Note the asymmetry in the official guidance, because it is easy to miss. The mainland route attaches a hard documentary requirement to premises — an office or warehouse rental agreement must be provided, and in Dubai it must be registered with Ejari. The equivalent u.ae page on starting a business in a free zone sets out legal forms and zones but states no premises requirement at all, leaving the question to each authority. Hence the practical rule: confirm with the specific zone what it will accept for your visa count, and do not assume a mainland licence offers an equivalent low-footprint option. The due diligence question changes shape accordingly. For a mainland unit you ask "is this Ejari-registerable and does it suit the activity"; for a free zone unit you ask "does this zone's own property portfolio support my occupancy plan". Both questions are covered in office, Ejari and signage requirements for a Dubai trade licence and in the lease-registration mechanics set out under RERA, Ejari and Oqood.

There is no reliable single answer, and none is invented here. The only figures available from an official source are the two published in the Resolution: AED 10,000 per year for a branch operating out of the free zone, and AED 5,000 for a temporary permit.

To those two the Media Office announcement adds one operational detail: the Free Zone Mainland Operating Permit is charged at AED 5,000 for six months and is "renewable for the same fee every six months", so a full year of continuous permit cover is two charges rather than one.

Everything else on the licensing side is unpriced here on purpose. DET publishes a fee schedule for mainland trade licence issuance, but no figure from it could be confirmed against a DET source, as set out in the sources below. This guide therefore quotes no DET licence fee at all rather than borrowing one from a formation agent's price list.

There is one discrepancy worth knowing about before you budget. KPMG's briefing on the Resolution sets out a fee table that puts AED 10,000 per year against a "branch license (within the Emirate)" as well as against the branch operating out of the free zone. The Resolution's own Article 12 does not state that. It names two chargeable items — the out-of-zone branch licence and the temporary permit — and stops. We are not able to say whether KPMG had sight of DET's schedule, or read the two branch routes as attracting the same fee. Either is plausible. What you should not do is treat AED 10,000 as the published Article 5 fee, because it is not published in the Resolution. Ask DET what the in-Emirate branch actually costs and get the answer in writing.

Free zone package pricing is equally resistant to generalisation: it moves with the authority, the visa allocation, and whether a flexi-desk, office or warehouse is bundled in. The honest guidance is to get written quotes for your specific activity, visa count and facility type from the zone itself and from DET, and to price the premises separately — rent, service charge and fit-out usually dwarf the licence line either way. For benchmarking the rent side, the Dubai commercial index is a better starting point than any licence-cost table, and the wider supply picture in what Dubai's office space shortage means for investor returns explains why premises cost, not licence cost, tends to decide the budget.

The tax question, and how far it is actually answered

Resolution No. (11) of 2025 is a licensing instrument, not a tax one. Its full text on the Dubai Legislation Portal does not mention corporate tax anywhere. The KPMG briefing on it is silent on corporate tax and on Qualifying Free Zone Person status as well.

One official statement does exist, and investors should weigh it carefully. The Government of Dubai Media Office announcement of 8 October 2025 states that "free zone companies engaging in mainland activities will be subject to 9% corporate tax on related revenues and must maintain separate financial records in line with Federal Tax Authority (FTA) requirements". Take that seriously as a signal of the intended treatment — it is a government announcement, and it points the same way common sense does. But note precisely what it is and is not. It is a press announcement accompanying a permit launch, not FTA guidance, not a tax ruling, and not a statement about Qualifying Free Zone Person status. It says mainland-related revenue is taxed at 9% and must be separately recorded; it does not say what effect earning that revenue has on the qualifying status of the rest of the company's income, which is the question that actually determines the cost.

The FTA's own material does not close the gap. Its Corporate Tax landing page contains no occurrence of the phrase "free zone", and working through its Topics index and its Guides & References index surfaced no Free Zone Persons material — the only free zone reference in them is an incidental mention of Qualifying Free Zone Persons in the Small Business Relief content. So no FTA wording on how mainland-sourced income interacts with Qualifying Free Zone Person status is quoted here, and none should be inferred from the licensing analysis above.

That is the reason this section exists. Whether income earned through an Article 5 or Article 6 branch, or under the permit, affects a free zone company's 0% position on its remaining income is a live and consequential question, and getting a mainland licence route right tells you nothing about the answer. Put it to an FTA-registered tax adviser as a separate workstream, before you commit to a route rather than after. Our guide to UAE corporate tax and VAT on commercial property sets out the shape of the issue but is not a substitute for advice on Qualifying Free Zone Person status.

Some free zones support F&B, retail and healthcare activities within specific precincts, but the premises must still satisfy the same activity-specific external approvals — Dubai Municipality Food Safety, DHA — that apply on the mainland. Those regimes are set out in our sector approvals hub, and in detail for food and beverage premises and healthcare premises. The activity you register is the root decision in both systems: it sets the licence category, triggers or excludes external approvals, and determines what the unit must technically support. See how business activity selection dictates your licence, approvals and premises for the activity-by-activity cascade, and note that fit-out approval routes also differ by jurisdiction — fit-out approvals in DDA/TECOM, DIFC and DMCC run on the zone's own process, not Dubai Municipality's.

• Confirm the activity is on DET's current Article 9 list before assuming any mainland-access route is available to you.
• Get the free zone's prior approval in writing — it is a condition of every route and it is not yours to grant.
• Match the route to the premises plan. A six-month permit does not support a fitted showroom; an Article 5 branch does but needs a mainland location.
• Identify the sector regulator early if the activity is regulated, because it will assess the unit, not just the entity.
• Check Ejari registrability of the actual unit, not the building — including whether the landlord's title and the unit's permitted use match your activity.
• Get DET's fee for your specific route in writing, especially for the Article 5 in-Emirate branch, which the Resolution does not price. Do not budget from a figure you found in a briefing or an agent's price list.
• Price rent, service charge, fit-out and power separately from the licence. The licence is rarely the expensive part.
• Run the corporate tax question in parallel, not afterwards. The licensing route says nothing about your Qualifying Free Zone Person position.
• If you have a legacy cross-jurisdiction arrangement predating March 2025, treat compliance as urgent rather than assuming grandfathering.

As a rough guide: mainland suits businesses needing UAE-wide trading rights, government-contract eligibility, or a retail or F&B presence in a mainland mall or street unit. Free zone suits businesses focused on international trade, logistics, media, tech, or holding structures where the zone's ecosystem and facilities are the draw. The branch, dual-licence and permit routes suit an existing free zone company that wants a compliant mainland footprint without re-domiciling — and, for the fastest mainland route where the activity qualifies, see the Dubai instant licence via Bashr and the full trade licence process from initial approval to issuance.

For a landlord, the underwriting read is straightforward. A mainland tenant is tied to a real, inspectable, Ejari-registered unit. A free zone tenant using the Article 6 dual licence may have no mainland premises obligation at all, which is a different covenant to assess.