Anyone starting a business in the UAE must first answer one question: should the company be registered on the "mainland" or in a "free zone"? The choice affects where you can sell, the type of licence, the registering authority and even tax. This article is based on pages of the official UAE Government portal (`u.ae`) and the UAE Ministry of Finance, checked on 24 October 2026.
The two routes compared
| Topic | Mainland | Free zone |
|---|---|---|
| Registering authority | The emirate's economic department | The authority of that free zone |
| Selling in the UAE local market | Activity across the whole UAE | Access to the mainland market is "regulated"; direct sales are generally not allowed without a mainland licence |
| Selling within the zone and internationally | — | Free, according to the UAE Government portal |
| Foreign ownership | Up to 100% in permitted activities; some strategic activities are restricted | Full foreign ownership possible |
| Customs duty | The general customs rules | 0% on goods imported into the free zone |
| Corporate tax | The general rate | 0% only on the "qualifying income" of a Qualifying Free Zone Person |
The free zone column is based on the UAE Government portal's page "Running a business in a free zone" (updated on 28 September 2026), and the tax row on the Ministry of Finance.
Full foreign ownership on the mainland
The UAE Government portal says the government amended the Commercial Companies Law and foreign investors can now own up to 100% of certain businesses; the earlier cap was 49%. These changes were later consolidated in "Federal Decree-Law No. 32 of 2021 on Commercial Companies". The Cabinet, on a committee's recommendation, identifies activities of "strategic impact", and their licensing conditions may restrict foreign ownership. The portal lists, among others, security and defence, telecommunications, and banking and insurance as restricted.
Nine steps for mainland registration
The UAE Government portal, updated on 16 July 2026, lists these steps:
| Step | Task |
|---|---|
| 1 | Identify the business activity |
| 2 | Choose a legal form that matches the activity |
| 3 | Apply for a trade licence |
| 4 | Register the trade name with the emirate's economic department |
| 5 | Obtain initial approval |
| 6 | Draft the memorandum of association and, where needed, a local service agent agreement |
| 7 | Choose the business location |
| 8 | Obtain any other government approvals |
| 9 | Submit the documents and pay the fees |
A few points from the same page:
- A foreign investor must obtain the approval of the General Directorate of Residency and Foreigners Affairs before the initial approval.
- Every business needs a physical address; an office or warehouse lease is required and some emirates require it to be attested. In Dubai the lease must be registered with Ejari.
- The licence fee must be paid within 30 days of receiving the payment voucher; otherwise the application is cancelled.
- The emirate's economic department registers the trade name, and the Ministry of Economy and Tourism registers the trademark.
- The Bashr platform allows a business to be registered online, and Abu Dhabi offers an "instant licence" service through the TAMM portal.
Licence types
| Authority | Licence types according to the UAE Government portal |
|---|---|
| Ministry of Economy and Tourism (6 types) | Industrial, commercial, professional, tourism, agricultural, crafts |
| Abu Dhabi Department of Economic Development (7 types) | Abu Dhabi trader, dual, freelancer, Mobdea, small producers, standard, virtual |
| Invest in Dubai (8 types) | Industrial, commercial, professional, eTrader, dual, instant, SME, Intelaq |
Registering in a free zone
The UAE Government portal, updated on 6 May 2026, lists 37 free zone authorities and zones in seven emirates, 22 of them in Dubai. Five legal forms are described:
- private limited liability company (LLC);
- free zone company (FZ Co.);
- free zone establishment (FZE);
- public joint stock company (PJSC);
- branch of a local or foreign company.
They differ mainly in the number of shareholders and whether these are individuals or companies, and not every free zone registers every form. The steps: choose the sector and the free zone, decide the legal form, review the costs, choose a trade name and apply online. The portal says that after review and approval the licence is issued within 14 working days.
Three practical examples
These examples are hypothetical and only show the logic of the choice.
| Situation | Likely route | Reason |
|---|---|---|
| A trader who wants to sell directly to shops and companies in Dubai | Mainland | Direct sales in the local market are generally not allowed without a mainland licence |
| A consultant who only serves clients outside the UAE | A free zone may suit | International activity is free; assess the tax conditions separately |
| A free zone company that later also wants to sell in the local market | A licensed mainland distributor, or a mainland branch or company | The routes the UAE Government portal describes |
Tax and obligations after registration
Both types of company must register for corporate tax. The free zone 0% rate is not automatic and only applies to qualifying income when the conditions are met. If the company's taxable supplies exceed the threshold, VAT registration is also required. See our separate articles on UAE corporate tax and VAT.
Practical points
- Define the exact activity first; the legal form and licence type depend on it.
- For the mainland, have the lease ready before paying the fees.
- In a free zone, ask which legal forms that zone registers.
- If you plan to sell in the local market, assess access to the mainland from the start.
Royal Golden does not give legal or tax advice. This article is general information and not legal or tax advice.
Sources
- UAE Government portal, steps to start a business on the mainland — https://u.ae/en/information-and-services/business/Doing-business/doing-business-on-the-mainland/steps-to-start-a-business-on-the-mainland (checked on 24 October 2026)
- UAE Government portal, full foreign ownership of commercial companies — https://u.ae/en/information-and-services/business/Doing-business/doing-business-on-the-mainland/full-foreign-ownership-of-commercial-companies (checked on 24 October 2026)
- UAE Government portal, starting a business in a free zone — https://u.ae/en/information-and-services/business/Doing-business/doing-business-in-free-zones/starting-a-business-in-a-free-zone (checked on 24 October 2026)
- UAE Government portal, running a business in a free zone — https://u.ae/en/information-and-services/business/Doing-business/doing-business-in-free-zones/running-a-business-in-a-free-zone- (checked on 24 October 2026)
- UAE Ministry of Finance, corporate tax in the UAE — https://mof.gov.ae/en/public-finance/tax/corporate-tax-in-the-uae/ (checked on 24 October 2026)