Comparing Business License Costs: Mainland vs. Free Zone in Dubai
If you’re considering business setup UAE, understanding the cost of acquiring a business license in Dubai is crucial. The choice between setting up on the mainland or in a free zone significantly impacts your startup expenses and long-term business strategy.
Understanding Business Setup UAE: Mainland and Free Zone Explained
Dubai offers two major jurisdictions for starting a business: the Mainland and numerous Free Zones. Each has its own regulations, licensing structures, and cost implications. Making a well-informed decision helps align your setup with your revenue model, operational goals, and target market.
What Is a Mainland Business License?
A Mainland business license allows you to operate anywhere in the UAE and conduct business with both UAE and international clients. The Department of Economic Development (DED) in Dubai issues these licenses.
Key Features of Mainland Setup
- Access to a broader UAE market
- Eligibility to bid for UAE government projects
- Permission for unlimited visas (based on office size)
- No restrictions on currency or office location
Mainland License Cost Overview
The cost of a mainland license varies based on business activity and location but typically includes:
- Trade name reservation: AED 620
- Initial approval: AED 120
- Office rent: AED 10,000–40,000 annually
- License issuance fees: AED 10,000–15,000
- Local sponsorship fees (if required): AED 8,000–20,000 annually
Estimated Total Cost: AED 20,000–45,000 per year
What Are Free Zone Business Licenses?
Free zones are specially designated areas that offer foreign investors complete ownership and attractive tax exemptions. Each free zone specializes in certain industries such as tech, media, or finance.
Key Features of Free Zone Setup
- 100% foreign ownership permitted
- Corporate tax exemptions for specific durations
- Customs duty benefits for goods within the zone
- Simplified procedures and quick setup
Free Zone License Cost Overview
Unlike mainland licenses, free zone budgets vary by authority, with over 40 free zones in the UAE. The costs generally include:
- Registration fee: AED 5,000–12,000
- License fee: AED 10,000–15,000
- Flexi-desk or office rental: AED 5,000–20,000
- Visa fees per person: AED 3,000–6,000
Estimated Total Cost: AED 15,000–35,000 per year
Comparing Business Setup UAE: Cost Breakdown
| Aspect | Mainland | Free Zone |
|---|---|---|
| Ownership | Up to 100% (dependent on activity) | 100% foreign ownership |
| License Cost | AED 20,000–45,000 | AED 15,000–35,000 |
| Visa Eligibility | Unlimited (based on office) | Restricted (based on package) |
| Market Access | Local + International | International + Limited UAE access |
| Office Space | Mandatory | Not always mandatory |
Additional Costs to Consider in Business Setup UAE
When choosing between mainland and free zone setups, look beyond the license. Include:
- Visa processing for employees
- Insurance and compliance costs
- Customs and logistics for product-based businesses
- Bank account opening fees and deposits
Pros and Cons of Each Option
Mainland Setup Pros:
- Wider operational scope in UAE
- Access to government tenders
- Flexible business expansion
Mainland Setup Cons:
- Higher initial costs
- Requires local service agent or partner in some cases
Free Zone Setup Pros:
- Lower setup cost
- Quick company incorporation
- Full ownership without UAE sponsor
Free Zone Setup Cons:
- Limited to operating within the free zone or internationally
- Additional licensing required for local market
Which Business Setup UAE Option Is Right for You?
Choosing between mainland and free zone depends on your business goals.
- Go Mainland if you want access to the broader UAE market, including government contracts.
- Choose a Free Zone if you’re a startup focused on international trade or digital services.
Entrepreneur Tips for Reducing License Costs
- Pick the right jurisdiction that suits your activity
- Use shared office or virtual desks to cut costs
- Apply during promotional periods
- Leverage business service providers for package discounts
Final Thoughts on Business Setup UAE
Whether you’re looking to launch a startup or expand an existing company, understanding the difference in business license costs between mainland and free zone setups is essential. While the mainland offers more flexibility within the UAE, free zones provide cost-effective and fast-tracked setups for international operations.
Always assess your long-term business goals, required market access, and visa needs before making a decision. Consulting with business setup experts can further streamline this process.
For official regulations and updates on licenses, visit the UAE Government Portal.
Also, check out our in-depth guide on Best Free Zones in UAE for Business Setup.
