The free zone's 0% is not a rate, it is a status, and the de minimis rule revokes it the moment non-qualifying income passes 5% of revenue. Set your customer mix below and watch it break.
Dubai has more than 30 free zones and the wider UAE over 45, each with its own authority, price list, activity list and visa formula. The practical leaders for international founders are DMCC in Jumeirah Lakes Towers for brand and banking, IFZA for cheapest full service, Meydan for low cost in central Dubai, RAKEZ for the lowest cost in the country, JAFZA for logistics, and DIFC for financial services.
An IFZA licence runs AED 12,500–14,500 in year one including trade licence, establishment card and two or three investor visa allocations. DMCC is AED 20,000–28,000 plus a flexi-desk at AED 8,000–12,000. Renewals are 70–90% of year-one fees, so a lean company can operate under AED 15,000 a year once established.
The 0% is conditional on six QFZP tests, and every free zone company must still register with the Federal Tax Authority and file a return, there is no opt-out, even at 0%.
A mainland company registers with the Dubai Department of Economic Development and can trade anywhere in the UAE without restriction. Since the 2020 amendments most activities allow 100% foreign ownership, the old 51% Emirati partner rule now applies only to a short strategic list covering defence, some oil and gas, and security.
It is the default for anything selling directly to UAE consumers or businesses: restaurants, cafés, clinics, dental practices, salons, gyms, boutique retail, construction, logistics, real estate services and government contractors. You can rent commercial space in any emirate and bid on public tenders.
A DED licence runs AED 15,000–28,000 depending on activity, plus AED 1,200 mandatory Chamber of Commerce membership, an establishment card at AED 2,000, office rent from AED 25,000, and a municipal fee of 5% of that rent. Corporate tax is 9% above AED 375,000 with no QFZP equivalent, and returns are due within nine months of year end.
The decision is about where your customers live, not what you sell.
If your customers are outside the UAE or are other free zone companies, the QFZP regime's 0% on qualifying income is decisive, worth the activity-list restrictions and the absence of onshore distribution rights.
If your customers walk through a UAE door to buy a coffee, see a dentist or have their hair cut, mainland is the only practical option. A growing number of founders run both: a free zone holding and services company alongside a mainland operating subsidiary for UAE-facing activity.
All six must hold. Fail any one and the company is taxed at 9% on everything, for the current tax period and the four that follow.
A free zone holding company over a mainland operating subsidiary keeps the 0% on foreign income while giving you onshore trading rights. DMCC and Meydan also offer dual-licence programmes.
