UAE Free Zone vs Mainland: Full First-Year and Renewal Cost

A UAE company costs more than the license: the full first-year budget adds the establishment card, each residence visa with medical test, Emirates ID and health insurance, premises, accounting and tax registration, and most of these recur at renewal. Only a few items are fixed federal fees; the rest are set by the free zone, the emirate or the market, so compare quotes line by line with the table and calculator below.

Facts checked: September 2026. Rules change — verify on the official sources linked in the text before you apply.

How the cost of a UAE company adds up

Comparing two quotes only makes sense once both are split into the same four layers.

• License layer. The trade license itself and, in most set-ups, an establishment or immigration card that lets the company sponsor visas. Set by the free zone authority, or for mainland by the emirate's economic department (in Dubai, the Department of Economy and Tourism, DET).
• People layer. For each person on a residence visa: entry permit or change of status, the residence permit, the medical fitness test, the Emirates ID and health insurance. This layer is multiplied by the number of visas.
• Premises layer. A flexi-desk, a shared office or a leased office. In Dubai, leases are registered in the Ejari system run by the Dubai Land Department (DLD Ejari service).
• Compliance layer. Bookkeeping, audit where required, corporate tax registration and annual filing, and VAT once turnover crosses the threshold.

If you have not yet decided on a free zone route at all, start with our overview of how a free zone license leads to a residence visa and come back to budget it.

Free zone vs mainland: the rules that change the budget

Who you can trade with

A free zone company is licensed to operate inside its free zone and with clients abroad. In Dubai, activity outside the free zone requires authorization: under Executive Council Resolution No. (11) of 2025, a free zone establishment may operate in the emirate only after obtaining a branch license or a permit for specific activities from DET (Dubai Legislation Portal). In October 2025 Dubai introduced the Free Zone Mainland Operating Permit for non-regulated activities such as technology, consultancy, design, professional services and trading. It is valid for six months at AED 5,000 and renewable for the same fee every six months; the announcement also notes that related revenue is subject to 9% corporate tax and separate financial records are required (Dubai Media Office). Other emirates have their own rules — check them with the relevant authority.

A mainland company is licensed by the emirate's economic department and is set up for the local market from the start. If most clients are in the UAE, add the mainland permit or a branch license to the free zone column before comparing.

Premises

Premises terms in a free zone, including flexi-desk options, are set by each free zone. For a mainland company, premises are leased on the open market; in Dubai the lease is registered in Ejari. Ask the licensing authority which premises your activity accepts before signing a lease.

Visas

In both cases the company sponsors residence visas for owners and employees, and each visa triggers the full people layer. Packages differ in how many visas they allow, so get the allocation in writing. A package with no visa allocation is not a residence solution.

First year vs renewal: what changes

The first year includes one-off items; renewal is cheaper, but the license, office, insurance and accounting all recur.

Items that usually appear only in the first year

• Entry permit for applicants outside the UAE, or a change of status for those already inside — ICP lists AED 500 for status adjustment inside the country (ICP).
• Corporate tax registration — free of charge, but it has a deadline (see below).

Items that recur

• License renewal on each license term, and the establishment card on its own cycle.
• Rent or flexi-desk fees, and in Dubai the Ejari renewal.
• Health insurance for every resident, every year.
• Bookkeeping, and audit where required.
• Residence visa renewal. A standard work residence visa is usually issued for two years and renewed (u.ae), so visa costs come back in the year of renewal rather than every year. ICP lists the renewal fee as AED 100 application + AED 100 per year of renewal + AED 100 smart service; valid health insurance and, depending on category, a lease and a medical report are required (ICP, Residency Renewal).
• Emirates ID renewal: AED 100 per year of residence plus a AED 100 smart application fee (ICP, Identity Card Renewal).

Late renewal costs extra: after a grace period that depends on the category (30 days for categories not listed separately), ICP applies AED 50 per day (ICP). A late Emirates ID renewal after one month costs AED 20 per day, up to AED 1,000 (u.ae).

What it costs: first-year and renewal estimate

Every line a complete quote should cover. Figures appear only where an official page publishes them; otherwise the authority that sets the fee is named.

Fees above are as published on official pages in September 2026 and may change. Always check the final invoice line by line against the authority's own fee page.

Corporate tax and VAT: the costs that are not on the license invoice

Corporate tax

Under the standard regime, taxable income is taxed at 0% up to AED 375,000 and 9% on the portion above it (FTA, Small Business bulletin). A free zone company can benefit from 0% only if it is a Qualifying Free Zone Person earning Qualifying Income. The conditions include adequate substance in the free zone, audited financial statements, transfer pricing documentation and a de minimis limit: non-qualifying revenue must not exceed the lower of AED 5 million or 5% of total revenue. Non-qualifying income is taxed at 9% without the AED 375,000 zero band, and failing a condition removes the status for that tax period and the four following ones (FTA, Free Zone Persons bulletin). A free zone license alone does not mean 0% tax, and qualifying status adds an audit cost.

Small Business Relief can be elected where revenue is not above AED 3,000,000 in the relevant periods; Qualifying Free Zone Persons are excluded (FTA). Ministerial Decision No. 73 of 2023 limited the relief to tax periods ending by 31 December 2026; Ministerial Decision No. 131 of 2026 (Ministry of Finance, 7 August 2026) extended it to tax periods ending on or before 31 December 2029 (FTA guide).

Registration deadline

A UAE company, including a free zone company, incorporated on or after 1 March 2024 must apply for corporate tax registration within three months of incorporation (FTA). Registration is free, and late registration carries an administrative penalty of AED 10,000. The FTA currently waives that penalty if the first tax return is filed within seven months of the end of the first tax period (FTA, Corporate Tax Registration). The waiver is an initiative, so register on time.

VAT

VAT registration becomes mandatory when taxable supplies and imports exceeded AED 375,000 over the previous 12 months, or are expected to exceed it in the next 30 days; voluntary registration is possible above AED 187,500 (FTA, Registration for VAT).

Calculator: first year and renewal from your own quotes

Enter the figures from the quotes you received. Only the ICP residence permit fee, the ICP Emirates ID renewal fee and the AED 500 status adjustment are pre-built, because these are published by ICP (residency, Emirates ID). Run it once per quote to compare like with like.

Who this is for — and who it is not for

A free zone company usually fits

• Consultants, IT, media and service businesses whose clients are mostly outside the UAE.
• Founders who need a residence visa for themselves and possibly family, with a small team.
• Businesses ready to keep audited accounts if they want to rely on the 0% Qualifying Income regime.

Mainland is usually worth pricing

• Businesses whose customers are mainly UAE companies or consumers, including government contracts.
• Retail, hospitality and other activities that need a physical location in the city.

Not a good fit if

• You work for a UAE employer — the employer sponsors your visa.
• You cannot budget for renewal: lapsed licenses and visas create fines, not savings.

Common mistakes and reasons for refusal

• Buying a package with zero visa allocation. The license is issued, but the company cannot sponsor a residence visa until the package or premises is upgraded — which costs more than choosing the right package at the start.
• Comparing unlike quotes. Some include visas, others do not. Split every quote into the four layers first.
• Forgetting insurance and the medical test. ICP requires valid health insurance at renewal (ICP), and in Dubai sponsors are responsible for their dependents' cover if the employer does not provide it (ISAHD).
• Missing the corporate tax registration deadline. Three months from incorporation, with a AED 10,000 penalty for late registration (FTA).
• Assuming a free zone license means 0% tax. The 0% rate applies only to Qualifying Income of a Qualifying Free Zone Person that meets every condition, including audited accounts.
• Selling to mainland clients without authorization. In Dubai this needs a DET permit or branch license.
• Refusals of the visa itself. A license does not guarantee a residence permit; incomplete documents, an unsuitable activity or an issue with the applicant's file can lead to a refusal. Professional support is optional, but errors at this stage usually cost months, not just fees.