In 2025, companies registered on the UAE mainland are rapidly outpacing those based in free zones. While freezone companies still offers significant advantages, such as 100% foreign ownership, full profit repatriation, and exemption from import/export duties, many businesses are shifting to mainland company setup in Dubai. This change is driven by updated legislation, the introduction of corporate tax, expanded business opportunities, and broader market access.
Legal Reform: Resolution No. 11 Reshapes Market Entry
A game-changing development occurred with the enactment of Resolution No. 11 of 2025, allowing freezone business setup in Dubai to expand into the mainland through branch operations. This eliminated the need to create a separate mainland business setup in Dubai or involve a local sponsor. Companies can now obtain a license from the Dubai Department of Economy and Tourism (DET) and legally serve clients outside their free zone.
Companies now have three licensing options for mainland operations:
- Branch license
- Head office license
- Activity-specific permits
Each license:
- Is valid for one year
- Must be renewed annually
- Requires separate accounting services in UAE for mainland and free zone operations
Corporate Tax Ushers in a New Business Mindset
Since the 9% corporate tax came into effect on June 1, 2023, tax residency certificate UAE structuring has become a major consideration. To retain a 0% tax rate, companies must qualify as a Qualified Free Zone Person (QFZP) by meeting the following criteria:
- Operate exclusively within or between free zones
- Avoid mainland-sourced income
- Submit audited annual financial reports
- Remain outside the standard tax regime
Even minimal income from mainland operations can trigger full taxation. As a result, there is increasing demand for expert audit services in UAE and legal advisory solutions.
Why the Mainland Is Gaining the Upper Hand
Despite higher tax exposure, operating on the mainland offers clear advantages. Companies can:
- Bid for government tenders
- Serve clients across all emirates, increasing the appeal of business setup in UAE mainland
- Lease offices in central business districts, aided by availability of office space for rent in Dubai
- Scale operations more freely
These benefits are especially valuable in sectors like consulting, logistics, construction, and professional services.
Dual Licensing: The Best of Both Worlds
Many businesses now adopt a dual-license model, retaining the tax benefits of freezone company setup while gaining access to Dubai mainland company setup. Leading business setup consultants in Dubai and free zones like IFZA, DMCC, Dubai CommerCity, and RAKEZ actively support this hybrid structure.
Compliance and Strategic Planning Are Crucial
As mainland company formation in Dubai becomes more attractive, compliance is more important than ever. For example, JAFZA reached 93% renewable energy usage in 2023 and aims to cut carbon emissions by 57% from 2019 levels by 2030.
New compliance requirements include:
- Corporate tax registration
- Mandatory audits and accounting firm in Dubai UAE
- Timely tax filing, even for companies with no taxable income
- License renewal deadlines to avoid fines and loss of tax benefits
In 2025:
- Tax returns must be submitted within nine months of the fiscal year-end
- All licenses must be renewed on time
The Evolving Role of Free Zones
Freezone business setup in UAE continues to provide:
- Easy business setup and registration support
- Visa assistance in Dubai for shareholders and employees
- Office to let in Dubai with flexible terms
- Business activity guidance
However, their role often ends after incorporation. Many firms engage external business setup services and auditors to manage ongoing tax, legal, and financial risks.
Final Thoughts: A Strategic Shift in the UAE Business Landscape
The UAE’s regulatory shift has redefined business strategy. Choosing between mainland business setup Dubai and a freezone company formation UAE is no longer just about location, it’s about long-term viability, compliance, and growth. For companies aiming to scale, secure government contracts, and expand regionally, the mainland is emerging as the strategic choice.
Top business setup companies in Dubai now recommend careful tax planning, especially for businesses with mixed mainland and free zone revenue streams. Free zones remain ideal for startups, export-focused ventures, and international trade, but without deliberate planning, even these businesses risk losing offshore company setup in UAE and tax advantages.
In 2025, adaptability, tax awareness, and regulatory alignment are critical success factors. Success depends not just on choosing the right company formation services, but on engaging experienced business set up consultants who understand the dynamic UAE business landscape.
Skier, shiba-inu lover, band member, Mad Men fan and independent Art Director. Operating at the fulcrum of design and mathematics to craft experiences that go beyond design. I prefer clear logic to decoration.
