Quick Answer
A free zone is a special UAE jurisdiction administered by its own authority, offering 100% foreign ownership, simplified company formation, and corporate-tax incentives — but with restrictions on direct trade with the UAE mainland market.
The UAE has dozens of free zones, each operated by its own authority and tailored to a specific industry: DMCC for commodities, DIFC and ADGM for finance, Dubai Internet City for tech, JAFZA for logistics, etc. Free-zone companies have 100% foreign ownership by default and historically operated outside mainland tax and customs regimes.
The trade-off: a free-zone company can sell to other free-zone companies, export internationally, or sell to UAE mainland companies through an importer or distributor. It cannot invoice end-customers in the UAE mainland directly without a special permit (Dubai's Free Zone Mainland Operating Permit partially addresses this).
Each free zone sets its own licence fees and packages, so costs vary by zone, activity and visa quota. Under UAE corporate tax, a free-zone company that meets the conditions of a Qualifying Free Zone Person can pay 0% on its qualifying income; whether income qualifies depends on the activity and the counterparty, so check the FTA's rules.
Frequently asked questions
What is a free zone in the UAE?
A special jurisdiction run by its own authority offering 100% foreign ownership, simplified company formation, and corporate-tax incentives — with restrictions on direct trade into the UAE mainland market.
What is the difference between a free zone and a mainland company?
A mainland company (licensed by DET in Dubai) can trade anywhere in the UAE; a free-zone company gets 100% ownership and tax incentives but cannot invoice mainland end-customers directly without a distributor or special permit.
How much does a free-zone licence cost?
Each free zone sets its own licence fees and packages, so costs vary by zone, activity and visa quota; ask the zone for a written quote.
Can a free-zone company do business on the mainland?
Only through an importer or distributor, or with a special permit (Dubai's Free Zone Mainland Operating Permit) — not by invoicing mainland end-customers directly.
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