Converting a Mainland Company to a Free Zone (2026): Is It Worth It?

If you convert a mainland company to a free zone in Dubai, the most likely change to your corporate tax bill is nothing at all. The 0% rate does not come with a free zone licence. It comes with a closed list of Qualifying Activities in Ministerial Decision No. 229 of 2025, and consultancy, IT services, marketing, recruitment and general trading of retail goods are not on it [1]. A free zone company outside that list is taxed exactly like a mainland one: 0% on the first AED 375,000 of taxable income and 9% above [2].

That leaves the move to be judged on everything else, and most of everything else runs against it. You give up direct sales to mainland customers, easy access to government tenders, your mainland premises and, for some owners, a registered commercial agency. What you might gain is narrower than the brochures suggest: a genuine route to 0% for a commodity, distribution or logistics business, and, as current policy stands, distance from the Emiratisation targets.

Since 2013, BusinessDubai.ae has set up free zone and mainland companies across the UAE. This guide covers the two legal routes, including the one zone that publishes a door for mainland companies, what you lose and how to buy it back, the tax traps specific to this direction, three worked profiles with a verdict each, the itemised cost and the order of operations.

Is converting a mainland company to a free zone worth it in 2026?

Converting a mainland company to a free zone is usually not worth it in 2026, and the reason is tax, just not the way founders expect. A free zone company whose activity is missing from Ministerial Decision No. 229 of 2025's closed Qualifying Activities list pays the same 0% to AED 375,000 and 9% above as a mainland company [1][2].

Most founders arrive with the opposite assumption, because free zone marketing still leads with "0% corporate tax". The rate is real, but it belongs to a Qualifying Free Zone Person (QFZP) earning Qualifying Income, and Article 2(1) of MD 229/2025 lists only fourteen headings: manufacturing, processing, trading of Qualifying Commodities, holding shares, ships, reinsurance, regulated fund management, regulated wealth and investment management, headquarter services to related parties, treasury and financing, aircraft financing and leasing, distribution in or from a Designated Zone, logistics, and activities ancillary to those [1]. There is no general services heading and no catch-all.

Set that against what a typical Dubai mainland company does. Consultancy, IT services, marketing, recruitment and general trading of retail-packaged goods appear nowhere on the list. For those businesses the free zone company is an ordinary taxable person, with the same AED 375,000 band under Article 3(1) of Federal Decree-Law No. 47 of 2022 [2] and the same access to Small Business Relief: revenue at or under AED 3,000,000, for tax periods ending on or before 31 December 2029, under Ministerial Decision No. 131 of 2026 [3].

The table sets the three possible tax positions side by side.

Read the first two rows together. For a service or general trading business, the jurisdiction changes nothing on the tax line. The move then has to pay for itself through something other than tax, and the rest of this guide tests whether it can.

Common Mistake: Treating the free zone licence as the thing that buys 0%. A mainland recruitment firm that moves to a Dubai free zone, keeps the same mainland clients and files its first return as if it were now tax-free has not changed its tax position at all. It has paid for a new licence, a liquidation and a visa transfer, and then filed on a basis the law does not support. Map every revenue line to a heading in Article 2(1) of MD 229/2025 before you price the move [1].

Our guide to the Qualifying Free Zone Person 0% regime works through every heading and condition, and our Small Business Relief guide covers the relief that often matters more to a small company than the free zone rate does.

What happens if you claim the 0% rate and your activity does not qualify?

A company that claims Qualifying Free Zone Person status and fails a condition stops being a QFZP from the first day of that tax period under Article 18(2) of Federal Decree-Law No. 47 of 2022. It is taxed at the ordinary rates, 0% to AED 375,000 and 9% above, and barred from QFZP status for four more periods [2][1].

The rule is worth stating precisely, because a wrong version circulates widely. Article 18(2) says a QFZP that fails any condition at any time during a tax period "shall cease to be a Qualifying Free Zone Person from the beginning of that Tax Period" [2]. From that point it is an ordinary taxable person for the period, so the Article 3(1) rates apply, including the AED 375,000 band. Article 5(2) of MD 229/2025 then extends the exclusion to the four following periods [1].

The "no AED 375,000 band" rule is real, but it applies to a different company: one that remains a QFZP and carries a small slice of non-qualifying income inside the de minimis limit. That slice is taxed at 9% with no nil band under Article 3(2)(b) [2]. A consultancy whose income is all non-qualifying fails the de minimis test outright, so it never remains a QFZP and never reaches that rule.

Quick Math: Take a consultancy with AED 600,000 of taxable income and revenue above AED 3,000,000, so Small Business Relief is not in play. On the mainland it pays 9% of AED 225,000, which is AED 20,250 [2]. In a free zone, not claiming QFZP, it pays AED 20,250. In a free zone, wrongly claiming QFZP, the claim fails and it still pays AED 20,250 at the ordinary rates, plus the penalties on an incorrect return and a four-period lockout [1]. The rate never improves. Only the paperwork gets worse.

The real cost of a wrong claim is the audited financial statements that QFZP status requires under Article 5(1)(b) of MD 229/2025 [1], and five periods in which a genuine qualifying stream, if you later build one, cannot be taxed at 0%.

Can a mainland company move to a free zone as the same legal entity?

A mainland company can, in law, move to a free zone as the same legal entity under Article 15bis of the Commercial Companies Law, in force since 15 October 2025 [4]. In practice Meydan Free Zone is the only zone found with a published inbound process for mainland companies, so most owners still open a new company and liquidate [5][6].

Federal Decree-Law No. 20 of 2025 inserted Article 15bis into the Commercial Companies Law, creating a transfer of registration between competent authorities in which the company keeps its legal personality [4]. TME Legal's re-domiciliation guide, updated 21 July 2026, confirms the article is drafted to cover a move from the UAE mainland to a free zone, and also records that implementing regulations for the inter-authority transfer categories had not been published in complete form [5]. The special resolution, the consent of both registries and the rest of the mechanics are the same in both directions, and our guide to converting a free zone company to mainland sets them out rather than repeating them here.

So the law allows the move. Whether you can execute it depends on the zone you are moving to.

Meydan Free Zone: the one published door

Meydan Free Zone publishes two dated pages for exactly this move. The first, published 22 December 2025 and updated 22 May 2026, describes a re-domiciliation in which the company continues to exist under a new licensing authority. It requires a no objection certificate from the current licensing authority and an exit certificate, which is issued only after every residence visa and the establishment card have been cancelled [6]. The company's structure, ownership, capital and activities cannot be amended during the transfer, and Meydan gives no fixed timeline: the duration depends on how quickly the mainland authority issues the exit certificate [6].

The second page, published 16 March 2026 and updated 30 June 2026, sets out what survives. The legal identity, the incorporation date, the trade name and existing contracts continue, with counterparties informed. Visas and the establishment card do not carry over, VAT and UBO filings must be made again under the new jurisdiction, and some banks continue the account while others require fresh onboarding [7].

DMCC: a door that needs a letter nobody has published

DMCC's Company Regulations do provide for continuation into DMCC. Article 18 admits a non-DMCC entity on a resolution of holders of 75% of the voting interests and a letter of no objection from the jurisdiction being left, and only "if authorised by the laws and regulations of the jurisdiction in which it was incorporated" [8]. Article 186.9 disapplies the federal Commercial Companies Law to DMCC companies, so Article 15bis does not open this door by itself [8].

For a Dubai mainland company, the letter would have to come from the Department of Economy and Tourism (DET). No DET mechanism for issuing such a letter to DMCC was found, so treat the DMCC route as unconfirmed until DET and DMCC both tell you in writing which document and which regulation they would use. Our DMCC free zone guide covers the zone itself, and our guide to moving a company between free zones maps the continuation rules zone by zone.

The default route: a new free zone company and a mainland liquidation

For every other zone, the route that works today is to incorporate a new free zone company, move the business across and liquidate the mainland LLC. It needs no special statute and works at every zone. It also resets everything: a new legal person, a new incorporation date, every contract novated and new tax registrations.

The table compares the two routes item by item.

Pro Tip: Before planning around either route, send the same two questions to DET and to the destination zone: which regulation permits this company to leave or arrive, and which documents are required. A zone with a door will name it, as Meydan names the no objection certificate and the exit certificate [6]. An answer that arrives as a checklist with no regulation cited is almost always a new company and a cancellation, described as a transfer.

Re-domiciliation earns its complexity only where continuity has value you cannot re-paper cheaply: long-term contracts with assignment restrictions, an incorporation date a tender or an investor relies on, a registered trademark, or pending litigation. For a consultancy on monthly retainers, the new-company route is simpler and rarely slower. Our Meydan Free Zone setup guide covers the zone's licences and packages.

What do you give up when a mainland company becomes a free zone company?

A mainland company that becomes a free zone company gives up direct trading with UAE mainland customers, easy access to government tenders, its Ejari-registered premises and possibly its Dubai Customs code. Most of that can be bought back through a branch, dual licence or temporary permit under Dubai Executive Council Resolution No. 11 of 2025 [10].

The table lists each loss with the route back, where one exists.

Most of these rows cost money rather than end the business. Resolution 11's government fees are modest, but a working mainland branch costs more than its fee: BusinessDubai.ae's guide to free zone to mainland trading prices a minimal branch at about AED 56,000 in its first year once office, accounting and staff are included, and a full launch at AED 120,000 to 260,000 [11]. A dual licence avoids the mainland office rent.

Real Talk: If more than half of your revenue comes from mainland customers, converting to a free zone and then buying mainland access back through Resolution 11 means paying twice to stand still. You finish with two licences, separate books for the mainland and free zone income, and the same tax rate you started with. The arithmetic works only for owners whose mainland slice is small and whose free zone income genuinely qualifies.

The Ejari row catches trading, retail and clinic businesses. Ejari registers Dubai tenancy contracts through the Dubai Land Department [13], and a mainland licence is tied to those registered premises. A free zone company operates from its zone. If your warehouse, showroom or shop is on the mainland, moving the licence moves the business away from its premises, and the lease exit, with any early termination penalty, is a cost of the move in its own right.

What happens to a registered commercial agency if you move?

A registered commercial agency sits with the agent entity recorded in the Commercial Agencies Register at the Ministry of Economy and Tourism. Under Federal Law No. 3 of 2022, eligibility turns on UAE-national ownership, not on whether the licence is mainland or free zone, so check with the Ministry before moving [12].

Article 2(1) of Federal Law No. 3 of 2022 Concerning Regulating Commercial Agencies limits the activity to individual UAE citizens and to companies and establishments wholly owned by a UAE national, a public legal person, a private legal person owned by public legal persons, or a private legal person wholly owned by UAE nationals [12]. Article 2(3) excludes from that restriction public joint-stock companies established in the UAE with at least 51% UAE-national shareholding, and Article 2(2) lets the Cabinet allow an international company to act for products it owns where there is no existing agent and the agency is new [12]. The law does not mention free zones at all.

So a free zone company is not barred as such. What decides eligibility is who owns it. A 100% foreign-owned company, mainland or free zone, cannot be a registered agent outside the Cabinet route; a company wholly owned by UAE nationals can be, subject to registration. In practice this matters mainly to Emirati-owned distributors.

The practical problem is that the registration belongs to the existing entity. Article 3 makes an unregistered agency invalid, Article 4 requires a written, notarised contract with the original principal, and Article 12 requires a copy of a valid business licence with every application [12]. On the new-company route the new entity is a different agent: it needs a fresh notarised contract with the principal and a fresh registration, and the old entity must apply for strike-off within 60 days under Article 16 once it no longer meets the conditions [12]. That hands the principal a moment to renegotiate or appoint someone else. Even on a re-domiciliation, where the legal person continues, Article 15 requires changes to the agency to be reported to the Ministry within 60 days [12].

Pro Tip: If your mainland company holds a registered agency, write to the Ministry of Economy and Tourism before committing to any route. Ask whether it will accept your intended free zone licence under Article 12, and what happens to the existing registration on a re-domiciliation. Put the same question to your principal in writing. The agency may be worth more than every tax saving discussed here, and our commercial agency law guide covers the registration process.

Which mainland businesses can genuinely reach 0% in a free zone?

A mainland business reaches 0% in a free zone only if its income falls under a heading in Article 2(1) of MD 229/2025, usually trading of Qualifying Commodities, distribution in or from a Designated Zone, or logistics, and its non-qualifying revenue stays under the lower of 5% of revenue or AED 5,000,000 [1].

For a business arriving from the mainland, three headings do most of the work.

Two further tests decide whether the rate survives. The first is the de minimis limit: non-qualifying revenue must not exceed 5% of total revenue or AED 5,000,000, whichever is lower [1]. Income from a Qualifying Activity still qualifies when the customer is a mainland business, under Article 3 of Cabinet Decision No. 100 of 2023 [14]. What counts against the cap is revenue from activities outside the headings, from Excluded Activities such as most transactions with natural persons, and from free zone counterparties that are not the beneficial recipient [14]. The second is the standing conditions: adequate substance in the zone, audited financial statements, transfer pricing compliance and no election out [1][2].

Common Mistake: Carrying the mainland customer mix into the free zone company. A mainland trader's walk-in customers are natural persons, and transactions with natural persons are an Excluded Activity for these headings [1]. At AED 8,000,000 of revenue the de minimis cap is AED 400,000, so a steady counter trade of a few thousand dirhams a day can end the status for that period and the four that follow.

Heading (l) has a timing point for a company arriving from the mainland. Stock it already imported through mainland customs did not enter the State through the zone, so selling that legacy stock is a poor fit for heading (l) [1]. Build the qualifying stream on new imports through the zone. Heading (c) needs no Designated Zone at all, which is why a non-designated zone such as DMCC can host a commodities trader. Our guide to the best free zones for trading covers which zones suit a goods business.

Does moving to a free zone take you out of Emiratisation targets?

Moving to a free zone takes a company outside the Ministry of Human Resources and Emiratisation (MoHRE) targets as current policy practice, not statute. BusinessDubai.ae's Emiratisation guide states free zone companies are currently exempt from the 10% target and the AED 9,000 monthly penalty per unfilled position, and calls the exemption policy-based [15].

The mainland regime is not small. BusinessDubai.ae's Emiratisation 2026 guide sets out a 10% Emiratisation rate among skilled employees by 31 December 2026 for companies with 50 or more skilled staff, and a penalty of AED 9,000 a month for each unfilled position, which is AED 108,000 a year per position [15]. Companies with 20 to 49 skilled employees in 14 designated sectors carry a smaller quota under the same system [15].

The free zone side is thinner than most pages admit. No primary MoHRE text exempting free zone establishments was found; BusinessDubai.ae's own guide describes the exemption as policy-based and notes government discussion of extending the targets to free zones [15]. Treat it as current practice that can narrow, not as a right. A relocation that only pays back over several years is exposed to exactly that change.

Two further questions deserve a written answer before you rely on the saving. First, whether staff who work through a Resolution 11 branch or dual licence on the mainland bring the business back within MoHRE's targets; no published rule either way was found. Second, how salaries will be paid and protected under the free zone establishment, whether through the Wage Protection System or the zone's own arrangements. Ask the destination zone's HR or PRO desk before you move a single employee.

Quick Math: A company with 50 skilled employees needs 5 Emiratis at the 10% target. With 2 on payroll it is 3 short, and at AED 9,000 a month each that is AED 27,000 a month, or AED 324,000 a year [15]. That is the largest single number in this guide, and the most plausible real reason a mainland company looks at a free zone. It is also the one that rests on policy rather than on a statute.

Which tax traps are specific to moving from mainland to a free zone?

A mainland company moving to a free zone faces no QFZP backdating trap, because it never held the status. The traps run elsewhere: Article 26 and 27 reliefs are barred if the new company will be a QFZP, liquidating the mainland LLC claws Article 26 relief back, and VAT needs the new company registered first [2][16].

No backdating trap on the way in

The most expensive detail of the reverse move is that losing QFZP status part-way through a period backdates the loss to day one. That trap belongs to a company that already holds the status. A mainland company has never been a QFZP, so there is nothing to lose on the way in, and the new free zone company is tested on its own periods from its own start.

One caution applies to the same-entity route. Article 18(2) tests the conditions at any time during the tax period [2]. A company re-domiciled to Meydan part-way through a period spent its first months as a mainland company, so if QFZP status is the goal, plan for that first period to be taxed at the ordinary rates, or land the move on the first day of a period.

Moving assets: Articles 26 and 27 do not help a QFZP-bound company

Article 26 Qualifying Group Relief and Article 27 Business Restructuring Relief let assets or a business move at book value with no taxable gain. Both carry the same exclusion, at 26(2)(d) and 27(2)(d): none of the persons may be a Qualifying Free Zone Person [2]. So a new free zone company that will claim QFZP cannot receive assets under either relief, and anything the mainland company transfers to it is a related-party transaction priced at arm's length under Article 34, with the gain taxed in the mainland company [2].

Where the new company will not be a QFZP, Article 26 is available in principle, but the default route breaks it. The FTA's Qualifying Group Relief guide, CTGQGR1, lists either company ceasing to exist within two years of the transfer as a clawback event, excludes transfers made as a result of a liquidation, and covers only assets held on capital account, not stock in trade [16]. It also lists the transferee becoming a QFZP within the two years [16]. Liquidating the mainland LLC in month three is exactly the event the guide describes.

The full mechanics, including who ends up paying a clawed-back gain, are in our guide to moving a company between free zones. For a consultancy moving laptops and a client list with no book value, none of this matters. For a business moving software, a brand or stock carried well below market value, it can be the largest number in the move.

VAT: register the free zone company first

Transferring a whole business, or an independent part of one, to a taxable person who continues it is not a supply for VAT, so no VAT is charged on it [17]. The recipient must be a taxable person, registered or required to register, at the time of the transfer, and a brand-new free zone company that has not registered yet can fail that condition. Register it before the business moves. VAT registration is mandatory above AED 375,000 of taxable supplies and voluntary from AED 187,500 [18].

Goods add a layer. JAFZA, DAFZA, Hamriyah Free Zone, SAIF Zone and Ajman Free Zone are among the Designated Zones in the annex to Cabinet Decision No. 59 of 2017, while Meydan Free Zone, IFZA and DMCC are not listed [19]. Goods moved from the mainland into a Designated Zone are treated as supplied in the State [19], so selling stock from the mainland LLC to a new JAFZA company outside a going-concern transfer puts 5% VAT on the invoice: recoverable later, but cash out first. Our Designated Zone VAT guide works through the conditions.

Pro Tip: Diarise the date the mainland company stops invoicing, not the date its licence dies. VAT deregistration is due within 20 business days of ceasing taxable supplies and corporate tax deregistration within three months of cessation, each with a penalty of AED 1,000 a month capped at AED 10,000 [9]. Our corporate tax deregistration guide covers the final return that closes the mainland file.

If you have assets with a real gain, or stock to move, get the transfer priced before anything changes hands.

Model your position→

Is it worth it for a consultancy, a commodity trader or a 60-person company?

For a consultancy with mainland clients, converting to a free zone is a no. For a bulk commodity trader re-exporting 70% of its volume, it is a conditional yes, only if non-qualifying UAE sales stay inside the de minimis cap. For a 60-person company facing Emiratisation penalties, it is a no on balance unless revenue is already export-weighted.

The three profiles use only figures from the federal tax rules, BusinessDubai.ae's package prices and BusinessDubai.ae's published guides. Every assumption is stated, so you can swap in your own numbers.

Profile A: a consultancy with mainland clients (verdict: no)

Assumptions: a Dubai mainland IT and management consultancy LLC, with the founder and one employee on visas and delivery partly through subcontracted specialists. Revenue is AED 3,200,000, taxable income AED 600,000, and more than half of revenue comes from UAE mainland companies. Consultancy is not a Qualifying Activity [1], and revenue above AED 3,000,000 takes Small Business Relief off the table [3].

The move costs at least AED 39,600 in year one, IFZA's two-visa package plus the bottom of the liquidation range, before the Resolution 11 add-on needed to keep serving the clients who make up most of the revenue. It saves nothing. The verdict is no, and it would be no at a smaller size too, because below AED 3,000,000 of revenue Small Business Relief takes the tax to nil in either location [3].

Profile B: a bulk metals trader re-exporting 70% (verdict: conditional yes)

Assumptions: a Dubai mainland trading LLC importing bulk industrial metals in raw form, priced by reference to a recognised exchange, with AED 8,000,000 of revenue and AED 800,000 of taxable income. 70% of revenue is re-exported in bulk. The other 30%, AED 2,400,000, is sold on the mainland as retail-packed product and counter sales to individual buyers. Distribution and logistics revenue is well under 51% of the total.

The export stream fits heading (c), trading of Qualifying Commodities [1]. The mainland slice is the problem. Retail-packed product falls outside the commodities definition and sales to individuals are an Excluded Activity [1], so the whole AED 2,400,000 is non-qualifying. At AED 8,000,000 of revenue the de minimis cap is the lower of AED 400,000 (5%) and AED 5,000,000, so AED 400,000 [1]. The mainland slice is six times the cap.

The third row assumes the same 10% margin on the remaining non-qualifying slice, and revenue held at AED 8,000,000 by selling the rest of the mainland volume in bulk raw form to mainland businesses, which heading (c) still covers because Qualifying Income from a Qualifying Activity has no counterparty test [14]. On those numbers the saving is about AED 35,100 a year, before the cost of the mandatory audit and real substance in the zone.

Two costs sit on the transfer itself. Stock is outside Article 26 relief and a QFZP-bound company cannot use Article 27, so stock sold across at a gain is taxed in the mainland company. Stock carried at AED 1,500,000 and worth AED 1,650,000 gives a gain of AED 150,000, which is AED 13,500 at 9% if the mainland company's other income has already used its AED 375,000 band [2][16]. And if the destination is a Designated Zone such as JAFZA, selling that stock outside a going-concern transfer carries 5% VAT, recoverable but paid first [19].

Verdict: conditional yes. The 0% on the re-export stream is real and available under the closed list, but only if the company reshapes its mainland sales so that non-qualifying revenue stays inside AED 400,000, and keeps it there every period. If the retail and counter trade is the business, the answer collapses into Profile A's no. A trader in that position is often better served by keeping the mainland LLC for local sales and adding a new free zone company for the export trade, with the two dealing at arm's length.

Profile C: a 60-person company facing Emiratisation (verdict: no, on balance)

Assumptions: a Dubai mainland LLC in general trading and services with 60 staff, of whom 50 are skilled under MoHRE's definition, 2 Emiratis on payroll, and most customers in the UAE. The activity is not on the Qualifying Activities list, so the tax line does not change [1].

The 60-visa relocation cost is a genuine gap. BusinessDubai.ae's standard packages are priced for one or two visas, so do not extrapolate from the AED 21,050 one-visa figure; a move of this size needs a custom quote for visa quota and a free zone office big enough for 60 people. The mainland branch needed to keep UAE customers may also bring its staff back within MoHRE's scope, which is the question to put to MoHRE first.

The honest comparator is compliance. BusinessDubai.ae's Emiratisation guide describes Nafis salary support of up to AED 7,000 a month for an eligible graduate hire [15]. Three hires at AED 15,000 a month would cost AED 540,000 a year in salary, or AED 288,000 net of that support at the full rate, for three people doing real work. Check the current Nafis terms before relying on the subsidy.

Verdict: no, on balance. The saving is large but rests on policy, and it is offset by an unpriced relocation and a branch bill. It becomes a yes only for a company whose revenue is already export-weighted, where the move stands on its own and Emiratisation is a bonus.

What does it cost to convert a mainland company to a free zone in 2026?

Converting a mainland company to a Dubai free zone costs a destination package, from AED 21,050 with one visa at Meydan Free Zone, plus a mainland liquidation of about AED 15,000 to 28,000 for an LLC with two employees [20][9]. Year two renews at roughly 80% of year one, and optional mainland access adds AED 10,000 a year.

There is no single price, because the destination package, the liquidation and any mainland access are separate bills. The table itemises them on a stated visa basis using BusinessDubai.ae's 2026 package prices.

Two warnings on that table. Real Dubai free zone renewals can land 35 to 60% above what year-one marketing implied, because cards, deposits and compliance items sit outside the headline [20]. And the liquidation range assumes a tidy LLC; an expired licence or more staff pushes it up, and the 45-day creditor notice is a floor that cannot be shortened [9]. Our company liquidation guide covers each step of the mainland exit.

Real Talk: At IFZA and Meydan Free Zone, an investor visa now requires the shareholder to show capital of at least AED 75,000 in a bank account, in the UAE or at home [20]. It is not widely published and it is not a fee, but it is money that has to sit somewhere visible at the same moment you are funding a liquidation and a new licence. Plan that cash before you cancel your mainland investor visa.

If the business does not need a Dubai address, the destination changes the arithmetic more than any other choice. The table compares BusinessDubai.ae's 2026 package prices across emirates, with VAT Designated Zone status for goods businesses.

The Sharjah and Ajman rows are non-Dubai alternatives, and they buy no mainland access either. Our business setup in Sharjah page shows what the Sharjah packages include, and our business setup in Ajman page covers both Ajman zones. For the Dubai pair, the IFZA vs Meydan comparison explains why the decision turns at the second visa, and our free zone company setup page itemises what each Dubai package includes.

For a quote that sets your destination package against your liquidation and any mainland access you will still need, ask for the full picture before you commit.

Get an itemised conversion quote→

In what order should you move, so staff and trading are not stranded?

Incorporate the free zone company first, obtain its establishment card and visa quota, and register it for VAT, then move the business and staff across in tranches. Only after that cancel mainland visas, deregister the mainland company for VAT and corporate tax, and liquidate it. Reversing that order strands employees without a sponsor [9].

The table sets out the sequence for the new-company route. The re-domiciliation route follows the same logic, with the zone's exit certificate replacing the liquidation.

On the mainland side the chain only runs one way: visas and the establishment card are cancelled before DET cancels the licence [9]. The new company registers for corporate tax within three months of incorporation, with an AED 10,000 penalty if it is late [18]. Our guide to converting a free zone company to mainland covers tranche sequencing in detail from the other direction, and our UAE visa cancellation guide covers the grace periods and what each cancellation needs.

Common Mistake: Assuming re-domiciliation keeps the staff in place. On Meydan's route, the exit certificate is issued only after every mainland residence visa and the establishment card have been cancelled, and new visas are issued under Meydan afterwards [6]. Ask Meydan, before you start, how staff are covered between the two, and plan the cancellations so the grace period after each one is enough to carry the person across.

Banking needs the same forward planning. The new company is a new customer, and WIO and Mashreq Neo are among the banks that open readily for free zone companies [20]. Tell the mainland bank in writing before any cancellation, and read our guide to the corporate bank account in Dubai for what the application needs.

Once the free zone company is live, the establishment card, visa renewals, UBO register, accounting and both tax registrations restart from zero. Our post-setup services team runs that calendar, so the filings that follow a move do not land on whoever is least busy that week.

Is there a cheaper alternative to converting the whole company?

For many mainland owners the cheaper alternative is to keep the mainland company for UAE customers and add a separate free zone company only for income that genuinely qualifies, such as re-exported commodities. The mainland company keeps its trading rights and tender eligibility, and renews at about AED 15,000 a year on BusinessDubai.ae's package.

Converting assumes the whole business should live in one place. For a mixed business it rarely should: the mainland LLC sells to UAE customers, bids for tenders and trades from Ejari premises, while a free zone company does the one thing a mainland company cannot, which is earn 0% on qualifying income.

The costs of running both are known. The mainland company renews on its existing terms, which our mainland company setup page puts at about AED 15,000 a year on BusinessDubai.ae's standard package. The free zone company adds a package from AED 12,500 licence-only in Dubai [20]. Transactions between the two are related-party transactions, priced at arm's length under Article 34 and documented for transfer pricing, which QFZP status requires in any case [2].

Real Talk: Owners reach for a full conversion when the problem is narrower than the company. A trader with one export line, a group with one entity that should hold shares, a distributor with one product that should come in through a Designated Zone: each needs one new company, not the loss of a working one. Before you liquidate anything, ask which revenue line the move is actually for, and put only that line in the free zone.

Real Client Stories

These are composite examples built from the situations mainland owners most often face when weighing a move. Names and details are illustrative, and the only figures used are BusinessDubai.ae's package prices and the official rules cited above.

The agency owner who priced the move and stayed (Dubai mainland)

Rania runs a digital marketing agency on a Dubai mainland licence and asked to move to a Dubai free zone for "0% tax". Marketing is not on the Qualifying Activities list, so a free zone company would pay the same 0% to AED 375,000 and 9% above. Most of her clients are mainland companies, so she would also need a dual licence at AED 10,000 a year on top of a AED 21,050 one-visa package and a liquidation, all to reach the tax bill she already had. She renewed on the mainland instead. Lesson: the 0% rate belongs to the activity, not the address, so map the revenue before pricing the move.

The Emirati distributor with a registered agency (Dubai mainland)

Khalid's mainland distribution company is wholly owned by him, a UAE national, and holds a registered commercial agency for a European equipment brand. He wanted a free zone warehouse for re-exports. Federal Law No. 3 of 2022 ties the registration to the agent entity and requires a notarised contract with the principal and a valid licence for any new registration, so moving the whole business into a new free zone company would have needed the principal to sign again. He kept the mainland company as the registered agent and added a free zone company for the export trade. Lesson: ask the Ministry and the principal before moving an agency.

The metals trader who moved stock before registering for VAT (mainland to JAFZA)

Arjun set up a JAFZA company to carry his bulk metals re-export trade and moved his mainland trading business across, stock included, in its first week. The JAFZA company had not yet registered for VAT, so going-concern treatment, which needs the recipient to be a taxable person, could not be relied on, and the stock was invoiced at 5%, because goods moved from the mainland into a Designated Zone are treated as supplied in the State. The VAT was recoverable once the JAFZA company registered, but it was cash out first, and the stock left at arm's length value because a QFZP-bound company cannot use Article 26 or 27 relief. Lesson: register the receiving company first, then move the business.

Your next steps

Three decisions carry the money here, and none of them is the licence. First, map every revenue line to Article 2(1) of MD 229/2025, because if your income does not fit a heading, a free zone changes nothing on the tax line [1]. Second, ask DET and the destination zone in writing which route is open, because Meydan Free Zone is the only published door for a mainland company and everything else is a new company plus a liquidation [6]. Third, price what you lose and what it costs to buy back, then incorporate before you cancel anything.

The table below is the short version, by owner profile.

BusinessDubai.ae has completed 700+ company registrations across the UAE since 2013, with itemised pricing and no hidden fees. We will price a free zone company setup for the income that genuinely qualifies against staying with your existing mainland company setup, model the tax on each route, and have our post-setup services team run the visas, tax registrations and liquidation calendar while the two companies overlap.

Get your move priced before you commit→

If you are moving in the other direction, our guide to converting a free zone company to mainland covers the Article 15bis mechanics and the QFZP timing trap that applies that way round.

Frequently Asked Questions

Can I convert my Dubai mainland company to a free zone company?

Yes, in one of two ways. Article 15bis of the Commercial Companies Law, in force since 15 October 2025, allows a re-domiciliation that keeps the same legal entity, and Meydan Free Zone is the only zone found with a published inbound process for mainland companies. Everywhere else, the working route is a new free zone company followed by liquidating the mainland LLC.

Is it possible to transfer a Dubai mainland general trading licence to a free zone?

The licence itself does not transfer: the company either re-domiciles to a zone that accepts it or is replaced by a new free zone company with its own licence. A general trading business also rarely gains on tax, because general trading of non-commodity goods is not a Qualifying Activity under Ministerial Decision No. 229 of 2025. Bulk trading in raw commodities is the main exception.

Can I keep my mainland company and add a free zone company instead?

Yes, and for many owners it is the better structure. The mainland company keeps its direct trading rights, tender eligibility and premises, while a separate free zone company carries only the income that genuinely qualifies for 0%, such as re-exported bulk commodities. Transactions between the two must be priced at arm's length and documented.

How much does it cost to move a mainland company to a free zone?

Budget a Dubai free zone package from AED 21,050 with one visa at Meydan Free Zone, or AED 21,400 at IFZA as a partner price, plus about AED 15,000 to 28,000 to liquidate a mainland LLC with two employees. Mainland access afterwards adds AED 10,000 a year for a branch or dual licence under Resolution 11 of 2025.

How long does it take to move from mainland to a free zone?

The free zone incorporation is quick, but the mainland exit sets the pace. A mainland LLC liquidation has a 45-day creditor notice period that cannot be shortened and commonly takes 60 to 90 days overall. On Meydan Free Zone's re-domiciliation route there is no fixed timeline, because it depends on when the mainland authority issues the exit certificate.

Does my company keep its incorporation date if it moves to a free zone?

Only on the re-domiciliation route. Meydan Free Zone's published process keeps the company's legal identity, incorporation date, trade name and contracts, because the same legal person moves. On the new-company route the free zone company is a new legal person with its own incorporation date.

Will I lose my bank account if I move my company to a free zone?

On the new-company route, expect to, because the bank opens a new customer file for a new legal person. On Meydan Free Zone's re-domiciliation route, some banks continue the existing account and others require fresh onboarding and know-your-customer checks. Notify the relationship manager in writing before any licence is cancelled.

Do I need a no objection certificate from DET to move to a free zone?

For a re-domiciliation, yes. Meydan Free Zone requires a no objection certificate from the current licensing authority and an exit certificate issued after visas and the establishment card are cancelled, and DMCC's Article 18 requires a letter of no objection from the jurisdiction being left. The new-company route needs no such certificate, only an ordinary mainland liquidation.

Can I still sell to UAE mainland customers after moving to a free zone?

Not directly by default. A Dubai free zone company reaches mainland customers through a branch, a dual licence or a temporary permit under Executive Council Resolution No. 11 of 2025, or through a distributor. The branch and dual licence each cost AED 10,000 a year and the temporary permit AED 5,000 per six months, before running costs.

Will I lose government tender eligibility if I move to a free zone?

Very likely, unless you add a mainland presence. Government and semi-government procurement typically expects a mainland trade licence, which is why free zone companies use a Resolution 11 branch or dual licence to bid. Check the specific procurement portal's registration rules before you move.

Do free zone companies have to meet Emiratisation targets?

Under current policy practice, no. BusinessDubai.ae's Emiratisation guide states that free zone companies are currently exempt from MoHRE's targets, but the exemption is policy-based rather than traceable to a single MoHRE regulation, and government discussion of extending the targets exists. Confirm your zone's position with MoHRE before building a plan around it.

What happens to my employees' visas when my company moves to a free zone?

Mainland residence visas and the establishment card do not carry over on either route. Employees are cancelled under the mainland establishment and issued new visas under the free zone establishment, which works without gaps only if the free zone establishment card and quota exist before any cancellation. Move staff in tranches.

What happens to my trademark when my mainland company moves to a free zone?

On the re-domiciliation route the trademark stays with the same legal owner. On the new-company route it does not follow the business: it needs a formal assignment recorded with the Ministry of Economy and Tourism, completed while both companies still exist. Leaving it in a company you then liquidate strands the mark.

Will I pay less corporate tax after moving to a free zone?

For most mainland businesses, no. A free zone company pays 0% only on Qualifying Income from the closed list in Ministerial Decision No. 229 of 2025, and consultancy, IT services, marketing, recruitment and general trading of retail goods are not on it. Outside the list, the free zone company pays the same 0% to AED 375,000 and 9% above as a mainland company.

Does a consultancy qualify for 0% corporate tax in a free zone?

No. Consultancy is not a Qualifying Activity under Article 2(1) of Ministerial Decision No. 229 of 2025, and headquarter services qualify only when supplied to related parties. A free zone consultancy is an ordinary taxable person, with the AED 375,000 band and access to Small Business Relief.

Can a free zone company still use the AED 375,000 zero-rate band?

Yes, if it is not a Qualifying Free Zone Person. An ordinary free zone taxable person gets 0% on the first AED 375,000 of taxable income under Article 3(1) of Federal Decree-Law No. 47 of 2022, exactly like a mainland company. Only a company that remains a QFZP loses the band, and only on its non-qualifying income.

Can I claim Small Business Relief after moving to a free zone?

Yes, provided the free zone company is not a Qualifying Free Zone Person. Small Business Relief applies at revenue of AED 3,000,000 or less for tax periods ending on or before 31 December 2029, under Ministerial Decision No. 131 of 2026. A QFZP can never claim it.

What happens if I claim QFZP status and my business does not qualify?

The company stops being a QFZP from the first day of that tax period and is taxed at the ordinary rates, 0% to AED 375,000 and 9% above. It is then barred from QFZP status for the next four periods under Article 5(2) of Ministerial Decision No. 229 of 2025, and faces penalties for filing on the wrong basis. The rate does not rise; the exposure does.

Can a free zone company be a registered commercial agent?

Nothing in Federal Law No. 3 of 2022 bars a free zone company as such; eligibility turns on ownership. The law limits registered agency to UAE citizens and to companies wholly owned by UAE nationals or public legal persons, plus UAE public joint-stock companies at least 51% UAE-owned and Cabinet-approved international companies for their own products. Ask the Ministry of Economy and Tourism whether it will register your intended free zone entity.

What happens to my VAT registration when I move to a free zone?

The free zone company needs its own VAT registration on the new-company route, and Meydan Free Zone says a new registration is needed even on its re-domiciliation route. Register the free zone company before the business transfers so the transfer can be a going concern, then deregister the mainland company within 20 business days of its last taxable supply.

Do I need Ejari for a free zone office?

No. Ejari registers Dubai tenancy contracts through the Dubai Land Department and is tied to mainland premises, while a free zone company leases its office or flexi-desk through the zone. The mainland Ejari tenancy has to be closed as part of the mainland exit, subject to the lease's termination terms.

How much does it cost to liquidate a Dubai mainland LLC?

About AED 15,000 to 28,000 for a mainland LLC with around two employees, per BusinessDubai.ae's liquidation guide, including a DET cancellation fee of about AED 1,020 and the newspaper notices. An expired licence or more staff pushes it higher, and the 45-day creditor notice period is a floor.

Which free zones accept a mainland company as the same legal entity?

Meydan Free Zone is the only zone found with a published inbound re-domiciliation process for UAE mainland companies as of September 2026. DMCC's Article 18 admits continuing entities only with a letter of no objection from the jurisdiction being left, and no DET mechanism to issue one was found. For any other zone, ask the zone and DET in writing.

Does Article 15bis let a mainland company move to a free zone without closing?

In law, yes. Article 15bis of the Commercial Companies Law, inserted by Federal Decree-Law No. 20 of 2025 and in force since 15 October 2025, is drafted to cover a transfer from the mainland to a free zone while keeping legal personality. Implementing rules were not complete at TME Legal's July 2026 update, so it works only where a zone has built the process.

Can I keep my contracts and clients when moving from mainland to a free zone?

On the re-domiciliation route, contracts continue with the same legal person once counterparties are informed. On the new-company route every contract must be novated or re-signed. Keeping mainland clients as customers is a separate question, because a free zone company needs a Resolution 11 branch, dual licence or permit to serve them on the mainland.

Do I need to show AED 75,000 for an investor visa at IFZA or Meydan?

Yes. At IFZA and Meydan Free Zone the shareholder must show capital of at least AED 75,000 in a bank account, in the UAE or in their home country, to obtain an investor visa. It is a balance to show, not a fee, so plan the cash alongside the liquidation.

What happens to my Dubai Customs code if I move to a free zone?

Assume you need a fresh one. A Dubai Customs importer code is registered against a specific licence, and no published rule on its portability to a new entity was found. Confirm with Dubai Trade and Dubai Customs before building a shipping schedule around the old code.

Can I move stock from my mainland company to the new free zone company tax-free?

Usually not. Stock in trade is outside Article 26 relief, which covers capital assets only, and neither Article 26 nor Article 27 relief is available if the new company will be a Qualifying Free Zone Person. Stock moved at a gain is priced at arm's length and the gain is taxed in the mainland company.

Should I close the mainland company before opening the free zone one?

No. Incorporate the free zone company, get its establishment card and visa quota, and register it for VAT first; then move the business and staff, and only then cancel mainland visas and liquidate. Closing first strands employees without a sponsor and can break the going-concern VAT treatment.

Is moving to a free zone worth it to avoid Emiratisation penalties?

Only rarely. The saving can be large, AED 324,000 a year for a company three Emiratis short, but the free zone exemption is policy-based, a 60-visa relocation needs a custom quote, and keeping UAE customers needs a mainland branch. It makes sense mainly for a company whose revenue is already export-weighted.

References

[1] Ministry of Finance. Ministerial Decision No. 229 of 2025 Regarding Qualifying Activities and Excluded Activities, issued 28 August 2025: Article 2(1) the closed list of fourteen Qualifying Activities, including trading of Qualifying Commodities at (c), distribution in or from a Designated Zone at (l) and logistics services at (m); Article 2(2) Excluded Activities, including transactions with natural persons; Article 2(3) definitions, including Qualifying Commodities excluding products packaged for retail sale and the 51% distribution revenue test; Article 3 the de minimis limit of the lower of 5% of revenue or AED 5,000,000; Article 5(1)(b) audited financial statements as a condition; and Article 5(2) cessation of QFZP status from the start of the period and for the four following periods. mof.gov.ae

[2] Federal Tax Authority. Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses: Article 3(1) rates of 0% up to AED 375,000 and 9% above; Article 3(2) the Qualifying Free Zone Person rates, with 9% on non-qualifying income and no threshold; Article 18(1) and 18(2) the QFZP conditions and cessation "from the beginning of that Tax Period"; Article 19 the election out; Articles 26(2)(d) and 27(2)(d) excluding a Qualifying Free Zone Person from Qualifying Group Relief and Business Restructuring Relief; and Article 34 the arm's length principle. tax.gov.ae

[3] Ministry of Finance. Ministerial Decision No. 131 of 2026, issued 29 July 2026, amending Ministerial Decision No. 73 of 2023 on Small Business Relief: revenue of AED 3,000,000 or less, tax periods ending on or before 31 December 2029, and no relief for a Qualifying Free Zone Person. mof.gov.ae

[4] Gibson Dunn. Recent amendments to the UAE Commercial Companies Law: Federal Decree-Law No. 20 of 2025, the insertion of Article 15bis and the retention of legal personality on a transfer of registration between competent authorities, in force from 15 October 2025. gibsondunn.com

[5] TME Legal. UAE company re-domiciliation guide, published 6 July 2026 and updated 21 July 2026: Article 15bis drafted to cover transfers from the UAE mainland to a free zone, and implementing regulations for the inter-authority transfer categories not yet published in complete form. tme-legal.com

[6] Meydan Free Zone. Transferring Mainland Company to Meydan Free Zone, published 22 December 2025 and updated 22 May 2026: the no objection certificate from the current licensing authority, the exit certificate issued only after residence visas and the establishment card are cancelled, no amendment of structure, ownership, capital or activities during re-domiciliation, no fixed timeline, visas and establishment cards not transferable, and a new VAT registration. meydanfz.ae

[7] Meydan Free Zone. Transferring From Mainland To Free Zone, published 16 March 2026 and updated 30 June 2026: the company keeps its legal identity, incorporation date, trade name and contracts; mainland visas are cancelled before the migration; VAT and UBO filings are made again under the new jurisdiction; and banks differ on continuing existing accounts. meydanfz.ae

[8] DMCC Authority. DMCCA Company Regulations, issued 10 October 2024: Article 18 (continuation into DMCC of a non-DMCC entity on a resolution of holders of 75% of the voting interests, with a letter of no objection from the jurisdiction being left and authorisation under that jurisdiction's laws) and Article 186.9 (Federal Law No. 32 of 2021 does not apply to any DMCC company or branch). dmcc.ae

[9] BusinessDubai.ae. How to liquidate a company in Dubai (18 July 2026): the 45-day creditor notice for a mainland LLC, a realistic timeline commonly of 60 to 90 days, indicative cost of AED 15,000 to 28,000 for a mainland LLC with about two employees, the DET cancellation fee of about AED 1,020, visa cancellations at AED 200 to 800 each, visa and establishment card cancellation before licence cancellation, and VAT deregistration within 20 business days and corporate tax deregistration within three months, each with penalties capped at AED 10,000. businessdubai.ae

[10] Dubai Legislation Portal. Executive Council Resolution No. 11 of 2025 Regulating the Conduct of Free Zone Establishments' Activities within the Emirate of Dubai: the branch, dual licence and temporary permit pathways for a free zone establishment to operate on the Dubai mainland. dlp.dubai.gov.ae

[11] BusinessDubai.ae. Dubai's Resolution 11/2025 guide: branch and dual licence fees of AED 10,000 a year, the temporary permit at AED 5,000 per six months, realistic first-year branch costs of about AED 56,000 for a minimal set-up and AED 120,000 to 260,000 for a full launch, and the use of a branch licence for government contracts. businessdubai.ae

[12] UAE Legislation Portal. Federal Law No. 3 of 2022 Concerning Regulating Commercial Agencies, issued 13 December 2022 and in force 15 June 2023: Article 2 (who may practise the Commercial Agency activity, the public joint-stock company exclusion at 51% UAE-national shareholding and the Cabinet route for international companies), Article 3 (registration in the Ministry's Commercial Agencies Register), Article 4 (written, notarised contract with the original Principal), Article 12 (registration application with a valid business licence), Article 15 (changes reported within 60 days) and Article 16 (strike-off within 60 days). The text contains no reference to free zones. uaelegislation.gov.ae

[13] Dubai Land Department. Ejari tenancy contract services, including registration and cancellation of Dubai tenancy contracts. dubailand.gov.ae

[14] Ministry of Finance. Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person: Article 3(1)(b), income from transactions with a Non-Free Zone Person qualifying in respect of Qualifying Activities that are not Excluded Activities, and Article 4, the composition of non-qualifying revenue for the de minimis test, including transactions with a Free Zone Person that is not the Beneficial Recipient. mof.gov.ae

[15] BusinessDubai.ae. Emiratisation 2026 guide (28 May 2026): the 10% target among skilled employees by 31 December 2026, the AED 9,000 monthly penalty per unfilled position, AED 324,000 a year for three positions, the 20 to 49 employee regime in 14 sectors, Nafis salary support of up to AED 7,000 a month, and free zone companies currently exempt on a policy rather than statutory basis. businessdubai.ae

[16] Federal Tax Authority. Qualifying Group Relief Corporate Tax Guide (CTGQGR1), April 2024: section 3.1 (transfers as a result of liquidation, dissolution or merger excluded), section 3.2 (assets and liabilities held on capital account only) and section 6.1.2 (clawback where the transferor or transferee ceases to exist, or becomes a Qualifying Free Zone Person, within two years). tax.gov.ae

[17] PwC Middle East. GCC VAT rules for transfer of going concern (2021), summarising Federal Decree-Law No. 8 of 2017 on VAT: the transfer of a whole business or an independent part to a taxable person who continues it is not a supply, with the conditions later clarified in FTA Public Clarification VATP015. pwc.com

[18] Federal Tax Authority. Corporate tax and VAT registration: corporate tax registration within three months of incorporation for juridical persons formed on or after 1 March 2024 under FTA Decision No. 3 of 2024, the AED 10,000 late registration penalty, and VAT registration mandatory above AED 375,000 of taxable supplies and voluntary from AED 187,500. tax.gov.ae

[19] Federal Tax Authority. Cabinet Decision No. 59 of 2017 on Designated Zones, as amended, and the Designated Zones VAT Guide (VATGDZ1), with Article 51 of Cabinet Decision No. 52 of 2017: the annex naming Jebel Ali Free Zone, Dubai Airport Free Zone, Hamriyah Free Zone, SAIF Zone and Ajman Free Zone among the designated areas, and goods moved into a Designated Zone from elsewhere in the State treated as supplied in the State. tax.gov.ae

[20] BusinessDubai.ae. Internal package pricing data, owner-confirmed 24 September 2026: 2026 free zone package prices on a stated visa basis for Meydan Free Zone, IFZA (partner prices; IFZA publishes none), Dubai South, Expo City, SRTIP, Ajman Free Zone and ANC Free Zone; the marginal cost of each visa; renewal at roughly 80% of year one, with real renewals landing 35 to 60% above year-one marketing; the AED 75,000 investor visa capital rule at IFZA and Meydan Free Zone; and WIO and Mashreq Neo opening readily for free zone companies. businessdubai.ae