Free Zone vs. Mainland: Where Should You Launch Your Logistics Company in Dubai?
Dubai stands as a global logistics hub connecting East and West. Whether you’re a freight forwarder, supply chain specialist, or e-commerce logistics player, setting up a logistics company in Dubai can be a game-changer. However, one of the most significant decisions you must make is this: Free Zone vs. Mainland – Where should you launch your logistics business?
This guide will unfold all the necessary information that will help you make the right choice between a Free Zone and the Mainland to set up your logistics company in Dubai.
21 Reasons Why Dubai Is a Logistics Powerhouse
- Strategic Location between Europe, Asia, and Africa
- Home to Jebel Ali Port, the largest in the Middle East
- Proximity to Al Maktoum International Airport for global air cargo
- World-class road network connecting all emirates efficiently
- Integrated sea-air-road connectivity across logistics corridors
- 100% foreign ownership is now allowed for logistics companies
- Customs-free zones simplify global trade operations
- Advanced warehousing facilities in free zones like JAFZA & Dubai South
- Dubai 2040 Urban Master Plan prioritises logistics infrastructure
- AED 2.5 trillion in non-oil trade as of 2023
- Fast customs clearance systems with digital processing
- Presence of global freight giants and shipping lines
- E-commerce-friendly infrastructure for cross-border fulfilment
- Availability of last-mile delivery networks within the city
- Smart city tech adoption in transport and logistics
- Excellent connectivity to GCC and MENA markets
- Stable and business-friendly legal framework
- Highly skilled and diverse logistics workforce
- Dedicated logistics zones like Dubai Logistics City
- Government-backed trade facilitation initiatives
- Seamless import/export ecosystem with minimal bureaucratic delays
Logistics Company Setup in Dubai: Two Main Options
1. Free Zone Logistics Business
Free zones are designated economic areas with their own regulatory frameworks, offering business-friendly policies.
2. Mainland Logistics Company
Mainland companies are licensed by the Dubai Economic Department (DED) and can operate across the UAE and beyond.
Free Zone vs Mainland: Detailed Comparison Table
| Feature | Free Zone | Mainland |
| Ownership | 100% foreign ownership | 100% foreign ownership allowed (Post-2021 reforms) |
| License Authority | Free Zone Authority (e.g., JAFZA, DAFZA, Dubai South) | Dubai Economic Department (DED) |
| Operating Scope | Within the free zone & international markets | Across all UAE + international markets |
| Clientele | Mainly B2B with international or free zone clients | B2B + B2C (government, individuals, mainland companies) |
| Office Requirement | Flexi-desk or warehouse options are often allowed | Must lease physical office space (minimum size required) |
| Customs & Trading | Needs customs clearance for mainland trade | Seamless local trading across the UAE |
| Audit Requirements | Depends on the free zone | Annual audits mandatory |
| Visa Eligibility | Limited by office/warehouse size (e.g., 1–3 visas for flexi-desk) | 1 visa per approx. 80 sq ft. of office space |
| Corporate Tax | Subject to 9% if income exceeds AED 375,000 | Same tax; QFZEs may qualify for exemptions |
| Import/Export | Simplified global shipping; limited local trade | Full access to local and international markets |
| Logistics Licensing | Zone-specific activities (logistics, warehousing, etc.) | DED categories (freight, delivery, customs clearance, etc.) |
| Popular Jurisdictions | JAFZA, DAFZA, Dubai South, Sharjah Airport Free Zone | The entire UAE, especially Dubai mainland hubs |
Key Considerations When Choosing Between Free Zone and Mainland
Nature of Business Activities
- Want to import/export globally? Free zones offer seamless global logistics.
- Need local distribution in the UAE? The mainland is better for unrestricted domestic operations.
Client Base
- Free zones are ideal for international clients and e-commerce fulfilment.
- Mainland lets you serve local government bodies, retailers, and public clients.
Facilities & Warehousing
- Free zones like JAFZA or Dubai South offer built-in warehousing and logistics zones.
- Mainland requires external warehousing partnerships or rented facilities.
Customs Requirements
- Free zone businesses must clear customs for mainland trade.
- Mainland businesses operate freely without customs restrictions within the UAE.
Most Preferred Free Zones for Logistics Companies
1. JAFZA (Jebel Ali Free Zone)
- Integrated with Jebel Ali Port.
- Excellent for large-scale import/export businesses.
2. Dubai South (Logistics District)
- Close to Al Maktoum International Airport.
- Smart city infrastructure and e-commerce-ready facilities.
3. DAFZA (Dubai Airport Free Zone)
- Ideal for time-sensitive shipments.
- Proximity to Dubai International Airport.
Mainland Logistics Setup: What to Expect
- License: Issued by the Dubai Economic Department.
- Business Activities: Freight forwarding, transport, delivery, customs clearance, 3PL.
- Office/warehouse: Must lease/rent physical space (min. 200 sq ft for basic license).
- Partnering with local delivery apps: Easier under a mainland license.
- Trading Rights: No restrictions. Full access to UAE-wide clients.
Free Zone vs Mainland Based on Business Use Case
| Business Scenario | Recommended Setup | Reason |
| International freight forwarding | Freezone | Proximity to ports/airports, customs benefits, international flexibility |
| Local last-mile delivery across the UAE | Mainland | Can serve all emirates and partner with local delivery platforms |
| E-commerce fulfilment for global markets | Freezone | Ideal warehousing + international shipping without local constraints |
| Logistics consulting or back-end support | Freezone | Flexi-desk option, minimal space needed, cost-efficient for service-based |
| Serving the UAE government or B2C mainland customers | Mainland | Only mainland companies can serve the public sector and local clients directly |
| Import/export with warehousing in the UAE | Mainland | Direct trading rights, physical space allowed, no customs bottlenecks |
| Air cargo or time-sensitive shipment services | Freezone (DAFZA) | Proximity to Dubai International Airport and express clearance |
| Starting lean (minimal capital) with scalability later | Freezone | Flexi-desk + scalable infrastructure in free zones like Dubai South |
| Multi-modal transport & large-scale 3PL operations | JAFZA | Integrated sea/land/air hub, built-in logistics ecosystem |
| Local warehouse-to-door logistics (e.g., retail delivery) | Mainland | Direct customer access, local warehousing, unrestricted UAE-wide trade |
Corporate Taxation for Logistics Companies (Mainland & Free Zone)
- 9% Corporate Tax applies if taxable income exceeds AED 375,000.
- Free Zone Companies may be exempt under Qualified Free Zone Entity (QFZE) criteria.
- VAT: 5% applicable for most logistics services.
Visa Eligibility: Free Zone vs Mainland
Free Zone
- The visa quota depends on the office/warehouse size.
- Flexi-desk = 1–3 visas (varies by authority).
Mainland
- Every 80–100 sq. ft. of office space = 1 visa.
- Easier to expand and accommodate a bigger workforce.
Audit & Compliance Requirements
- Mainland: Annual audit is mandatory.
- Free Zone: Audit depends on the free zone (JAFZA requires it; others may not).
Ensure proper bookkeeping and PRO services to stay compliant with the DED or Free Zone Authority.
Trading Rights and Import/Export Permissions
- Free Zone:
- Can import/export internationally without restriction.
- Needs a UAE mainland distributor or customs clearance for local trading.
- Mainland:
- Can freely trade within the UAE.
- Can import/export directly, no restrictions.
Recommended Setup Strategy
For International Logistics (Import/Export)
- Choose Free Zone (JAFZA or Dubai South)
- Benefit: Near ports/airports, customs efficiency, tax advantages
For Domestic Distribution & On-ground Delivery
- Choose Mainland (DED license)
- Benefit: Local operations, flexibility, and client access
Final Thoughts
Dubai is designed to be logistics-friendly. But the right setup depends on your business model. Free Zones are great for international freight, e-commerce fulfilment, and air/sea connectivity. The Mainland is ideal for delivery apps, last-mile services, and local warehouse-to-door models.
Consult experts for better outcomes.
We are experienced in setting up logistics companies within JAFZA and across Dubai’s top free zones and the mainland. From business licensing to warehousing and PRO services, we take care of everything. Your only task is to work on growing your business.
Start your logistics journey with expert support, strategic guidance, and local know-how.
FAQs
1. Can I set up a logistics company in Dubai without a local partner?
Yes. Both free zone and mainland logistics setups now allow 100% foreign ownership.
2. Which free zone is best for logistics?
JAFZA, Dubai South, and DAFZA are top picks depending on your logistics model.
3. Do I need a warehouse to start a logistics company?
Not always. You can start with a flexi-desk, but warehouse leasing is essential for storage-based services.
4. What license category should I choose under DED?
Categories include freight forwarding, cargo transport, warehousing, logistics consultancy, etc.
5. Is VAT applicable to logistics services in Dubai?
Yes. Most logistics activities are subject to 5% VAT.
