In the era of digital commerce, Dubai is becoming an increasingly attractive destination for entrepreneurs who want to launch an online store. With a top-notch infrastructure, favorable tax policies and easy access to international markets, the UAE provides an ideal setting for e‑commerce businesses. However, before you start, you have to decide: do you set up your company in a Free Zone or Mainland?
Why choose Dubai for e‑commerce?
Dubai is considered an emerging digital hub with multiple advantages for online merchants:
• Reduced Fees:0% personal income tax and 9% corporate tax (over AED 375,000 annually).
• Advanced Logistics:world-class airports and ports.
• Digital infrastructure:high-speed internet, fast digital payments.
• Strategic point:access to markets in the Middle East, Asia and Africa.
Free Zone vs. Mainland — What do you choose for your online business?
Free Zone e‑commerce license
The e‑commerce license in the Free Zone gives entrepreneurs the opportunity to quickly set up an online business, benefiting from simplified procedures and favorable conditions for international business activities.
• 100% foreign ownership, without the need for a local partner.
• Fast start-up procedures and modern digital infrastructure.
• VAT exemption for international sales.
• Possibility to manage your business completely online.
Advantages:Easy access to global trade, administrative flexibility and expansion opportunities without complex local obligations.
Disadvantages:You cannot sell directly to customers in the UAE without an authorized reseller. The delivery address in the UAE must be outsourced. You don't have access to government markets or public contracts.
Mainland e‑commerce license
Mainland e‑commerce license (issued by DED — Dubai Economic Department) offers:
• The right to sell directly to consumers in the UAE (B2C).
• Possibility to have a showroom or physical store.
• Direct integration with local delivery and payment platforms.
Advantages:Full access to the local market, collaborations with government institutions, marketplaces.
Disadvantages:Higher costs, taxation from the beginning, possible need for local sponsor, mandatory office.
Steps to launching an eCommerce in Dubai
1. Determine the area:Analyze the type of products, the audience and the available budget.
2. Choose the right business:Activity codes such as “Trading via internet” or “Online marketplace”.
3. Register the company:Directly with the Free Zone authority or through DED for Mainland.
4. Prepare the licensing file:The process of obtaining a license involves checking documents, approving the activity and issuing a certificate of operation. The procedure is simplified and can be completed in a few days, depending on the chosen area.
5. Obtaining the e‑commerce license:Depending on the area in which you choose to operate, the authorization process involves validating the business activity and issuing the necessary license to operate legally in Dubai.
6. Activate bank accounts and online payments:Integration with PayTabs, Stripe MENA, Telr, etc.
7. Develop the online platform:Shopify, WooCommerce, etc.
Important tax and operational differences
Zona Gratuito:
• 100% foreign ownership, no local partner.
• VAT applicable only if you sell in the UAE (5%); for exports, VAT does not apply.
• You cannot sell directly to customers in the UAE — a distributor is required.
• More flexible administrative conditions and attractive financial benefits.
• The physical office is not always necessary.
• Corporate tax (9%) applicable only if you exceed AED 375,000 and are not a “Qualifying Free Zone Person”.
Mainland:
• 100% ownership possible (no mandatory local sponsor).
• VAT of 5% applicable from the first transaction.
• Direct sale to UAE customers without intermediaries.
• Access to public collaborations and local marketplaces.
• Stricter operating space rules and administrative requirements.
Case study 1: selling products in the GCC region vs. local delivery in Dubai
Suppose you want to launch an online store that sells clothing products in Kuwait, Saudi Arabia and the United Arab Emirates, with central warehouse in Dubai and delivery through courier firms such as Aramex or Fetchr. In such a situation, a firm opened in a Free Zone, such as Dubai CommerCity, would be ideal: you get VAT exemptions for exports, low operating costs and easy integration with regional logistics services. You don't need physical space in the city, and you can get started quickly with a smaller budget.
Conversely, if you plan to sell flowers or food to customers in Dubai and Abu Dhabi, things are different. In order to be able to make direct deliveries to the final consumer within the UAE, it is essential to operate under a Mainland license. Only in this way can you have a full local presence, legally collaborate with delivery apps like Talabat and have direct access to the local market without intermediaries.
Case study 2: sale of digital services vs. marketing of physical goods
Let's take the case of a freelancer or entrepreneur who provides digital services, such as web development, online marketing consulting or graphic design, to clients in Europe, the US and the Middle East. If the work is carried out exclusively online, without direct contact with customers in the UAE, a company registered in a Free Zone is undoubtedly the most effective solution. You can issue international invoices, you are not obliged to collect VAT on exported services and significantly reduce your monthly costs by avoiding office space or physical infrastructure.
On the other hand, if you sell physical products — such as electronics, cosmetics or accessories — and want to operate directly in the local market in Dubai, you need a structure in Mainland. Customers expect fast delivery, easy returns and local presence, which involves integration with local logistics operators, warehouse space, and partnerships with local marketplaces or applications.
Dubai offers a flexible and advantageous framework for any entrepreneur who wants to launch an e‑commerce business. The choice between Free Zone and Mainland depends on the type of products, your target audience and your goals. With proper planning and the right partners, you can launch your online business in just a few days and access international or local markets with maximum efficiency.
