Mainland vs. Free Zone Business Setup: Which One is Best for You
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As many businesses start to move to Dubai with a year-over-year growth of 25%, due to its tax-efficient infrastructure and business-friendly policies, the question remains quite common: which jurisdiction should I choose for my business? Freezone or mainland?
Well, choosing the right jurisdiction depends on several factors like your business structure, which type of activity you intend to conduct and who your clients are. Moreover, your market access, visa structure and free zone vs mainland company setup cost will also influence your business jurisdiction choice. Recently, Freezones is becoming quite famous for their exclusive offerings, 100% ownership and ease of conducting operations.
Let’s dive into the complexities of starting a business in free zone vs mainland Dubai , helping you make the most suitable choice for your business.
What Is Free Zone In Dubai
The Dubai Free zone is also a called a free-trade zone (FTZ) or special economic zone (SEZ) is a specific area outlined by the government. Businesses operating in this area are required to follow certain economic regulations than the businesses conducting in other parts of the country. Most of the companies operating in Freezone have limited access to mainland market.
Freezone areas are specially for the companies who want to offer their services globally, while operating in Dubai and benefitting from tax free policies. A business operating in Freezone cannot directly start operation in Mainland and is easier to set up than other jurisdictions in Dubai.
Benefits Of Free Zone Business In UAE
Here are what benefits you can get while setting up and operating a company in the Dubai Freezone?
1- 100% company ownership without a UAE Sponsor
2- Easy Company Formation process
3- 100% access to capital and profit
4- Conduct a transaction in any currency
5- 0% import and export duties on trade
6- Company ownership details are kept confidential
7- Smooth and easy recruitment procedures
What is Dubai Mainland Business
Mainland is a designated area by the UAE government. Companies operating in the mainland have to register with the Department of Economic Development. Mainland companies have access to both international and local markets in Dubai, including throughout Dubai and other emirates. These companies can issue visas easily to their employees, conduct business with other companies, and can also take government contracts, making it a top choice among several businesses.
Just like freezone mainland companies also have access to 100% ownership in Dubai. It offers additional benefits for entrepreneurs and investors form across the globe.
Benefits Of Mainland Business In UAE
Mainland business setup advantages include the following
1- Conduct business across the UAE restriction-free
2- Open multiple branches to strengthen local presence
3- 0% personal tax and a high threshold for corporate tax
4- Bid and work on UAE government contracts
5- No restriction on the number of visas for company employees
6- Access to the local and global market
Difference Between Freezone and Mainland
The following are some key difference between freezone and mainland
Here’s the updated and more organized table, with the requested points removed and modifications to the taxation section:
| Factor | Mainland | Free Zone |
|---|---|---|
| Scope of Business | Operate locally and internationally | Can operate only in freezone areas and internationally |
| Market Access | Full access to the UAE market, including government contracts | Limited access to the UAE market unless a separate mainland license is obtained |
| Taxation | 9% corporate tax on profits exceeding AED 375,000 | Tax exemption applies in some free zones; 20 free zones offer full exemption, others limited |
| Customs and Import/Export | You will need to pay customs duty | Exempt from customs duty within the free zone |
| Office Space Requirements | Requires a physical office in the UAE | Can be a physical or virtual office, depending on the free zone |
| Visa Eligibility | No restriction on the number of employee visas | Limited visas, depends on free zone and office size |
| Regulatory Body | Department of Economic Development (DED) | Free Zone Authority (FZA) |
| Business Type | Suitable for most business types, including larger operations | Ideal for smaller, specialized businesses like tech, trading, consultancy |
| Capital Requirements | Typically higher, depends on business activity | Varies by free zone, often lower than mainland |
| Government Support | Must adhere to local and federal regulations | Special incentives and benefits depending on free zone |
| Legal Structure | Can be LLC, sole proprietorship, or other structures | Can be free zone company, branch, or representative office |
| Local Sponsor Requirement | Required for foreign ownership in most businesses | No local sponsor required, 100% foreign ownership allowed |
| Setup Time | Takes longer due to regulations and paperwork | Often quicker, depends on the free zone |
| Physical Office | Depends on the type of business license | Depends on the free zone requirements |
How To Choose Between Free Zone Vs Mainland Company Setup
Setting up a business and choosing the most suitable jurisdiction could be quite hectic for you. You need to understand the scope of your business, your business’s planned activities and the clients you intend to serve.
Free Zone vs Mainland:
Which one is right for you? This is a question that many entrepreneurs face, and the answer depends largely on your specific business requirements which includes the following.
Business Ownership Structure:
Business structure tends to play a key role when selecting a jurisdiction between the mainland and the freezone. If your business intends to provide services and products for local clients they prefer a mainland company.
On the other, if your company is internationally focused, offers online services and linked to specific industries like tech, media, or logistics, you can opt for freezone.
Your Business Activity:
Another aspect when choosing between mainland and freezone is the available activities for your business. Mainland can have more than 2000 activities that your business can select from. On the other hand, freezone activities are limited and may restrict a few activities to be conducted.
You can also offer multiple services on the mainland and freezone under one business license. However, it will increase the cost to add more service categorize to your business opening under a single license.
What Clients do You Serve?
The major difference between mainland and freezone company is the type of clients you serve. If your business tends to provide services to local clients in UAE, then you should opt for a mainland company. A mainland company can conduct trade locally and with international clients.
However, a company in a free zone can only conduct trade with international clients. They will need to have a local distributor or set up a mainland branch. Here are what business activities you can conduct across different jurisdictions in Dubai
| Activity | Common Practice |
|---|---|
| Internationally Operated E-commerce store | Free zone company |
| Educational or training institutes serving the UAE | Mainland company |
| Media and advertising services for global clients outside the UAE | Free zone company |
| Retail Outlets | Mainland company |
| Construction services | Mainland company |
| Software development for international clients | Free zone company |
| Logistics and freight services within the UAE | Mainland company |
| Event management for regional and international clients | Free zone company |
| Food and beverage (restaurants, cafes) | Mainland company |
| Import/export business with minimal local operations | Free zone company |
Number of Visas You Require
When you own a business in UAE, anyone you hire will need a visa to work in UAE. Your business visa needs must also influence the jurisdiction you choose to start your business.
If you own a mainland company, there is no restriction on the number of visas one can issue. To acquire a visa for your employee, you need to submit a labor card for each employee, your office size and the £3000 deposit for each employee.
In a freezone Dubai company, visas are provided according to your business size. UAE government allows you to have 0-6 visas in freezone. Some freezone areas allow you to expand your operations and increase the number of visas accordingly. However, reducing your office space and operations can decrease your visa quota.
Value Added Tax (VAT) Exemption
Make an Insightful Choice for Mainland vs Freezone Business with Dubai Business and Tax Advisors
Choosing between a UAE mainland and Freezone business setup is more than just a legal or logistical decision; it’s a strategic one. Both mainland vs free zone UAE company formation options offer unique advantages tailored to different business needs, goals, and operational models.
For business those looking for more access to the market and local reach, a Mainland company offers more scope to trade across the UAE and allows you to deal with government contracts. However, a freezone setup offers tailored benefits including 100% foreign ownership, specific tax exemptions, and easy setup processes. Making it perfect for companies engaging in international trade and having less employees.
By aligning your business structure with your goals, you not only ensure regulatory compliance but also set a solid foundation for sustainable growth.
Get in touch with Dubai Business and Tax Advisors, helping you throughout company formation across all jurisdictions in Dubai.
FAQs
Mainland companies can operate freely across the UAE and directly engage with the local market. However, they must partner with a local agent for some activities. Free zones allow 100% foreign ownership but restrict direct mainland business operations.
It is comparatively more economical to set up free zone establishments. It involves lower startup costs, fewer restrictions and doesn’t always need a place of business, making them well suited to small or online-type businesses.
Not directly. However, if these companies want to do business within the mainland UAE, they either need a local distributor or a branch open in the mainland.
Mainland setups offer greater flexibility and the ability to operate across the UAE, though they come with higher costs. Free zones are cheaper and easier to set up but limit domestic market access, making them better for niche or online businesses.
Free zones are a great option for foreign investors, offering full ownership and lower costs. However, if you plan to access the broader UAE market or work with government entities, a mainland setup may be more beneficial.
Final Thoughts
Starting a business in Dubai is not challenging. It will take you about 2-4 weeks to start a complete business in Dubai. Whether selecting a business setup zone for mainland, freezone, or offshore, you will need the right guidance to help you with the entire registration, visa, and licensing process with ease.
Dubai is one of the best places to start your business because it offers access to a multicultural consumer base from over 200 nationalities and provides world-class digital infrastructure, allowing even small startups to scale quickly and operate efficiently in a globally connected market. While the cost to start a business in Dubai isn’t excessively high, accuracy and compliance at each step are essential.
Dubai Business and Tax Advisors can make starting a business in Dubai seamless. We ensure all your documentation is correct and you incur the least cost of business formation.
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Read More »About the Author:
AURANGZAIB CHAWLA
As CEO of DBTA, Aurangzaib Chawla advises globally mobile businesses and individuals on cross-border tax planning and structuring. With expertise spanning the UK, UAE, and wider GCC, Zaib helps clients minimise double taxation, protect assets, and achieve long-term financial efficiency while staying fully compliant.
Planning to launch in Dubai or the UAE?
Let’s talk about how to structure your business for growth the smart, compliant, and tax-efficient way
About the Author:
AURANGZAIB CHAWLA
As CEO of DBTA, Aurangzaib Chawla advises globally mobile businesses
and individuals on cross-border tax planning and structuring. With expertise spanning the UK, UAE, and wider GCC, Zaib helps clients minimise double taxation, protect assets, and achieve long-term financial efficiency while staying fully compliant.
Planning to launch in Dubai or the UAE?
Let’s talk about how to structure your business for growth the smart, compliant, and tax-efficient way.
