Quick summary

• Mainland companies offer full access to the UAE market, unlimited visas, and eligibility for government contracts.
• Free Zone companies offer 100% foreign ownership, fast setup, low costs, and ideal conditions for remote or global operations.
• Mainland requires a physical office (Ejari), whereas Free Zones allow flexible desks or virtual offices.
• Both structures now support 100% foreign ownership and may be subject to a 9% corporate tax on profits exceeding AED 375,000.
• Your ideal setup depends on your target market, budget, and growth plan.

Free zone vs mainland in Dubai: Which is better for your business?

Dubai offers two primary options for entrepreneurs seeking to establish a company: the Mainland and the Free Zone. Both come with their advantages and rules, but choosing the right one depends entirely on your business goals. In this blog, we’ll help you understand the key differences between Free Zone and Mainland companies in Dubai and guide you through the pros, cons, and ideal use cases for each so you can make a wise, confident decision.

What is a mainland company?

A Mainland company is licensed by the Dubai Department of Economy and Tourism (DET) and is authorized to conduct business operations across the entire UAE, including direct dealings with the local market and government entities. With recent reforms, many business activities in the Mainland now offer 100% foreign ownership, eliminating the need for a local Emirati sponsor in most sectors.

What Is a free zone company?

A Free Zone company is established in a designated area governed by its own Free Zone Authority. Dubai has over 30 Free Zones, each offering specialized services for different sectors, such as media, logistics, finance, or technology.
Free Zones are best known for:

• 100% foreign ownership.
• Quick setup.
• Tax exemptions.
• Low-cost packages.

Free zone vs mainland: A quick comparison

Factor	Mainland	Free Zone
Ownership	100% foreign ownership (for most activities)	100% foreign ownership
Market Access	UAE-wide + international	Free Zone + international only + UAE subject to certain licensing requirements amended from time to time
Office Requirement	Physical office (Ejari) required	Flexi-desk/virtual allowed
Visa Quotas	Unlimited (based on office size)	Limited (usually 1–6 per package)
Government Contracts	Eligible	Non eligible
Setup Time (estimated)	7–10 working days	3 – 5 working days
Banking Ease	Easier with Ejari office	May require extra documentation
Business Activities	2,000+ allowed	Depends on the selected free zone
Expansion	Operate anywhere in UAE (some activities may require extra licensing)	Subject to extra licensing requirements

When to choose mainland

A Mainland setup is ideal if your business:

• Wants to trade directly with UAE customers.
• Plans to open a retail store, restaurant, or office.
• Needs unlimited visa quotas.
• Intends to work with government clients.
• Has plans to scale operations across the UAE (some activities may require extra licensing).

Common Mainland Businesses:

• Restaurants and cafes.
• Construction and contracting companies.
• Consulting and law firms.
• Real estate and property management.
• Educational institutions.

When to choose free zone

A Free Zone company is best suited if you:

• Want full ownership with low setup cost.
• Don’t plan to deal with the local UAE market directly.
• Need a fast and paperless registration.
• Operate online or internationally.
• Require limited visas and work remotely.

Common Free Zone Businesses:

• E-commerce stores.
• Digital marketing agencies.
• IT and tech firms.
• Freelancers and remote workers.
• Import/export companies.

Office requirements

Mainland companies must lease physical office space under an Ejari tenancy contract.

In contrast, most Free Zones offer:

• Flexi-desk options.
• Shared workspaces.
• Virtual office packages.

These options are budget-friendly and ideal for startups or solopreneurs.

Visa quotas

Mainland:

• Visa eligibility depends on office size (80 sq. ft. per visa).
• No upper limit.

Free Zone:

• Visa limits tied to your license package (usually 1–6).
• Can be upgraded by increasing the office size.

If you plan to hire and grow your team, Mainland offers more flexibility.

Taxation and compliance

Both Free Zone and Mainland companies are now subject to the UAE’s corporate tax (9% on net profits above AED 375,000). However, Free Zones may offer tax incentives depending on activity and location. VAT registration is mandatory for both if the annual turnover exceeds AED 375,000.

Banking and corporate services

Mainland companies generally find it easier to open corporate bank accounts, thanks to their physical office, local presence, and unrestricted business model. Free Zone businesses may face stricter documentation requirements, especially when using a flexi-desk or virtual office.

Legal structure and activities

Mainland allows:

• Commercial Company.
• Sole Proprietorship.
• Civil Company.
• Branch of a national, foreign or free zone company.

Free Zones offer (not exhaustive):

• FZE (Free Zone Establishment – 1 shareholder).
• FZ LLC (Free Zone Limited Liability Company .
• FZCO (Free Zone Company – 2+ shareholders).
• Branch of local/foreign companies.

Mainland licenses offer more activity options and allow combining multiple related activities under one license.

Frequently asked questions (FAQs)

1. Can I own 100% of a Mainland company in Dubai?
Yes. According to the UAE’s recent reforms, most Mainland business activities now permit 100% foreign ownership without requiring a local sponsor.

2. What is the main difference between Free Zone and Mainland companies?
The most significant difference is access to the market. Mainland companies can operate anywhere in the UAE, while Free Zone businesses are limited to their zone and international markets unless they open a branch in the Emirate .

3. Is a Free Zone company cheaper to set up than a Mainland company?
Yes, generally. Free Zones offer lower-cost packages, particularly for startups and solo entrepreneurs, with options such as flexible desks and shared offices.

4. Can Free Zone companies work with clients in the UAE mainland?
Not directly. Free Zone companies must open a branch to serve clients on the UAE mainland legally.

5. Which setup is better for e-commerce businesses in Dubai?
If you’re selling internationally or through global platforms, a Free Zone is ideal. If you plan to deliver to UAE customers directly, consider a Mainland license for unrestricted operations.

6. Do both Mainland and Free Zone companies pay corporate tax?
Yes. Both are subject to a 9% corporate tax on profits exceeding AED 375,000 per annum. However, some Free Zones offer tax exemptions under certain conditions.

7. How long does it take to register a company in the Dubai Free Zone vs the Mainland?

• Free Zone: 3–5 working days (on average)
• Mainland: 7–10 working days (depending on documentation and activity)

8. Do I need to rent an office for both Mainland and Free Zone companies?
Yes, but the requirements differ. Mainland companies are required to lease a physical office (Ejari is needed). Free Zones offers flexi-desks, shared spaces, and virtual offices.

9. Can I switch from Free Zone to Mainland later?
Yes, but it involves company restructuring, new licensing, and relocation of the office. It’s essential to plan your setup carefully from the start.

10. Which setup is better for long-term business growth in the UAE?
Mainland offers more flexibility, unlimited hiring, and UAE-wide expansion ideal for businesses targeting local markets and government projects. Free Zones are better for niche, global, or remote operations with minimal overhead.

Which is right for You?

There’s no one-size-fits-all answer. The Mainland model is best for businesses targeting the local UAE market, seeking scalability, and hiring a larger team. Meanwhile, Free Zones offers fast and low-cost setups for companies that operate remotely or serve clients outside the UAE.
Choosing the right option depends on:

• Your target market.
• Your budget.
• Your growth plans.

Need help making the right choice?

Still unsure whether Mainland or Free Zone is best for your business? Let the team at Kanoony help you understand your options, assess your goals, and handle your registration from start to finish. Build your UAE business on the proper foundation innovative, scalable, and stress-free.