Mainland vs. Freezone Business Setup: What's The Main Difference
Starting a business in the UAE is a great opportunity. Choosing the right setup is important to make your business run smoothly. You can choose from three main options: mainland, free zone and offshore.
A mainland company allows you to do business anywhere in the UAE, including government entities. A free zone company is great if you want full ownership and a simple setup. Offshore companies help with international business and tax planning.
Knowing the differences helps you make the right choice for your business. Think about what you need, such as where you want to sell, how many staff you will have and your budget.
DBS is here to help you every step of the way. We guide you through what is best for your business, whether it is mainland or free zone. With DBS Group, you can confidently start your business in the UAE.
Are you ready to dive in? Let's answer the differences between mainland and freezone business setup in clearly detailed steps.
What Is a Mainland Company?
A mainland company is a business that registers with the local government of the emirate where it operates. It is granted a trade license by the Department of Economic Development (DED) in the emirate. A mainland company can carry out any type of business activity. But for some businesses, you need a UAE citizen as a local sponsor or partner.
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Speak With an Expert!What Is a Free Zone Company?
Free zones are specific business zones in the UAE, and each is run by its own Free Zone Authority (FZA). They have their own rules and benefits.
Free zones offer business owners great benefits such as complete foreign ownership and no taxes, making them a popular choice for starting a business.
A free zone company is a business that you register in one of the 40+ free zones in the UAE. These businesses can only trade within the free zone or internationally. They cannot do business on the UAE mainland.
In a free zone, you can set up three types of businesses: a Free Zone Company (FZC), a Free Zone Establishment (FZE), or a branch of an existing company.
Further Reading: LLC Company Formation in Dubai: A Comprehensive Guide (2025)
Free Zone Company Benefits
Full Foreign Ownership: You can own 100% of your business in a free zone without the need for a local partner.
Tax Benefits: Free zone companies pay no corporate or personal income tax for a certain period of time (usually up to 50 years). You also donβt pay import or export taxes in a free zone.
Easy Setup: Setting up a company in a free zone is often quick and easy, as government assistance is available.
Move your money freely: You can send all your profits and capital back home without any restrictions.
Flexible Office Space: Free zones offer a variety of office types, from shared desks to full offices, which helps reduce your start-up costs.
Industry Focus: Many free zones focus on specific industries, such as technology, trade, or finance. This can give you additional benefits and a community of like-minded businesses.
Disadvantages of a Free Zone Company
Limited mainland access: You cannot sell directly to the UAE mainland. You will have to hire a local agent or distributor.
Location restrictions: You can only do business in a free zone unless you get special permission.
High costs: Rent and service fees in a free zone can sometimes be higher than on the mainland.
Advantages of a Mainland Company
Do business anywhere: Mainland companies can do business in the UAE and around the world. This is great for businesses that want to reach local customers or grow in the UAE.
More business options: Unlike free zones, mainland companies can run many types of businesses. This makes it easier to expand into new areas.
Work with the government: Mainland companies can bid for government projects. These contracts often bring stable work and more opportunities.
Easier to grow: Mainland companies can open new branches anywhere in the UAE. This makes it easier to grow and reach more customers.
Move money freely: Mainland companies can send their profits and money back home without any restrictions.
Disadvantages of a Mainland Company
Require a local partner: Some types of businesses require a local Emirati partner who owns 51% of the company. But not all businesses have this rule. Some can be fully owned by foreigners.
Follow more regulations: Mainland companies generally have to comply with more paperwork and regulations than free zone companies.
Taxation: Mainland companies pay corporate tax (starting June 2023) if their annual income exceeds AED 375,000. This can affect companies that earn a lot of money.
Key Difference Between Mainland And Freezone Company UAE
|
Points |
Mainland Company |
Freezone Company |
|
Local Ownership |
You need a local partner who owns 51% of the company, but you can still run the business however you want. |
You can own 100% of the company without needing a local sponsor. |
|
Trade Flexibility |
You can do business anywhere in the UAE and even trade with other countries. |
You can trade with businesses outside the UAE and with other freezones, which helps with international business. |
|
Office Space |
You must have a physical office registered with Ejari and obtain the necessary approvals from local authorities. |
You can choose to have a physical office or a virtual office, depending on what works best for you. |
|
Visa Eligibility |
There is no limit to the number of visas you can obtain, but you will need a larger office space for more visas. |
Depending on the size of your office, you can apply for a limited number of visas, usually up to 6 or 7. |
|
Company Audit |
You must have a financial audit every year, and you will need approvals from various UAE authorities. |
Some free zones do not ask for an audit, while others follow their own rules. |
|
Setup Cost |
Depending on the type of business you have, costs start from around AED 20,000 to AED 25,000. |
You do not need approval from UAE ministries, but you do need approval from the Freezone Authority. |
|
Business Approvals |
You need approval from the Department of Economic Development, Ministry of Labor and Immigration. If your business is in health, education or food, you may need additional approvals. |
If you are only exporting or re-exporting goods, you do not need any additional approvals. But for certain services, you may need them. |
Conclusion
Choosing between a Free Zone and a Mainland company depends on what you want to achieve with your business. If you plan to trade internationally, work in special industries, or want an easier setup, a Free Zone company could be the right choice. But if you want to do business in the local market, get government contracts, or grow your business across the UAE, a Mainland company is a better fit.
Itβs a good idea to talk to a professional business advisor to help you pick the best option. They can guide you through the process of setting up your company in Dubai and make sure you choose the right structure for your needs.
Need help? Contact DBS for clear and easy guidance.
FAQs: Frequently Asked Questions
Q1. How much does it cost to start a mainland company in Dubai?
The cost of starting a mainland company in Dubai depends on the type of business and setup requirements, but it usually ranges between AED 20,000 and AED 40,000.
Q2. How much does it cost to start a free zone company in the UAE?
The cost of opening a free zone company in the UAE depends on the free zone and the type of business, starting from AED 10,000 and going up to AED 50,000 or more.