Free zones are special areas set up to attract foreign business. You can own 100% of your company, pay no corporate tax, and repatriate all your profits.
But you can’t trade directly in the UAE market unless you use a local distributor. Each free zone has its own rules.
What’s a Mainland Company?
Mainland companies are licensed by the Dubai Department of Economy and Tourism (DET). You can trade anywhere in the UAE and even get government contracts.
You need a mainland license to sell directly to the UAE market. Free zone companies need a local distributor or must apply for a dual license.
If your customers are inside Dubai or elsewhere in the UAE, go with a mainland company. You’ll skip the hassle of working through a third party. Free zones are better if your clients are overseas or if you only need a digital presence.
What if you want fast and cheap setup?
Free zones are quicker to set up and usually cost less. You can often register online with just basic documents.
If time and money are tight, start in a free zone. Many offer startup packages with shared desks and basic licenses. You can always upgrade or switch to a mainland setup later. It’s not one or the other forever.
How many employees do you need to sponsor?
Mainland licenses offer more flexibility with visa quotas. Free zones limit you to a few, depending on the desk size.
If you need to hire more people or grow quickly, a mainland company gives you breathing room. Free zones make sense for solo founders or small teams. Some zones even require you to upgrade your office if you want more visas.
Source: Depositphotos.
What kind of business are you starting?
If you’re in media, tech, consulting, or export, a free zone fits well. If you’re doing trading, contracting, or retail, you’ll need a mainland license.
Some business types are restricted to the mainland. Others only need a virtual office to operate smoothly. Check your exact business activity against DET and zone lists before deciding.
Want to build a brand or win government contracts?
Mainland companies get more visibility and can pitch for government work. Free zones are great, but they don’t give that local authority image.
If your work depends on face-to-face meetings or large local clients, having a mainland office helps you look legit. It also builds trust.
Common Questions Answered
Can a free zone company trade in the UAE?
No, unless they appoint a local distributor or get a dual license through DED/DET. You’ll hit a wall if you try to sell to local clients directly. The workaround is possible but costs more and adds complexity.
Do I still need a local partner for a mainland company?
No. Most commercial and professional licenses now allow 100% foreign ownership. Only a few categories like defense or oil require a local partner. For most business types, you don’t need one anymore.
Is a free zone cheaper than a mainland company?
Yes, in most cases. Free zones offer lower entry costs and no need to rent a full office. You can often start with just a flexi-desk and upgrade later. Mainland licenses come with higher fees, office rental, and government approvals.
What about tax?
Both free zone and mainland companies can be tax-free, depending on turnover. Corporate tax applies only if your profit crosses AED 375,000 annually. You can register for VAT if needed. Profit repatriation is allowed in both types.
Can I switch later if I choose wrong?
Yes. You can migrate from free zone to mainland, though the process involves license cancellation and setup. Some entrepreneurs start in a free zone, test the waters, and then move to the mainland once they scale.
Final Thoughts + What to Do Next
Source: Depositphotos.
If you’re focused on local trade, building a bigger team, and having a strong presence in the UAE, mainland is your best bet. If your clients are outside the UAE and you want to get started quickly without much cost, then go with a free zone.
Make a checklist. Ask yourself where your customers are, how fast you want to start, what your budget looks like, and how big your team will grow. These answers point you in the right direction.
Still unsure? Talk to a setup consultant or visit a few zones to see what each one offers. The more clear you are about your goals, the easier this decision becomes.
Pick the license that fits what you want today—but keep in mind it doesn’t lock you in forever. You can shift gears later if things change.
Disclaimer:
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