Mainland vs Free Zone | A UAE Business Setup Guide
Setting up a business in the UAE is a big step and an exciting opportunity. But before you begin, you must choose the right place to register your company. Is the best place to register a company in UAE a free zone or the mainland?
This guide will explain both options in easy-to-understand terms so that you can choose the best option for your business venture in the UAE.
Understanding Mainland Company Formation in the UAE
If you wish to trade freely within the UAE and even outside of the country, then a UAE mainland company setup is the best choice for you. You register your company with the Department of Economic Development (DED) in the emirate where you intend to do business.
In addition, mainland companies have no trading restrictions. You are free to sell goods or services in any part of the UAE, not necessarily from one place.
Key Points
- Registered under DED: You register your trade license with the local economic department.
- Can trade across the UAE and worldwide: You are not limited to where you can operate.
- Physical office space needed: You need to rent or own an office to begin.
- Ideal for big operations: Suitable for companies willing to expand, employ more individuals, or serve local and government clients.
If you are willing to grow, serve local clients, or require additional employees, the mainland is the option that provides the liberty and flexibility you need.
About Company Registration in UAE Freezone
If you wish to have complete control of your business, then free zone company registration in Dubai is a wise and easy option. In free zones, you have 100% foreign ownership. That means you don’t have a local sponsor or partner. Thus, you retain complete control of your company and profits.
Also, establishing a company in a free zone is fast. It only takes a few days. There’s less paperwork, and rules are more relaxed than on the mainland. Also, free zones provide substantial tax advantages, such as no corporate tax, no customs duties, and convenient repatriation of profits.
Key Points
- No local partner required: You have 100% ownership of your company from the very beginning.
- Easy and swift setup: Registration is swift, normally within 1 to 5 working days.
- Suitable for international services and e-commerce: Ideal for online companies or businesses catering to customers outside the UAE.
- There are some visa restrictions: You can obtain up to 6 visas based on your office area and free zone regulations.
So, if you need an affordable and low-risk means of entering the UAE market, free zones are a great option.
Mainland Vs Free Zone: What’s the Difference?
Mainland vs free zone UAE is a general dilemma, but knowing the differences will help you make the best decision.
1. Ownership
Foreign ownership can be up to 100% in the mainland, depending on the nature of the business. In contrast, in free zones, there is always 100% foreign ownership.
2. Trade Area
Companies from the mainland can trade anywhere in the UAE and outside. However, free zone companies can trade only in their designated zone and overseas, in case they have a local distributor who can handle the trading for them.
3. Office Space
Mainland companies are required to have a physical office. However, most free zones permit virtual or shared office arrangements, particularly for startups and small businesses.
4. Visa Quota
Mainland companies can avail of more visas based on the size of the office. Free zone companies, on the other hand, typically receive up to 6 visas based on the package.
5. Corporate Tax
Mainland business ventures pay 9% on profits over AED 375,000. However, most of the free zones continue to provide 0% corporate tax if your company is completely based within the zone.
Free Zone vs Mainland: Where to Register Your Company in UAE?
While choosing the best place to register a company in the UAE, try considering what your business truly requires. If you intend to deal with clients within Dubai, Abu Dhabi, or other emirates, then you would be suited for a mainland company.
But if your company is working for international markets — such as online selling, e-commerce, or consulting for foreign clients — then a free zone company is the best option.
Advantages of a Mainland Company
A mainland company setup provides your company with room to expand. Let’s examine the major advantages.
1. Trade anywhere in the UA
You can sell your goods or services in any emirate without any limit. In addition, you are not restricted by area or trade borders.
2. Bid on government tenders
Mainland businesses can bid on large government projects. Also, this provides access to high-value transactions and trusted customers.
3. No limit to visas
There is no specific limit on visas. Also, the quantity is based on your office space and business size.
4. No limit on business activities
You have thousands of activities to choose from. In addition, you have the option to bundle various services under one license.
5. Freedom to expand and have branches
Mainland companies are able to expand quickly. Hence, you are free to open more branches anywhere in the UAE with ease.
Advantages of a Freezone Company
If you want maximum control of your company, then free zone company registration in the Dubai free zone is a good idea. It provides quick establishment, tax advantage, and sole ownership.
1. 100% foreign ownership
You don’t require a local sponsor. So, you can own and operate your company entirely without sharing the ownership with others.
2. No import or export taxes
You will not pay additional fees for importing goods or exporting them. It also makes your overall cost of doing business lower.
3. Easy and rapid registration
The registration process is quick. Most free zones allow you to register your business in a matter of days with very few steps.
4. Availability of shared office space
Free zones provide coworking spaces, desks, and meeting rooms. Furthermore, you don’t have to lease a large office initially.
5. Fewer papers, fewer headaches
You deal with fewer documents and approvals. Besides, free zone authorities handle most legal and administrative work for you.
Mainland Vs Free Zone: Cost Comparison
Cost matters. Let’s compare. Mainland costs more due to legal steps and office needs. Free zones offer packages for startups.
| Expense | Mainland | Free Zone |
| License | Higher due to DED approvals | Lower with startup packages |
| Office Rent | Mandatory & larger | Optional in some zones |
| Visa Charges | More flexible and lower | Limited and often higher |
| Setup Time | Longer | Quick (1-5 days) |
FAQs
Q1. Can mainland companies make international trades?
Yes, definitely. Along with trade within the UAE, mainland businesses also have the opportunity to sell products or services to consumers globally.
Q2. Is 100% ownership available on the mainland?
Yes, in most sectors. Earlier, it was not permitted, but now, the regulations allow foreigners 100% ownership in most of the approved activities.
Q3. Is free zone company registration in Dubai free zone suitable for e-commerce?
Yes, absolutely. Since free zones facilitate international sales, they are ideal for online retailers who deal with consumers outside the UAE.
Q4. How are taxes different between the mainland and free zone UAE?
Mainland businesses are subject to a 9% tax if profit exceeds AED 375,000. On the other hand, free zones tend to provide tax-free status for eligible companies.
Q5. Can I migrate from the free zone to the mainland?
Yes, but it will take time. In addition, you’ll need to re-change your license and go through new legal procedures with government approvals.
Q6. Do free zone companies require office space?
Not necessarily. Lots of free zones have virtual offices or common areas. So, you can begin without leasing a large office.
Q8. Does company formation facilitate setting up a business in Dubai?
Yes, they do. As there are numerous steps involved in the process, company formation corporate services providers make paperwork, approvals, and licenses much simpler.
Conclusion
Now you know what to seek when deciding on the best place to register a company in the UAE. Whether free zone company registration in Dubai free zone or UAE mainland company setup, choose what suits your purpose.
Follow this guide to make an informed decision. And when you’re ready, leave the difficult bits to company formation in Dubai. From company incorporation UAE to complete business setup in Dubai, professional assistance can be time and money-saving.
