Free Zone vs. Mainland UAE: Differences Explained

There are many foreigners willing to start their own businesses in the UAE. From the exceptional tax benefits to easy trading routes, there are many benefits that attract these participants. While the process is streamlined and can easily be accessible to anyone with the right set of documents, there is a base question that is required to be answered: mainland vs freezone?

In this blog, we will discover the meaning of the two along with their differences and benefits to help you make a final decision for your business.

Mainland vs Freezone: Understanding the two

Two important business formation choices in the United Arab Emirates are mainland and free zone firms. Mainland businesses are permitted to conduct business both domestically and abroad after registering with the Department of Economic Development (DED). They can also bid on government contracts and engage in direct trade with the local market.

Free zone businesses, on the other hand, are based in specific locations and enjoy simplified procedures, complete foreign ownership, and tax benefits. They are not allowed to deal directly in the local market without a distributor, nevertheless.

Mainland Company Formation in Dubai

The UAE’s mainland firms provide a great deal of business flexibility and are registered with the Department of Economic Development (DED). These businesses are free to operate both inside and outside the United Arab Emirates, provide visas, and even place bids for government contracts.

Foreigners can now hold 100% of their mainland businesses in the majority of sectors, according to a major shift in recent legislation. In the past, a local partner had to own 51% of the business.

Compared to other business formats, establishing and running a mainland company in UAE involves navigating a more complicated regulatory environment, despite the fact that it offers more freedom. Depending on the sector and region, businesses may be subject to different licensing and regulatory requirements.

In spite of these factors, mainland corporations continue to be a desirable choice for enterprises looking to expand their operations and gain access to the UAE market.

Freezone Company Formation in Dubai

Freezones are special economic zones that are usually industry specific and offer top notch business facilities to entrepreneurs. There are over 45 freezones in the United Arab Emirates’ and each has its own regulations. A firm that is registered in one of these zones is known as a free zone corporation.

These businesses can function both inside and outside of the free zone (internationally) while taking advantage of tax-free advantages. They are unable to conduct direct business on the UAE mainland, nevertheless. Generally speaking, freezone business setup is quicker and simpler than starting one on the mainland.

Difference between Freezone vs Mainland Company Formation

Here are some points that will help to understand UAE mainland vs freezone better:

Benefits of Mainland Company Formation

Mainland offers a wide range of facilities and advantages over the freezone company formation. Let us look at this list of benefits:

• Freedom to Operate: There are no limitations on your ability to do business anywhere in the United Arab Emirates.
• Tax Benefits: Take advantage of a 100% personal tax exemption and low corporate tax rates.
• Repatriation of Profits: You are free to return all of your capital and profits.
• Government Contracts: Get the chance to work on and bid on government contracts in the United Arab Emirates.
• Visa Flexibility: You are not limited in how many visas you can grant to your staff members.
• Business Expansion: Increase your presence in the local market and open several company branches within the registered emirate.
• Access to International Markets: Acquire unfettered access to international markets.

Benefits of Freezone Company Formation

There are several benefits of a company formation in the freezone. Below is the list of all the points that favour the freezones.

• Complete Foreign Ownership: You don’t require a local Emirati sponsor to fully control your company.
• Simple Setup: In general, establishing a business in a free zone is quick and simple.
• Tax Benefits: Take advantage of a 100% import and export duty exemption. Additionally, you are free to repatriate all of your capital and earnings.
• Business Privacy: The information about your company’s shareholders is kept private.
• Flexible Hiring: It’s relatively easy to find and hire staff.
• Support and Guidance: Free zones provide networking opportunities and helpful business advice.

How to choose between Mainland vs Freezone for business setup

You might be thinking about how to select the ideal jurisdiction for your business setup in Dubai. Here are some questions that will make the decision easier for you:

1. What business activities you want to carry on?

The jurisdiction you choose should support the business operations you plan to carry on. There may be certain activities that some freezones may not support.

2. What is your visa requirement for employees?

On the mainland, businesses usually get higher visa quotas which depend on the size of the office. So, if you are looking for huge number of employee visas, you can consider mainland.

3. Who is your target market?

For those looking to expand their business operations across the UAE, mainland company formation may be a better choice. Those looking to target more international clients can choose freezone business setup.

4. What business ownership rights do you want to enjoy?

If you want to enjoy 100% ownership of your business, consider freezones. On mainland, though now complete foreign ownership is permissible, yet some activities may need partnering with local sponsors.

5. What is your budget for business setup?

For startups and those looking for low cost business setup in UAE, freezone company formation may be a better choice as the cost of setup is lower in comparison with mainland business setup.

Still in doubt? Book a consultation with our expert to get a clearer picture.

Start your business in preferred jurisdiction

For someone looking to setup a company in UAE, mainland vs freezone remains a major concern. Though each jurisdiction has its own advantages, but it’s important to find out what works best for your business.

Dubiz Business Setup is a firm that deals with company formation in UAE. Our experts can guide you throughout your business formation journey in Dubai. From selecting the suitable economic zone and getting your company name registered to submitting the required documents to the respective authorities, we guide and assist you throughout the process. Let us make your business setup in Dubai easier.

Get in touch with us at
📞 Call: +971 56 369 5485

💬 WhatsApp: +971563695485

📧 Email: info@dubiz.co

Frequently Asked Questions (FAQs)

1. What is the difference between freezone and mainland in UAE?

The primary distinction between mainland vs freezone businesses is that the former are unable to conduct business outside of the free zone without the assistance of a local agent. Mainland businesses are exempt from this restriction and are permitted to operate anywhere in the United Arab Emirates.

2. How to choose between mainland vs freezone Dubai?

Mainland companies have more market access, operate throughout the United Arab Emirates, and need local control. Freezone companies prioritize export-oriented operations, provide tax incentives, and allow 100% foreign ownership. Therefore, when making a choice, you should take into account elements like ownership, market access, taxation, and expansion ambitions.

3. What is the difference between mainland and freezone license?

Both the mainland and the free zone require a license for the company formation. These licenses offer different benefits, among which the major difference remains in functionality with and without a local agent.

4. For an LLC company formation in Dubai, which is better between free zone and mainland?

The choice between the mainland and the free zone is mostly based on your target market and business objectives. A mainland structure is probably the better option if you intend to deal with government organizations and operate directly in the local market.

5. Is Dubai a safe place for foreign entrepreneurs in the UAE?

The UAE government’s dedication to public safety has helped to establish Dubai as one of the safest cities in the world. For residents, business owners, and their families, this commitment fosters a safe atmosphere.