Mainland vs Freezone: Where to Setup Your Business in 2025

Name: Dubiz Bussiness Setup
Brand: Dubiz
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By Farwa Fatima
September 9, 2025

What is a freezone or a mainland in UAE?
What is a mainland company in UAE?
What is a freezone company in UAE?
What is difference between mainland and freezone UAE?
Cost difference between UAE mainland and freezone business setup
Should You choose mainland or freezone for UAE business setup?
Conclusion
How Dubiz can help with Dubai mainland and freezone business setup?
Frequently Asked Question (FAQs)

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: UAE freezone vs mainland? 

Entrepreneurs often face a crucial decision of selecting either a UAE freezone company formation or mainland company formation. UAE freezones offer highly relaxed tax policies along with 100% foreign ownership rights whereas mainland offers flexible business operations across UAE with multiple other benefits.

So, how do you choose the right jurisdiction for your business? 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.

What is a freezone or a mainland in UAE?

Freezone and mainland refer to the types of business jurisdictions in UAE where companies can be established. They are essentially economic zones into which the Emirates is divided.

Mainland is the onshore area, which is regulated by the Department of Economic Development (DED) of respective Emirate. Freezones, on the other hand, are special areas created for businesses. There is not just one freezone in UAE but there are many, and each one has its own rules and authority.

While mainland remains a single unified jurisdiction in each Emirate (such as mainland Dubai, mainland Abu Dhabi and so on), there are currently more than 40 freezones operating in UAE, with multiples in each Emirate. Some popular options include:

Dubai South Free Zone
Ras Al Khaimah Economic Zone (RAKEZ)
Ajman Freezone
Jebel Ali Free Zone (JAFZA)
International Free Zone Authority (IFZA)
Dubai International Financial Centre (DIFC)
Meydan Free Zone
Dubai World Trade Centre (DWTC)

Let us look at the meaning of UAE freezone vs mainland separately for a better understanding.

What is a mainland company in UAE?

A mainland company is a business that is set up in the onshore area of UAE. These companies are registered and licensed by the Department of Economic Development (DED) of respective Emirate.

Benefits of mainland company formation in UAE

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.
Business activity choice: Mainland companies can trade directly with the local UAE market and choose from a wide range of business activities.
100% foreign ownership: Thanks to recent legal reforms, foreigners can now own 100% of their mainland companies in most sectors. Previously, a local partner was required to hold 51% ownership.

Drawbacks of setting up a mainland company in UAE

Compared to other business formats, setting up and operating a mainland company in the UAE can involve a more complex regulatory process, even though it offers more flexibility.
In some specific sectors, a local sponsor may still be required to hold 51% of the business ownership, which can limit full control for foreign investors.
Mainland company setup can be more costly as compared to freezone business setup in UAE.

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.

What is a freezone company in UAE?

A firm that is registered in one of the freezones in UAE is known as a free zone company. 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.

Benefits of freezone company formation in UAE

Complete Foreign Ownership: You do not 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 is relatively easy to find and hire staff.
Support and Guidance: Free zones provide networking opportunities and helpful business advice.
Widened business scope: Freezone companies can now conduct direct business on the UAE mainland by obtaining a license from the Department of Economic Development (DED).

Generally speaking, freezone business setup is quicker and simpler than starting one on the mainland.

Disadvantages of setting up a freezone company in UAE

Activity restriction: Some free zones may not allow the business activity you wish to conduct.
Additional permits for mainland: To operate on the mainland, you need a separate license and permit, which may include additional costs.

What is difference between mainland and freezone UAE?

Criteria	Mainland Companies	Free Zone Companies
Ownership	Previously required 51% Emirati ownership. Now allows 100% foreign ownership for specific activities.	Offers 100% foreign ownership from the outset with no need for a local sponsor.
Taxation	9% standard corporate tax on annual income exceeding AED 375,000*. No income tax.	No income tax plus corporate tax exemption for qualifying freezone persons.
VAT	Applicable at the rate of 5%.	VAT applied at 5%, however, many freezones offer 0% VAT.
Regulatory body	Mainland companies are regulated by the Department of Economic Development (DED).	Each freezone has its own independent regulatory authority that regulated companies operating within them.
Market access	Can operate anywhere in the UAE, including the local market, without restrictions.	Restricted to operating within the free zone unless a sperate license from DED for mainland is acquired.
Business scope	A very broad range of business activities allowed by DED that can be pursued by businesses.	You can choose from the business activities that may be allowed selected freezone.
Workspace	Typically, physical office space is required to obtain a license.	Physical office space is optional; virtual offices are allowed in many free zones.
Visas	No restrictions on the number of visas; depends on workspace size (larger office, more visas).	Limited visa quotas, typically ranging from 1 to 6, depending on free zone regulations.
Business Setup Approvals	Requires approvals from multiple government agencies like DED, municipalities, and Ministry of Labor.	Requires free zone authority’s approvals, with clearance from external agencies as may be needed.
Company Audit	Mandatory to prepare a financial audit at the end of each fiscal year.	Audit requirements vary; only Specific entities like FZE and FZCO need yearly audits.

Cost difference between UAE mainland and freezone business setup

Is mainland costly or freezone? Which jurisdiction offers low business setup options in UAE? Here is what you need to know:

Cost of mainland business license:	Cost of freezone business license:
The cost of a DED mainland business license ranges between AED 10,000 to AED 15,000.	The cost of freezone business license in UAE can start from AED 5,999*.

However, you must know that the total cost of business setup in Dubai freezone vs mainland includes many other factors, such as:

Approval fees
Office rent (in freezone, you can operate through virtual office address which may reduce office costs)
Visa costs (depends on the number of visas required)
Local sponsor fee (not applicable in freezones)
MOA fees
Attestation of documents

Overall, mainland business can be costly as there are higher office and other costs. On the other hand, in freezones, visas charges can be more.

For more costing detail, you can contact our experts at Dubiz Business Setup.

Should You choose mainland or freezone for UAE business setup?

Well, the question of choosing between freezone vs mainland for your business setup in UAE is very personal and will purely depend on your business goals and needs. Here are some questions that will make the decision easier for you:

What business activities you want to carry on?

The jurisdiction you choose should support the business operations you plan to carry on. While there are more than 2000 business activities supported in UAE, there may be certain activities that some freezones may not support. 

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. On the other hand, if you plan to get 0-6 visas only, then you can go with freezone.

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 or a niche can choose freezone business setup.

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.

Do you need a physical office for your business?

Most of the mainland companies must have a physical office. So, if your business model and budget allow you, you can choose mainland for setup. On the other hand, if you want to begin with a startup and do not wish to invest in office, then freezones will offer your virtual address operations.

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.

You should weight the difference between mainland and freezone company in Dubai and then choose the one that best matches your needs. Still in doubt about freezone vs mainland Dubai? Book a consultation with our expert to get a clearer picture.

Conclusion

Starting a business in the UAE comes with an important decision of choosing between a freezone vs mainland company. Mainland companies let you trade anywhere in the UAE, bid for government projects, and hire unlimited staff based on office size.

Freezone companies, on the other hand, offer 100% foreign ownership, lower startup costs, virtual office options, and tax exemptions, making them perfect for startups and international-focused businesses. Therefore, understanding the freezone and mainland difference becomes important.

Your choice depends on your goals, whether you want to expand across the UAE or run a cost-effective business with global reach.

How Dubiz can help with Dubai mainland and freezone business setup?

Dubiz Business Setup specialises in company formation in UAE. Our experts can guide you throughout your business formation journey in Dubai or UAE. 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.

We can help you with:

Trade license and company incorporation
Visa and labour cards
Golden visa services for yourself and family
Business bank account setup
Tax and compliance services
Accounting and bookkeeping services
Business center solutions
Document clearance and PRO assistance

Here’s why 7000+ entrepreneurs choose us:

8 years of industry experience across diverse business activities.
One stop shop for all the essential business formation needs.
A strong team of 50+ professionals delivering value across fields.
Strong and reliable ties with local government authorities and agencies.
Expert PRO and legal documentation support.
Transparent pricing with no hidden charges.
Faster processes that save time and money for clients.

Frequently Asked Question (FAQs)

What is the difference between freezone and mainland in UAE?

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

How to choose between freezone vs mainland 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 consider elements like ownership, market access, taxation, and expansion ambitions. 

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. 

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.

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.

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