Mainland vs Free Zone: Which Is Right for You?
When setting up a business in the UAE, the first major decision is choosing between Mainland and Free Zone. Each has different advantages and limitations depending on your business type, target clients, and growth plans.
Key Comparison
| Criteria | Mainland | Free Zone |
|---|---|---|
| Foreign ownership | 100% (since 2021) | 100% |
| Local market trading | Yes, unrestricted | Restricted — needs agent or branch |
| Physical office | Required (Ejari) | Virtual/shared office options |
| Government contracts | Eligible | Usually not eligible |
| Corporate tax | 9% (above AED 375K) | 0% for qualifying entities* |
| VAT | 5% | 5% (with exceptions) |
| Branches | Anywhere in UAE | Within free zone only |
Mainland Setup Costs (Dubai)
| Item | Cost (AED) |
|---|---|
| Trade license (DED) | 10,000 – 15,000 |
| Initial approval | 1,100 |
| Office lease (annual) | 15,000 – 50,000+ |
| Investor visa + residency | 5,000 – 8,000 |
| Total (first year) | 35,000 – 80,000 |
Free Zone Setup Costs
| Free Zone | First Year (AED) | Best For |
|---|---|---|
| IFZA | 11,900+ | Cheapest, fast setup |
| Meydan | 12,750+ | Central location |
| DMCC | 25,000+ | Global reputation, trade |
| JAFZA | 30,000+ | Import/export |
| RAKEZ | 10,000+ | Budget-friendly |
When to Choose Mainland
- Your clients are inside the UAE
- You need government contracts
- You want branches across emirates
- Your activity requires special licenses
When to Choose Free Zone
- Your clients are primarily international
- You want lower setup costs
- You don’t need a large physical office
- You want the 0% corporate tax benefit
FAQ
Can a free zone company sell in the local market?
Yes, through a local distributor or by opening a mainland branch.
Do I need an Emirati partner for mainland?
No, since 2021 reforms, foreigners can own 100% of most mainland businesses.
