Mainland vs Free Zone Company in UAE – Which is Better? [2025 Guide]

So, if you are setting up a business in the UAE, you will probably have one major decision in front of you soon — Whether you should register your company in the Mainland or in a Free Zone?

This decision can have a direct bearing on your business operations, expenses, right of ownership, tax liability, and long-term scalability. Let's deconstruct both options in detail so you can decide what's optimal for your needs.

What is a Mainland Company?

A UAE Mainland firm is licensed by the emirate's Department of Economic Development (DED) in which it is registered (for instance, Dubai, Abu Dhabi, Sharjah). Mainland companies can do business anywhere in the UAE — the local market included — and even undertake government contracts.

Until recently, foreigners had to be sponsored locally (51% share holder), but in most business activities, 100% foreign ownership is permitted now.

What is a Free Zone Company?

A Free Zone firm is registered within a particular economic zone such as IFZA, RAKEZ, SHAMS, DMCC, or Dubai South and is regulated by the authority of that zone. Free Zones are most famous for providing 100% foreign ownership, tax benefits, simple opening of bank accounts, and low-cost packages for start-ups.

Free Zone firms are unable to conduct business directly in the UAE mainland unless they have a local distributor or agent.

Free Zone vs Mainland – Key Differences Detailed

Let's go through the key differences between these two company setups in a straightforward and concise manner:

Ownership

Both Free Zone and Mainland companies now have 100% foreign ownership. Previously, this facility was limited to Free Zones alone, but thanks to UAE's liberalized policies, you can also have 100% ownership of a Mainland company now.

Office Requirement

Mainland companies need to rent an actual office in the UAE.

Free Zone businesses may begin with a flexi-desk or virtual office, hence more affordable for solo entrepreneurs and small startups.

Business Scope

Mainland businesses are free to operate anywhere within the UAE and the world at large.

Free Zone businesses may operate within their Free Zone or outside the UAE but not in the mainland UAE itself in the absence of a local partner.

Government Contracts

Mainland businesses may bid for UAE government contracts and projects.

Free Zone firms are not entitled to government contracts.

Visa Eligibility

Mainland licenses enable you to apply for unlimited visas based on office size.

Free Zone packages have restricted visa quotas — normally between 1 and 6 visas.

Setup Time

Free Zones typically issue licenses in 2 to 5 working days.

Mainland setup can take 5 to 10 working days as there are extra DED approvals involved.

Cost of Setup

Mainland setup is more expensive with office lease and government charges.

Free Zone setup is less expensive with all-inclusive packages specifically designed for business owners.

 Audit Requirements

Annual audits are obligatory for Mainland companies.

Free Zone audit regulations differ by zone; most exempt small businesses from audits.

Corporate Tax (2025)

Both Mainland and Free Zone companies, as of 2025, pay a 9% UAE corporate tax on yearly profits over AED 375,000.

If your income is less than that, your business continues to be tax-free.

Which One Should You Opt for?

Selecting Mainland and Free Zone depends on your business objectives:

Opt for a Mainland Company if:

• You desire to reach customers within UAE (B2C or B2B)

• You are opening a shop, showroom, restaurant, or clinic

• You wish to execute UAE government contracts

• You require additional visas and have plans for employee growth

Go for a Free Zone Company if:

• You’re a consultant, freelancer, or e-commerce startup

• You primarily serve international clients

• You want to minimize setup costs

• You don’t require a physical office yet

• You prefer a quick, digital, low-hassle setup

E-Startup India is the Best Partner for UAE Company Setup

Starting a business in a foreign country can be overwhelming — but with the right guidance, it becomes a smooth journey.

That's where E-Startup India is here to help.

We're a reputable name in setting up international business, assisting thousands of entrepreneurs, freelancers, and startups in registering their UAE company with ease.

Here's what makes us the preferred choice of businesses:

• Expert Advice – Our Chartered Accountants and company setup consultants assist you from A-Z

• End-to-End Solution – From license, VAT, visa, to bank account – everything under one roof

• Quick Setup – Receive your Free Zone license in a mere 3 days

• Online Process – All done from home, no need to come in

• Clear Pricing – No surprises, several packages available to fit your budget

Whether you wish to start a technology startup, trading company, or service consultancy, we assist you in selecting the most suitable jurisdiction (Mainland or Free Zone) and incorporating your UAE company efficiently, compliantly, and economically.

Final Thoughts

Both Mainland and Free Zone options have their own advantages. The best path for your company relies on your activity, target customers, visa requirements, and future strategy.

Instead of guessing, let our experts help you choose the best option and launch your UAE business with confidence. Business setup in UAE