Choosing a Free Zone Company over a Mainland Company is one of the most challenging choices that business owners in Dubai have to make. Both have their advantages and disadvantages, and the best option for your business depends on your specific business objectives. In this guide, we will discuss the main differences between Free Zone Company and Mainland Company in Dubai, so that you can make an educated decision for the success of your business.
What is a Free Zone company?
A free economic zone (FZ) is a self-contained area with its own rules and regulations, offering benefits such as zero corporate and income tax, foreign ownership, and business flexibility. Free zones cater to different industries and are simpler to set up than mainland companies. FZCs are established in FZs to attract foreign investors and trade by providing a business-friendly environment, but do not sell directly to the UAE mainland market.
- Free Zone companies are now easier to establish in the UAE.
- The UAE offers advantages such as 100% ownership, established business setup processes, and industry-specific jurisdiction.
What is a Mainland company?
A mainland corporation is a legal entity that has been registered with the MiniMainland companies in Dubai offer greater market access and flexibility compared to Free Zone Companies. They can trade with both local UAE companies and international markets. Recent reforms allow for 10% foreign ownership for certain business activities. Mainland companies are eligible to participate in lucrative government tenders and contracts. However, they come with higher costs, potential local sponsorship, and corporate tax. The choice between Free Zone Company and Mainland Company depends on specific business goals, desired market reach, and tolerance for regulations and costs.stry of Economy and is supervised by the Department of Economic Development (DED).
- A mainland corporation is a legal entity registered with the Ministry of Economy and supervised by the DED.
- A UAE resident sponsor is necessary for the creation of a mainland company, which can operate both inside and outside the country.

Benefits of setting up a Free Zone company in the UAE
- Free Zone Companies in the UAE offer a favorable tax environment, full foreign ownership, simplified business setup, and industry focus
- Free zones provide access to specialized resources and networking opportunities, global market access, modern infrastructure and facilities, liberal labor laws, and streamlined immigration procedures
- FZCs offer tax benefits, ownership freedom, operational ease, and strategic access to global markets
- They are a strong consideration for businesses seeking to establish a presence in the region and expand their international reach.
Import and export duty exemption:
Establishing a Free Zone Company in Dubai offers import and export duty exemptions, which can significantly reduce operational costs. However, it’s important to check with the relevant free zone authority for applicable duty rates and free trade agreements. Overall, these exemptions can substantially reduce business expenses and make products more competitive in the global marketplace.
State-of-the-art infrastructure and technology:
The UAE offers modern facilities, advanced logistics hubs, cutting-edge technology, and a focus on sustainability for both FZCs and mainland companies. Specific business needs and future-proofing are important factors to consider when evaluating technological infrastructure. Some zones, such as tech free zones, offer unique advantages for technology-focused businesses. The UAE’s emphasis on developing and implementing state-of-the-art infrastructure and technology creates a dynamic and competitive environment.
Benefits of setting up a mainland company in the UAE
- Establishing a mainland company in the UAE offers advantages over Free Zone Companies (FZCs)
- Mainland companies have unrestricted market access, potential for 100% foreign ownership, eligibility for government contracts, and broader business scope
- They are also free to repatriate profits and invested capital out of the UAE
- The UAE’s strategic location, developed infrastructure, and strong economic outlook make it an attractive destination for businesses seeking long-term success
- However, mainland companies come with higher costs, potential local sponsorship, and corporate tax
- Businesses should carefully weigh the pros and cons against their specific business goals to determine if mainland company setup is the right choice.
More business activities:
Comparatively speaking, mainland companies engage in more excellent business activity than businesses in free zones. This can support the expansion of the economy by allowing business owners to explore a variety of alternatives.
100% expat ownership:
For mainland firms, the ideal sponsor is a UAE national, but some types of business, including commercial and service ventures, as well as company types, are eligible for full foreign ownership.
Ease in obtaining a corporate bank account:
Opening and obtaining a corporate bank account is straightforward for mainland businesses.
Key differences between a Free Zone and a mainland company
Ownership of businesses:
- Expats can own 100% of a mainland company if they carry out certain commercial and service operations.
- Foreign investors can own their mainland company in a Free Zone, but the company can only operate within the Free Zones.
Visa Eligibility: There are no restrictions on visa eligibility for mainland UAE companies. Generally, Free Zone companies are issued visas in batches of 1 to 6. However, visa packages may vary depending on the Free Zone authority.
Unlike the free zone visa, which is valid for 3 years, the work visa issued by mainland corporations is valid for 2 years.
The capital requirement for a UAE mainland company is determined by the legal structure of the company.
Business set-up approvals:
Mainland businesses must be approved by a number of government bodies, such as the Ministry of Economic Development or the Ministry of Economy. On the other hand, a corporation in a free zone must adhere to the regulations set by the Free Zone Authority.