Mainland vs Free Zone: Which Dubai Setup Fits Your Business?

If you’re thinking about starting a company in Dubai, the first big choice is whether to go mainland or set up in a free zone. Both options let you run a legit business, but they differ on ownership rules, where you can work, and how much you’ll spend. Below you’ll get the low‑down so you can decide fast.

Ownership and Control

In a mainland company, the UAE used to require a local sponsor who holds 51% of the shares. Since the new 2020 reforms, many activities now allow 100% foreign ownership, but you still need a local service agent for certain paperwork. A free zone, on the other hand, lets you own 100% of the business without any local partner. That’s why a lot of foreign entrepreneurs pick a free zone – it’s simpler and you keep every profit.

Where You Can Operate

Think of mainland as the open road: you can do business anywhere in the UAE, whether that’s a mall, a market, or a client’s office. Free zone companies are limited to the specific zone they’re registered in. If you need to sell directly to the UAE market, you’ll have to appoint a local distributor or set up a mainland branch later on. Some free zones, like Dubai Internet City, are tailored for tech firms, while others focus on logistics or media. Pick the one that matches your industry.

Costs also split into two camps. Mainland firms pay a trade license fee, a registration fee, and often higher office rent because you need a physical location on the mainland. Free zones charge a package that bundles license, office space (often a flexi‑desk), and visa fees. The total can be lower, especially if you start small, but you’ll pay extra if you later need a mainland presence.

Visas are another practical point. Mainland licenses let you sponsor up to 100 employees, but each visa has its own cost. In most free zones, the visa quota is tied to the size of your office space—bigger office, more visas. Some zones even offer “visa‑free” packages for freelancers, which is perfect if you’re a solo consultant.

When it comes to taxes, both mainland and free zone businesses enjoy 0% corporate tax on most activities (a federal tax is coming in 2024 for certain industries, but thresholds are high). The main difference is customs duty: free zones are often close to ports and have streamlined import‑export procedures, making them ideal for trading companies.

So how do you pick? Ask yourself three questions:

• Do I need to sell directly to local UAE customers? If yes, mainland is the smoother route.
• Do I want full ownership without a local partner? Free zone wins.
• What’s my budget for office space and visas? Free zones usually cost less to start, but mainland gives more flexibility later.

Most startups start in a free zone to keep costs low, then graduate to a mainland license when they outgrow the zone’s limits. Whatever you choose, make sure you register with the Department of Economic Development (for mainland) or the relevant free zone authority, and keep your paperwork up to date.

Bottom line: mainland offers unlimited market access and flexibility, while free zones give you 100% ownership and lower entry costs. Weigh the pros and cons, match them to your business plan, and you’ll be set to launch in Dubai without a hitch.