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Free Zone or Mainland? Choosing a Company Setup in the UAE

How UAE free zone and mainland companies differ in ownership, where you can trade, office rules, visas and tax, and how to choose.

By UAE360 editors · · 5 min read

Free Zone or Mainland? Choosing a Company Setup in the UAE: minimal line art of a briefcase in desert gold, emerald and gulf blue
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Setting up a company in the UAE starts with one big choice: a free zone company or a mainland company. Both can be 100% foreign-owned for most activities, but they differ in where you can trade, office rules, visas and tax.

The key differences

Free zoneMainland
Ownership100% foreign100% foreign for most activities
Where you can tradeInside the zone and abroad; the UAE market usually through a distributor or extra permitAnywhere in the UAE and abroad
Government contractsLimitedAllowed
OfficeFlexi-desk or shared options commonA physical office is usually required
VisasSet by the package and office sizeLinked to office space and activity
Licensing authorityThe free zone authorityThe emirate's economic department

Tax basics

The UAE introduced a corporate tax in 2023: 9% on taxable profit above AED 375,000, with 0% below it. Free zone companies that meet the conditions for a qualifying free zone person can pay 0% on qualifying income. VAT is 5%, with registration required above a turnover threshold. Get advice from a registered tax agent, because the details decide which structure saves more.

Which one fits?

  • Free zone suits consultancies, e-commerce, trading with other countries, startups and holding companies that don't need a shop or local clients.
  • Mainland suits businesses that serve UAE customers directly, open shops or restaurants, or bid for government work.

Popular free zones include those in Dubai, Abu Dhabi, Sharjah and Ras Al Khaimah, each with its own prices, activities and visa packages.

The setup steps

  1. Choose the activity, which decides the licence type and where you can register.
  2. Reserve a trade name and get initial approval.
  3. Choose the office or flexi-desk and sign the lease.
  4. Get the licence and register the company.
  5. Apply for visas and Emirates IDs for founders and staff.
  6. Open a corporate bank account, which can take time, so prepare a clear business plan and source of funds.

Not sure which structure suits you? Talk to our partners about setup, banking, tax and reaching UAE customers online.

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