Key differences between setting up company in mainland and freezone in the UAE

Mainland and free zone setups in the UAE offer distinct paths for company formation, balancing local market access against tax considerations and operational flexibility. Choosing wisely aligns with business goals like trading locally or exporting globally. 

Ownership rules

Mainland companies now allow upto 100% foreign ownership for most activities since 2021, though strategic sectors may require local partners. Free zones generally permit full foreign ownership without sponsors, ideal for expats seeking control. 

Business scope and market access

Mainland entities trade freely across all UAE emirates, bid on government contracts, and serve local clients directly subject to applicable licensing and regulatory requirements. Free zone firms focus on international trade or within their zone,may require additional arrangements to conduct onshore mainland business. 

Tax and cost comparison

Free zones provide corporate tax incentives on qualifying income, duty exemptions, and lower setup costs via flexi-desks. Mainland faces corporate tax at the prevailing statutory rate above applicable thresholds but offers broader activity options  -and fewer geographic trading restrictions. 

When to choose each

Opt for mainland for retail, services, or UAE-focused growth; free zones suit e-commerce, logistics, or export-heavy ops. The choice depends on the business activity, target market, regulatory requirements, and operational priorities.