Free zone vs mainland at a glance
| Factor | Free Zone | Mainland |
|---|---|---|
| Ownership | 100% foreign ownership | 100% foreign ownership for most activities |
| Where you can trade | Inside the free zone + internationally; UAE mainland needs a distributor or branch | Directly across the whole UAE market |
| Government / public contracts | Generally no | Yes — can bid for government work |
| Office | Flexi-desk often included; cheap to start | Physical office with Ejari usually required |
| Starting cost | Lower — packages from ~AED 5,500–12,500 | Higher up front — from ~AED 15,000+ (office adds more) |
| Visas | Tied to desk/office package | Scales with office size (more space = more visas) |
| Corporate tax | 0% on qualifying income if a Qualifying Free Zone Person, else 9% over AED 375k | 9% on profits over AED 375,000 |
| Best for | Online, services, trading, holding, international business | Retail, restaurants, local services, government-facing business |
Choose a free zone if…
- Your customers are online or outside the UAE
- You run consulting, media, IT, trading or a holding company
- You want the lowest start-up cost and 100% ownership
- You want a fast, mostly-digital setup
Choose mainland if…
- You sell directly to UAE customers (shop, clinic, restaurant, local services)
- You want to bid for government or semi-government contracts
- You need many visas and a larger physical office
- You want no limit on where you trade inside the UAE
What about tax?
Both fall under the UAE's 9% corporate tax on profits above AED 375,000. A free zone company can keep a 0% rate on qualifying income if it is a Qualifying Free Zone Person — real office, staff and core activity in the zone. There is no personal income tax either way.
Free zone vs mainland — FAQs
Is free zone or mainland better in the UAE?
Neither is "better" outright — it depends on where your customers are. Choose a free zone for online, international, service or holding businesses that want low cost and 100% ownership. Choose mainland if you need to sell directly across the UAE, open a shop or restaurant, or bid for government contracts.
Can a free zone company sell in mainland UAE?
Not directly. A free zone company trades inside its zone and internationally. To sell to the mainland it usually appoints a local distributor, opens a mainland branch, or uses a dual-licence option where the zone offers one.
Is mainland more expensive than a free zone?
Usually yes to start, because mainland needs a physical office (Ejari). Free zone packages bundle a flexi-desk and lower government fees, so first-year cost is typically lower.
Do both pay 9% corporate tax?
Mainland companies pay 9% on profits above AED 375,000. A free zone company can keep 0% on qualifying income if it is a Qualifying Free Zone Person with real substance; otherwise the 9% applies. Neither has personal income tax.
Can I move from free zone to mainland later?
Yes. Many founders start in a free zone and later add a mainland licence or branch as they grow into the local market.
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Last updated: September 2026 · Maintained by the My Business Setup editorial team