Dubai Mainland vs Free Zone Company Setup – Which is Right for You? (2025 Guide)
Introduction
Dubai offers two primary business setup options for entrepreneurs and investors: Mainland companies and Free Zone companies. Each has unique advantages, ownership rules, and licensing requirements.
In 2025, choosing the right structure is crucial to maximizing profits, meeting legal requirements, and expanding into the right markets. This guide will break down the key differences, benefits, costs, and decision factors so you can confidently choose the best option for your business.
What is a Mainland Company in Dubai?
A Mainland company is registered under the Department of Economy and Tourism (DET) in Dubai and is licensed to operate anywhere in the UAE and internationally.
What is a Free Zone Company in Dubai?
A Free Zone company is registered within a specific free zone and is governed by its free zone authority. It enjoys tax benefits and 100% foreign ownership but is restricted in doing direct business in the UAE mainland unless using a distributor.
Key Differences Between Mainland & Free Zone Companies (2025)
| Feature | Mainland | Free Zone |
|---|---|---|
| Ownership | 100% foreign ownership for most activities (some regulated sectors require UAE partner) | 100% foreign ownership |
| Business Scope | Anywhere in UAE and internationally | Within the free zone and internationally (mainland via distributor/agent) |
| Office Space Requirement | Mandatory | Flexible (can use flexi-desk or office) |
| Taxation | 9% corporate tax above AED 375,000 profit (with exemptions) | 0% tax in many free zones (some subject to corporate tax rules) |
| Regulatory Authority | Dubai Economy & Tourism (DET) | Specific free zone authority |
| Cost | Generally higher due to office space and government fees | Usually lower, depending on free zone |
Benefits of a Dubai Mainland Company
- Ability to operate anywhere in the UAE.
- No restrictions on the number of visas (linked to office size).
- Easier to work with government contracts.
- Access to a wider range of business activities.
Benefits of a Dubai Free Zone Company
- 100% foreign ownership guaranteed.
- 0% corporate tax in many zones.
- Import/export duty exemptions.
- Fast and simple incorporation process.
- No physical presence required in some zones.
Step-by-Step Process to Set Up a Mainland Company in 2025
Step 1: Choose business activity.
Step 2: Reserve trade name with DET.
Step 3: Get initial approval.
Step 4: Lease office space.
Step 5: Submit documents and pay fees.
Step 6: Receive trade license.
Step-by-Step Process to Set Up a Free Zone Company in 2025
Step 1: Choose free zone and activity.
Step 2: Submit application to free zone authority.
Step 3: Provide documents (passport copy, photo, business plan if required).
Step 4: Pay license fee.
Step 5: Collect trade license.
Costs in 2025
| Company Type | Estimated Cost (AED) |
|---|---|
| Mainland Company | 15,000 – 25,000+ |
| Free Zone Company | 6,000 – 18,000+ |
Costs vary by activity, number of visas, and location.
Which Option Should You Choose?
- Choose Mainland if you want to operate across the UAE, work with government contracts, or need an unlimited number of visas.
- Choose Free Zone if you focus on international trade, want tax benefits, or need a low-cost, fast setup.
Latest 2025 Updates
- 100% foreign ownership allowed in more mainland activities.
- Many free zones now offer dual licenses for mainland trade.
- Corporate tax rules apply differently depending on income source.
FAQs
1. Can I convert my free zone company to a mainland company?
Yes, but it requires formal relocation and DET licensing.
2. Can a mainland company trade internationally?
Yes, without restrictions.
3. Do I need an office for a free zone company?
Many free zones offer flexi-desk packages instead of full offices.
4. Are both mainland and free zone companies subject to VAT?
Yes, if annual turnover exceeds AED 375,000.
5. Which is better for a startup?
Free zone is often cheaper, but mainland offers more market access.
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