Gatestone Group

The United Arab Emirates’ (UAEs’) ideal location, strong infrastructure, and investor-friendly laws significantly contribute to its successful business environment. The UAE, well-known for its economic diversification, offers tax-free zones, low trade barriers, and strong legal frameworks. Finance, tourism, real estate, and technology are some of the most important businesses here, supported by advanced facilities and innovative ideas. Because of forward-thinking leadership and a strong emphasis on sustainability and technology, this country has emerged as an integral economic hub in the Middle East.

The country has attracted investors and businesses from all over the world. The UAE offers two main options to pick from when it comes to company formation: Mainland and free zones. Each has different advantages, so the ideal choice depends on specific business objectives.

What are the UAE’s free zones? A free zone, sometimes known as a free trade zone, or free zone authority, is a trading area with its own rules exclusive to enterprises operating within it. Free zone businesses use special tax and foreign ownership regulations to sell goods and services. One of the steps the government took to diversify the economy and draw more international investors to Dubai and the UAE overall was its creation of free trade zones, enabling them to launch businesses within an evolving entrepreneurial ecosystem and enhance their profits.

Mainland on the other hand, is where businesses are established to tap into the entire UAE market, both local and international. It is a fantastic alternative for businesses that require a strong local presence or are pursuing a wider market because, despite the stiffer requirements, there are no limits on commercial operations (as long as they stay within the law).

So how do you decide which is the right business location for you? In this blog, we will delve into the key differences between free zones and the mainland to help you make the right choice when it comes to setting up your business in the UAE!

The main distinctions between mainland and free zone companies established in the UAE are as follows:


Free zones



Designated areas within the UAE

Entire territory of the UAE (excluding free zones)


Relaxed regulations and streamlined setup

Stricter regulations and extra approvals needed

Ownership Structure

100% foreign ownership

100% foreign ownership allowed; however, some activities may need a local UAE citizen as partner

Business Activities

Restricted to free zone activities

A wider range of business activities allowed

Market Access

Primarily international trade

Access to both local and international markets

Corporate Tax

0% Corporate Tax for qualifying income and 9% Corporate Tax for taxable income above AED 375,000

0% for taxable income up to AED 375,000 and 9% for taxable income over AED 375,000

Office Space

Virtual or physical office options available

Physical office space of minimum 200 sqft. is mandatory


A limited number of visas typically and linked to office space

No restrictions on the number of visas but linked to office space

Target Market

International trade, exports etc.

Local and international markets

Advantages of a Mainland Company

  • A mainland company provides access to a wider market. Businesses set up in mainland are more likely to receive access to a large clientele. This includes both domestic and international clients.
  • Provides increased flexibility in ownership models. Even though the UAE’s free zones grant 100% foreign ownership, it may be advantageous for certain businesses that mainland companies offer partnerships and joint ventures with local businesses.
  • Offers diversity in the workforce. Since the UAE’s population is saturated with multinationals as its residents, starting a company in mainland would allow you to work with a diverse workforce.

Advantages of a Free Zone Company

  • In the UAE, free zones offer 100% foreign ownership, no income or corporate tax (on Qualifying income), and no restrictions on profit repatriation.
  • The UAE’s free zones often have much more lenient regulations compared to mainland businesses. They offer quicker visa processing, lower setup costs, and streamlined business establishment procedures.
  • Many free zones in the UAE cater to specific industries like media, technology, and healthcare. These zones provide industry-specific perks such as specialised infrastructure, research facilities, and valuable industry networks and relationships.

Types of UAE Free Zones

The UAE is home to a wide variety of designated free zones. Certain free zones may include multiple groups or have specialised sub-zones, including:

1. Logistics and trade

Companies engaged in import or export, warehousing, goods forwarding, and international trade, connectivity to air and seaport will find these free zones ideal. Examples include the Dubai Airport Free Zone (DAFZA) and the Jebel Ali Free Zone (JAFZA), Sharjah Airport International Free Zone (SAIF), Hamriyah Free Zone (HFZA), Khalifa Industrial Zone Abu Dhabi (KIZAD), Ras Al Khaimah Economic Zone (RAKEZ), etc.

2. Innovation and technology

Businesses in IT, software development, e-commerce, robotics, and artificial intelligence fields get drawn to these free zones. Examples include Dubai Silicon Oasis (DSO), Dubai Internet City (DIC), Masdar City, Twofour54, Sharjah Media City (SHAMS), Ajman Media City (AMC), Creative City Fujairah (CCFZ) etc.

3. Life sciences and healthcare

The life sciences industry, including hospitals, clinics, pharmaceutical enterprises, and medical research institutes, is served by these free zones. Examples include Dubai Healthcare City (DHCC) and Dubai Science Park (DSP).

4. Creative and design sectors

Businesses in media, fashion, design, architecture, and other creative industries are supported by these free zones. They provide networking opportunities, shared offices, and studios. Examples include Dubai Design District (d3), Dubai Media City (DMC), Twofour54, Sharjah Media City (SHAMS), Ajman Media City (AMC), Creative City Fujairah (CCFZ) etc.

5. Training and education

Training facilities, centres for research, and educational institutions are supported by these free zones. Examples include Dubai International Academic City (DIAC), Dubai Knowledge Park (DKP), Abu Dhabi Global Market (ADGM), Sharjah Media City Free Zone (SHAMS), Ajman Media City Free Zone (AMC), etc.

6. Food and drink

Businesses engaged in food and beverage manufacturing, distribution, packaging, and processing come to these free zones. Examples include Jebel Ali Free Zone (JAFZA), Dubai Airport Free Zone (DAFZ), Sharjah Airport International Free Zone (SAIF), Ajman Free Zone, Umm Al Quwain Free Zone (UAQ FZ), etc.

7. Manufacturing and construction

For businesses engaged in building and manufacturing, these free zones provide specialised facilities and support services. Examples include Jebel Ali Free Zone (JAFZA), Ajman Free Zone, Ras Al Khaimah Free Zone (RAK FZ), Khalifa Industrial Zone Abu Dhabi (KIZAD), Hamriyah Free Zone (HFZA), etc.

8. Professional and financial services

Banks, financial businesses, legal consultancies, and various other professional service providers benefit from these free zones. Examples include the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), Dubai World Trade Centre (DWTC), Jebel Ali Free Zone (JAFZA), etc.

9. Sustainability and renewable energy

Enterprises specialising in green technology, renewable energy, and environmental sustainability are drawn to these free zones. Examples include Masdar City, Jebel Ali Free Zone (JAFZA), etc.

10. Humanitarian and social impact

Currently, there is only one free zone in this category. This free zone helps groups engaged in relief operations, humanitarian aid, and social impact projects. An example is the International Humanitarian City (IHC).

Factors to Consider When Choosing the Right Location for Your Business

1. Business activity

Setting up a company in mainland is best for businesses that cater to the local UAE market. You can perform any lawful commercial activity in mainland, although some require a local sponsor (UAE national partner).

Many free zones focus on luring specialised businesses, such as technology, media, and logistics. This might be advantageous if your company aligns with the free zones’ focus, which provides industry-specific assistance and opportunities for networking.

2. Business ownership

For a mainland company, local sponsorship is required for some commercial operations.

Freezones allow for 100% foreign ownership, providing you with complete control over your firm. This provides a significant benefit for entrepreneurs seeking complete independence.

3. Taxes

The corporate tax rate is set at 9% for taxable profit above AED 375,000 for all mainland companies. However, tax breaks, including exemptions from business and personal income taxes, are common in free zones.

4. Office space

A mainland company is mandated to have a physical office space of 200 sqft. After leasing the office space, DED will issue a license for your company. Whereas for free zone companies virtual or physical office options are available.

5. Market access

Mainland enterprises enjoy direct access to the UAE market and may easily deal with other emirates. Whereas freezone businesses typically come across constraints on trade with the mainland market. They may need a local distributor or to open a branch in mainland to continue operations there.

How Can Gatestone Group Help?

By carefully considering these factors and how they align with your specific business goals, you can make an informed decision about whether a freezone or mainland setup is the right choice for your venture in the UAE.

Ready to embark on your journey in the UAE? Gatestone Group is here to guide you every step of the way. Our team of experts can assist with business setup and navigation through freezone or mainland locations across the UAE. Contact our expert team of business consultants today for a free consultation via email at [email protected] or call +971 4 450 1023 or +971 52 410 0849.


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