For any foreign entrepreneur or business entering the UAE, one of the first — and most consequential — decisions is choosing between a Mainland or Free Zone setup. This isn’t just a matter of location; it affects everything from ownership rights and tax obligations to client access and future expansion.
In 2025, with corporate tax in full effect and business reforms still unfolding, understanding the pros, cons, and key differences is more critical than ever. At ASTRUC & Co, we advise clients daily on these decisions — and we’ve created this practical guide to help you navigate them with clarity and confidence.
Understanding the Two Jurisdictions: Mainland and Free Zones
Mainland companies are licensed by the UAE’s Department of Economy and Trade (DET) or its equivalent in each Emirate. They can operate throughout the UAE and beyond, with no restrictions on doing business with the local market.
Free Zone companies, on the other hand, are incorporated within one of over 40 special economic zones — each with its own authority, regulations, and incentives. These companies are generally limited to doing business within the Free Zone itself or internationally, unless they appoint a local distributor or open a mainland branch.
Mainland vs Free Zone: Key Differences
Here’s a side-by-side comparison of the most important criteria:
Criteria | Mainland | Free Zone |
Business Scope | Can operate anywhere in the UAE and globally | Limited to Free Zone or international markets (local business via agents) |
Ownership (2025) | 100% foreign ownership possible for most activities | 100% foreign ownership standard |
Tax Regime | Subject to 9% UAE Corporate Tax (above AED 375,000 net profit) | May benefit from 0% tax under “Qualifying Free Zone Person” rules |
Office Requirement | Must lease physical space (co-working possible in some cases) | Must lease within the Free Zone; flexi-desk options widely available |
Customs & Import/Export | Subject to UAE customs | Exemptions and simplified customs in many Free Zones |
Banking and Fund Transfers | No restrictions | Some challenges with interbank transactions; scrutiny of Free Zone accounts |
Reputation & Credibility | Often seen as more “established” and suitable for government bids | Seen as more suitable for SMEs, startups, and international traders |
Visa Quota and Staffing | Based on office size and business activity | Usually capped unless larger office leased |
Regulatory Complexity | Subject to UAE federal and Emirate-level laws | Each Free Zone has its own regulations, sometimes faster and simpler |
When to Choose a Mainland Setup
Mainland is often the best choice if:
- You sell products or services directly to UAE clients, including retail, consultancy, F&B, healthcare, and construction.
- You want to bid for government contracts or large tenders.
- Your business model requires flexibility in hiring and office location.
- You’re building a consumer-facing brand that benefits from on-the-ground visibility.
- You need to open branches across Emirates or beyond the UAE in the future.
Tip: In 2025, 100% foreign ownership is now permitted across most sectors, but some “strategic activities” still require a UAE national partner — especially in defense, oil & gas, or media.
When to Choose a Free Zone Setup
Free Zones are ideal if:
- Your business is B2B or export-oriented and does not need to operate in the local UAE market.
- You want to benefit from 0% corporate tax as a Qualifying Free Zone Person (QFZP) — provided strict conditions are met.
- You’re looking for a cost-efficient launch, with minimal red tape and simplified setup.
- You need to import/export goods, especially in logistics hubs like JAFZA, DAFZA, or DMCC.
- You’re testing the market or setting up a holding, IP, or investment vehicle.
Caution: Free Zone companies cannot invoice or sign contracts directly with mainland clients unless they register a mainland branch or appoint a local commercial agent.
Spotlight: 2025 Corporate Tax Impact
Since June 2023, most UAE businesses — mainland and Free Zone alike — are subject to UAE Corporate Tax at 9%, with key exceptions:
- Mainland companies: Fully taxable if profits exceed AED 375,000/year.
- Free Zone companies: May qualify for 0% tax if they meet QFZP conditions, such as:
- Conducting only eligible activities (e.g., trading with other Free Zone entities or foreign markets)
- Maintaining adequate economic substance in the Free Zone
- Not earning income from the UAE mainland (or paying tax on such income)
For many Free Zone companies, staying compliant with QFZP rules is now a strategic priority, and the line between “Free Zone” and “Mainland” benefits is more nuanced than ever.
Costs and Setup Timelines
Mainland setup (Dubai example):
- License: AED 12,000–25,000/year
- Office lease: AED 20,000–80,000/year minimum
- Timeframe: 2–4 weeks
Free Zone setup (e.g., DMCC, IFZA, SHAMS):
- Package: AED 8,000–20,000/year for flexi-desk
- Office: Optional for small setups
- Timeframe: 5–15 working days
Note: Visa quotas, insurance, and PRO fees vary — we recommend budgeting 30–40% above base costs for a realistic total.
Which Free Zones Are Best for Your Needs?
There are over 40 Free Zones in the UAE — choosing the right one depends on your sector, location preferences, and goals. Here are a few top picks for French and European businesses:
- DMCC (Dubai Multi Commodities Centre) — Global trading hub, ideal for precious metals, crypto, and commodities.
- RAKEZ (Ras Al Khaimah) — Low-cost, fast-track setup with a wide range of licenses.
- IFZA (International Free Zone Authority) — Popular with startups and consulting firms.
- DIFC / ADGM — Premier financial Free Zones with common law jurisdictions for finance, private equity, and holding structures.
Mainland vs Free Zone in Practice: A Case Snapshot
Let’s say a French logistics firm wants to expand into the UAE. They handle regional imports and want access to UAE warehouses, but don’t plan to sell directly to UAE consumers.
- A Free Zone setup in JAFZA (near Jebel Ali Port) could offer tax savings, simplified customs, and trade efficiency.
- If they decide to expand and sign contracts with UAE retailers, they may later need a Mainland branch license or distributor agreement.
This hybrid approach is increasingly common — and something we often structure for our clients.
ASTRUC & Co’s Role in Your UAE Launch
Choosing the right jurisdiction isn’t just a legal formality — it shapes your operations, tax position, and growth strategy. At ASTRUC & Co, we offer:
- Comparative setup memos tailored to your business
- Legal structuring across UAE mainland and Free Zones
- Turnkey incorporation support — licenses, visas, office, banking
- Tax advisory for Free Zone compliance and QFZP status
Our multilingual team speaks French, English, and Arabic — and we specialize in supporting French-speaking clients through cross-border legal strategy in the UAE.
