Free zone or mainland? Choosing where to set up in the UAE
A plain comparison of UAE free zones, mainland companies and DIFC for foreign founders, including ownership, where you can trade, offices, visas and corporate tax.
The UAE offers three broad options for a new company: a mainland company licensed by an emirate's economic department, a company in one of the many free zones, or an entity in a financial free zone such as DIFC. The right choice depends on what you sell, to whom, and how you want to bank and hold assets.
Mainland
- Trade directly with customers anywhere in the UAE, including government entities.
- 100% foreign ownership is allowed for most commercial and industrial activities.
- A physical office or approved workspace is usually required, and the number of visas follows the office size.
Free zones
- 100% foreign ownership and a fast, standardised setup.
- Built for international trade, consulting, technology, media and holding activities.
- Selling goods directly into the mainland generally requires a distributor or a mainland presence. Some free zones now offer permits to work with mainland clients, so check before you choose.
- Flexi-desk and shared office packages keep costs down for small teams.
DIFC and other financial free zones
- Independent common law courts and regulation in English.
- Suits financial services, family offices, holding structures and businesses that want a common law framework.
Corporate tax
Both mainland and free zone companies pay 9% corporate tax on taxable profits above AED 375,000. A free zone company can pay 0% on its qualifying income if it meets every condition to be a Qualifying Free Zone Person, including real substance and audited accounts. Many businesses, especially those selling services to mainland customers, will not qualify for 0% on all their income, so it should never be the only reason to choose a free zone.
Our view
For most foreign founders serving international clients, a free zone company is the simplest start. For businesses that sell mainly inside the UAE, the mainland is usually right. We compare the options for your actual customers and plans before you commit. See company setup and PRO services.
Sources
This page gives general information as at the date shown and is not advice for your specific situation. Rules in other countries are summarised for orientation; your home-country position should be confirmed before you act.
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