The UAE offers multiple paths for entrepreneurs and investors to set up a company, but choosing between a Free Trade Zone (FTZ) and a Mainland setup can significantly impact your operations, licensing, access to markets, and long-term strategy.
This guide will help you understand the core differences, advantages, and disadvantages of both options — and guide you toward the most suitable structure based on your goals.
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What Is the Mainland?
A Mainland company is registered with the Department of Economic Development (DED) of one of the seven Emirates (Dubai, Abu Dhabi, Sharjah, etc.). Mainland companies can do business anywhere in the UAE and internationally, including directly with the UAE public sector and local market.
Advantages of Mainland Companies
- 100% foreign ownership (since mid-2021, for most business activities)
- No restrictions on doing business across the UAE
- Eligibility for government contracts and tenders
- Greater flexibility for opening branches and hiring staff
- No limit on office location within the UAE (e.g., can lease anywhere)
Disadvantages of Mainland Companies
- Higher setup and operating costs (rent, admin, etc.)
- Mandatory requirement for physical office space
- More regulatory oversight and sometimes slower approvals
- Corporate tax (9%) applies, but subject to thresholds and exemptions
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What Is a Free Trade Zone (FTZ)?
FTZs are special economic areas that allow 100% foreign ownership, simplified customs procedures, and favorable tax regimes. Each FTZ is governed by its own authority, which regulates licensing and compliance. There are over 45+ FTZs in the UAE, each catering to different industries: finance, media, logistics, crypto, etc.
Examples: DIFC, ADGM, DMCC, IFZA, Meydan, RAKEZ, DAFZA, JAFZA, etc.
Advantages of Free Trade Zones
- 100% foreign ownership
- Zero corporate and personal income tax (until thresholds apply)
- Full repatriation of profits and capital
- Simplified and fast registration process
- Often no physical office required (flexi-desk options)
- Industry-specific ecosystems (e.g., finance in DIFC/ADGM, commodities in DMCC)
Disadvantages of Free Trade Zones
- Can only operate within the FTZ or internationally
- Cannot directly trade with UAE Mainland without a distributor or a DED-licensed branch
- Limited visa quota depending on office size
- Restrictions on office location (must be within the FTZ)
- FTZs are not equal – some are premium (DIFC, ADGM), others less recognized globally
Comparison Chart: Mainland vs Free Zone
| Feature | Mainland | Free Trade Zone |
|---|---|---|
| Ownership | 100% foreign (in most sectors) | 100% foreign |
| Business Scope | UAE-wide + international | Only within FTZ & abroad (limited UAE access) |
| Government Contracts | Allowed | Not allowed |
| Office Location | Anywhere in UAE | Within the FTZ only |
| Setup Cost | Medium to high | Low to medium |
| Corporate Tax | 9% above AED 375k profit | 9% above AED 375k profit (many exemptions) |
| Licensing Authority | DED of Emirate | Specific FTZ Authority |
| Customs Duty | 5% on imports | 0% inside FTZ |
| Regulations | Unified Federal & Emirate law | FTZ-specific rules |
| Visa Eligibility | High (based on office size) | Limited (linked to flexi-desk or office) |
Key Strategic Questions to Ask Before Choosing
- Where are my clients located?
- If you want to sell to UAE residents, retail, or local services → Mainland.
- If your clients are abroad or you’re in a B2B niche → FTZ might suffice.
- Will I need office space or can I work remotely?
- Flexi-desk in FTZs works for solo professionals or remote teams.
- Mainland requires leased space — but gives more credibility.
- Is cost a priority or am I targeting long-term credibility?
- FTZs are cheaper and quicker.
- Mainland gives access to all of UAE and long-term scalability.
- Am I in a regulated industry?
- Certain sectors (finance, crypto, legal, education, media) benefit from specialized FTZs (e.g., DIFC, ADGM, DMCC).
- Do I need access to government or large corporate tenders?
- FTZs are excluded from public procurement.
- Mainland gives full eligibility.
- How many visas will I need?
- FTZs offer a limited quota tied to office size.
- Mainland is more flexible for growing teams.
- Is brand image and global recognition important?
- DIFC/ADGM licenses are globally prestigious.
- IFZA, DMCC, and Meydan are increasingly recognized by banks and regulators.
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Recommended Free Trade Zones
While there are dozens of FTZs in the UAE, here are the preferred options we regularly recommend based on credibility, flexibility, and client experience:
| Free Zone | Focus | Why We Recommend It |
|---|---|---|
| DIFC | Finance, funds, legal | Globally regulated, top-tier legal framework, recognized by international banks |
| ADGM | Finance, VC, family offices | Abu Dhabi-focused, flexible, fund and SPV-friendly |
| DMCC | Commodities, crypto, trading | Strong global reputation, fast setup, highly flexible licensing |
| IFZA | General trading, consultancy, digital businesses | Efficient, cost-effective, very flexible, good for startups and SMEs |
| Meydan Free Zone | General trading, e-commerce, holding | Streamlined process, good brand image, cost-effective Dubai presence |
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Final Thoughts
Choosing the right business setup in the UAE depends on more than just cost — it’s about access, compliance, credibility, and long-term growth. While Free Zones are great for lean startups and international businesses, a Mainland company gives broader access and positioning if you’re looking to fully integrate into the UAE market.
We help clients navigate this complexity daily, and we’d be happy to support you with tailored advice, including:
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Structuring (single or dual-entity)
Asset Protection
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Bank account opening
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Local substance requirements
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VAT and corporate tax optimization