UAE free zone or mainland? A guide for UK businesses

Setting up a company in the UAE starts with one choice: free zone or mainland. Both let you own 100% of your business, but they differ in where you can sell, how many visas you can sponsor and what you pay each year. Getting this right at the start saves you from restructuring later.

What is a UAE free zone company?

The UAE has more than 40 free zones, each run by its own authority. Many focus on a sector, such as media, technology, logistics or finance. A free zone company:

• can be 100% foreign-owned
• is licensed by the free zone authority, not the emirate's economic department
• usually has a simpler, faster setup with packages that include a flexi-desk or small office
• trades freely outside the UAE and with other free zone companies

The main limit is selling directly to customers on the UAE mainland. For that you normally need a local distributor or agent, or a separate mainland licence.

What is a mainland company?

A mainland (onshore) company is licensed by the emirate's economic department, for example the Department of Economy and Tourism in Dubai. Since 2021, most commercial activities allow 100% foreign ownership on the mainland too, although a small number of strategic activities still have conditions.

A mainland company can:

• trade anywhere in the UAE, including directly with consumers and government
• bid for many government contracts
• open branches across the emirates

In return you usually need a physical office lease, and setup involves more steps.

Side-by-side comparison

• Where you can sell: free zone: outside the UAE and within free zones; mainland: anywhere in the UAE and abroad
• Office: free zone: flexi-desk or shared office is often enough; mainland: usually a leased office
• Visas: both depend on your office space and package; mainland often allows more as you grow
• Setup speed: free zone is often quicker; mainland has more approvals
• Best for: free zone suits consultancies, digital services, holding companies and businesses selling abroad; mainland suits retail, restaurants, contracting and anyone selling to UAE customers directly

What about tax?

The UAE introduced corporate tax of 9% on taxable profits above AED 375,000 for financial years starting on or after 1 June 2023, and VAT is charged at 5%. Free zone companies that meet the rules for a Qualifying Free Zone Person can pay 0% on qualifying income, but the conditions are detailed. Always confirm your position with a UAE tax adviser before you choose.

How to choose

Ask yourself three questions:

1. Who are your customers? If most are in the UAE itself, mainland is usually the better fit.
2. How many people will you employ there? Visa allocation is tied to your licence and office, so plan headcount early.
3. What do you need on day one? A free zone can get you trading quickly, and many businesses add a mainland presence later.

How EA CORP helps

We coordinate UAE mainland and free zone setup for UK founders, working alongside licensed local partners, and connect it to everything else you need: your business plan, brand, website and operations. Read our step-by-step guide to expanding a UK business into the UAE, or start your project and talk to our UK or UAE team.

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This article is general information, not legal, tax or immigration advice. Rules change; check current requirements with the relevant authority or a licensed adviser.