Ownership is no longer the deciding factor
Free zones have always allowed 100% foreign ownership. Since the 2021 amendment, mainland companies can also be fully foreign owned across more than a thousand commercial and industrial activities. A local partner is still required only in specific strategic sectors.
Where you can sell
This is the real difference. A mainland licence lets you trade directly anywhere in the UAE, including with government entities. A free zone company is set up to operate within its zone and internationally; selling into the mainland market usually means appointing a distributor or opening a mainland branch.
What each costs to start
| Free zone | Mainland | |
|---|---|---|
| Licence | From about AED 5,750 in the cheapest zones | Roughly AED 12,000–25,000+ |
| Realistic first year | About AED 12,000–30,000 | Higher, driven by the office |
| Office | Flexi-desk packages are common | Physical space with Ejari, mandatory |
| Setup speed | Days in the fastest zones | Longer, more approvals |
The headline licence price is the number everyone compares, and it is the least reliable one. Visa quotas, establishment cards, medical and Emirates ID costs, and the office requirement move the total far more than the licence line does.
The tax question free zone companies still face
A free zone company may benefit from a 0% corporate tax rate on qualifying income, but only if it meets the qualifying free zone person conditions — real substance in the zone, and income of the qualifying kind. Anything outside that is taxed at 9%. Choosing a free zone does not settle the tax question; it opens it.
How to decide in the right order
- 1Write down who your first ten customers are and where they are based. That answers the mainland question faster than any comparison table.
- 2Count the residence visas you need in year one, and check the quota attached to the package you are considering.
- 3Ask what renewal costs in year two — some cheap first-year packages are not cheap afterwards.
- 4Check whether your activity is even licensed in the zone you like; activity lists differ more than people expect.
- 5Then compare the total of licence, office, visas and renewal — not the advertised licence price.
Can a free zone company invoice a mainland client?
It depends on the activity and the arrangement. Some services can be invoiced across, while trading physical goods into the mainland market generally requires a distributor or a mainland presence. It is worth confirming for your specific activity before you commit.
Is an office really mandatory on the mainland?
A mainland licence requires premises registered through Ejari, which is why the mainland total sits above the free zone total for a small team.
Which is better for a residence visa?
Both routes lead to residence visas. The difference is quota and cost per visa, which is set by the package and the space you hold rather than by mainland versus free zone in principle.
This article is general information, not legal or financial advice. Rules change — confirm your own position with a qualified professional before deciding.
