Jasmine Birtles
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Free Zone or Mainland? How to choose the best option for your business in the UAE
Moneymagpie Team
1st Jul 2025
Starting a business in the United Arab Emirates is the dream of many entrepreneurs. The region offers attractive conditions: low taxes, stable economy, well-developed infrastructure, and the status of an international business center. However, before starting an entrepreneurial activity, an important strategic question arises: Should you choose the Free Zone or the Mainland? This decision determines whether you will be able to sell services in the country, rent an office in a business district, interact with government agencies, and ensure full legal compliance when ads on social platforms.7
In this article, we will examine in detail the key differences between the two business modes, their pros and cons, as well as how the choice affects marketing and promotion through social media.
- What is the Free Zone and the Mainland?
- The main differences between the Free Zone and the Mainland
- When should you choose the Free Zone?
- When is the best time to choose the Mainland?
- Which option to choose: tips
- Conclusion
What is the Free Zone and the Mainland?
There are two popular formats for business setup and company formation in the UAE – Mainland and Free Zone. Each of them offers entrepreneurs different conditions, opportunities, and degrees of flexibility in doing business.
A Free Zone (or free economic zone) is a specially designated territory created in order to attract foreign investors. In such zones, companies can usually be fully owned by non-residents, receive tax benefits, go through a simplified registration procedure, and freely transfer income abroad. These zones are especially popular among online entrepreneurs, technology startups, export-oriented companies, and digital service providers.
Mainland, in turn, is the registration of a business within one of the emirates, with the full right to operate throughout the UAE. Such a business can directly cooperate with clients within the country, conclude contracts with government agencies, open offices in any area, and actively use local marketing channels, including advertising on social networks aimed at residents and citizens of the Emirates.
The two formats have their pros and cons, and the preference of one over the other will depend on the intended purpose of the business, the magnitude thereof, and the intended consumers.
The main differences between the Free Zone and the Mainland
Before choosing a business format in the UAE, it is important to understand the differences between the Free Zone and the Mainland – your opportunities and limitations in the market depend on this.
The main difference is the work area. Free Zone companies are limited by their zone or exports. To legally sell goods and services within the country, you will need a partner or a branch office in the Mainland. At the same time, Mainland companies can operate throughout the Emirates without restrictions.
Ownership is another difference. Previously, the Mainland required a local partner with 51%, but now most areas allow 100% foreign ownership, as in the Free Zone.
Taxes and regulations. Most Free Zones are zero-taxed in the case of businesses dealing with an overseas market. In 2023, the Mainland has presented a 9-percent charge payable on profits exceeding 375,000 AED, which is not instituted shifting toward small companies.
Participation in tenders. Free Zone companies most often cannot apply for government contracts, which cannot be said about the Mainland.
Marketing and advertising. Free Zone companies can advertise online but are typically restricted from placing outdoor ads or conducting offline marketing activities within the Mainland UAE, which only Mainland companies are authorized to do.
Consequently, the Free Zone is the best place where we have startups, IT, and exporters. Mainland will be appropriate for those who intend to expand in the UAE, as well as actively advertise in the local market.
When should you choose the Free Zone?
Registration in the Free Zone is perfect for those who:
- Conducts most of the operations online.
- Is focused on international clients.
- Plans to launch a digital product or educational platform.
- Does not require a physical presence in the country.
- Wants to start a business with minimal investment.
Such zones often provide an opportunity to register a company in 2-10 days, open an account, obtain a resident visa, and all this without having to rent a full-fledged office. Many Free Zones offer virtual office packages, which are convenient for freelancers, digital marketers, bloggers, consultants, and online store owners.
When is the best time to choose the Mainland?
The Mainland is ideal for those who want to work within the country with local clients. This is especially true for:
- Retail.
- Cafes and restaurants.
- Beauty salons and fitness clubs.
- On-site services: cleaning, logistics, and service.
- Participation in tenders and working with government agencies.
If you plan to launch targeted advertising on social networks – on local influencers, through Arabic-language publications, or using geolocation filters – then Mainland will give you more freedom. For example, you can register a trademark, obtain an advertising license from the DED (Department of Economic Development), and legally promote your services on TikTok and Instagram.
Which option to choose: tips
Before choosing a business model, ask yourself three key questions:
- Where is your main audience located – in the UAE or abroad?
- Do you need a physical location, office, or warehouse?
- How important is local marketing, working with bloggers, and participating in exhibitions?
If you answered “yes” to all three, then the Mainland is closer to you. If “no” or “probably not” – Free Zone.
Conclusion
Choosing between the Free Zone and the Mainland is not just a formality. This is a strategic decision that will affect all aspects of your business, from taxation to market access and operational flexibility.
The Free Zone gives you maximum flexibility at the start, especially if you are working online or in the international market. Mainland offers more opportunities for development within the country, including marketing, tenders, and community outreach.
And no matter what you choose, it is important to adapt to the local market – to take into account cultural peculiarities, language, design of websites and accounts. Then your business in the UAE will really get a chance to succeed.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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