Mainland vs free zone in the UAE: the comparison that decides it

1. A consultancy with clients in Europe and Asia, two founders, three visas in year one. Free zone. No mainland sales, so the market-access limit costs nothing; a flexi desk or small office covers three visas in most zones; 100% ownership and repatriation apply. Check whether the consulting income is qualifying income before assuming 0%.
2. A café, clinic, contractor or retailer serving UAE customers. Mainland. The customers are local and a free zone licence cannot serve them directly. Sector approvals (for example health authority or municipality) apply either way.
3. A trader importing goods for re-export through Jebel Ali. Free zone. Goods that never enter the mainland attract 0% customs duty; a warehouse licence exists in several zones. If some goods will be sold in the UAE, add a distributor or a mainland entity for that share.
4. An existing free zone company that now has Dubai mainland clients. Keep the free zone company and add a DET branch licence (AED 10,000 per year) or, for a short engagement, a temporary permit of up to six months (AED 5,000), keeping separate financial records. Compare that with forming a mainland LLC if the mainland work will dominate.
5. A business that will hire fifty people in its first year. Mainland. The Ministry of Economy and Tourism states there is no visa limit on the mainland, whereas a free zone would require office space sized to the visa count.
6. A foreign company that wants a UAE presence to serve government and mainland corporate clients. Mainland branch. It needs a licence from the competent authority with Ministry of Economy and Tourism approval and entry in the foreign companies register; the local-agent requirement for branches was removed by Decree-Law 26/2020.
7. A holding entity for shares or property with no trading. Consider an offshore company or a free zone holding entity after professional review. Offshore visa eligibility is not stated officially, and substance rules may apply. See the offshore page.

A mainland company pays 0% on its first AED 375,000 of taxable income and 9% above that. A free zone company that meets the Qualifying Free Zone Person conditions pays 0% on qualifying income and 9% on everything else, and is not entitled to the AED 375,000 band. A free zone company that does not meet the conditions pays the standard rates. Small Business Relief, which the FTA illustrates with a revenue threshold of AED 3,000,000, is a separate election; its conditions and end date should be read on the FTA page. VAT is identical in rate and thresholds across both, with designated-zone treatment depending on the zone and the activity. Both register with the FTA on the same timeline and face the same AED 10,000 late-registration penalty.

If the table has not settled it, the business setup finder asks the questions that do: activity, customer location, visa count and office needs. Or send us those four answers and a consultant will return a written recommendation with the official rule behind each point.