Choosing where to register your company in Dubai is one of the first and most important decisions you will make. The choice between mainland and free zone affects ownership, taxes, office requirements, visas, the ability to trade locally, banking and much more. This guide explains the differences clearly, shows the pros and cons of each option, and gives practical advice so you can decide which is better for your business in 2026.
Quick summary upfront
- Mainland gives you direct access to the UAE local market and most government contracts.
- Freezone offers 100% foreign ownership and faster setup for export and international business.
- Costs and compliance differ. Freezone can be cheaper to start. Mainland can be better for long term scale inside the UAE.
- The right choice depends on your customer base, business activity, visa needs and long term plan.
Read on for a detailed comparison with practical examples, estimated costs, and a decision checklist.
What Mainland company setup means in Dubai
A mainland company is registered with the Department of Economy and Tourism or equivalent emirate authority and is allowed to do business across the UAE without restrictions. Mainland companies can deal directly with local customers, take part in local tenders and work with government entities.
Key features:
- Trade anywhere in the UAE and sell directly to local clients.
- Can secure local office space and retail units.
- Depending on the activity you may need approvals from other government departments.
- Visa quota scales with the size of your office and company structure.
- Local regulations may require certain processes but foreign owners now can hold 100 percent ownership for many activities.
Choose mainland if your customers are mainly in the UAE, you need to bid on government contracts, or your business model depends on walk-in retail, supply to local companies or services delivered onshore.
What Freezone company setup means in Dubai
Free zones are special economic areas designed to attract foreign investors. Each free zone has its own authority, rules and business activities list. Examples in Dubai include JAFZA, DMCC, Dubai Internet City and Dubai Multi Commodities Centre.
Key features:
- 100% foreign ownership and no requirement for a local sponsor.
- Simplified company setup and predictable pricing packages.
- Excellent for export oriented businesses and international trading.
- Many free zones allow flexible office options like flexi desks and virtual offices.
- Generally faster approvals and fewer local approvals.
When free zone is the logical choice
Choose a freezone if you sell mainly outside the UAE, want full foreign ownership, or want a lower cost and faster setup. Freezone is suited for ecommerce, software, consulting for overseas clients and international trading.
Side by side comparison
| Topic | Mainland Company | Freezone Company |
| Ownership | 100% ownership available for many activities but subject to rules | 100% foreign ownership standard |
| Local market access | Full access to UAE local market without agent | Limited direct access to local market unless using a local distributor or establishing a branch |
| Office requirement | Physical office usually required for license | Options include flexi desk, shared office or physical office depending on free zone |
| Visa | Visa quota linked to office size and activity | Visa packages vary by free zone and are often flexible |
| Cost to start | Moderate to high depending on office and approvals | Often lower initial cost due to flexi desk options |
| Tax and corporate structure | Corporate tax rules as per UAE law apply equally | Same corporate tax rules apply; some free zones offer incentives but no tax exemption from corporate tax law |
| Banking | Widely accepted by local and international banks | Banks accept free zone accounts; some banks specialise in free zone clients |
| Ability to bid for government contracts | Yes | Not directly without mainland presence or local partner |
| Trade license speed | Moderate | Usually faster |
| Ideal for | Local service providers, retail, construction, supply, onshore operations | Export, IT, ecommerce, consultancy, holding companies |
Costs to expect in 2026
Costs vary by emirate, business activity and the exact free zone chosen. Below are realistic ranges to plan for.
| Item | Mainland approximate AED | Free zone approximate AED |
| Trade name and initial approval | 500 to 2,000 | 500 to 1,500 |
| Trade license yearly fee | 6,000 to 20,000 | 5,500 to 18,000 |
| Office rent small workspace yearly | 20,000 to 60,000 | Optional flexi desk 3,000 to 8,000 |
| Visa processing per visa | 3,500 to 7,000 | 2,500 to 6,000 |
| Corporate bank account setup | 0 to 5,000 | 0 to 4,000 |
| Additional approvals or NOCs | 2,000 to 10,000 | Rare or bundled in package |
| Estimated first year total | 40,000 to 120,000 | 10,000 to 50,000 |
These figures are indicative. Some free zones offer packages starting from AED 5,500 and promotion rates that reduce initial cost. Mainland costs often rise with office scale and specific activity approvals.
Practical examples to guide your choice
Example 1. Retail store or restaurant: If you plan to open a shop, take bookings for local customers or serve dine in clients choose mainland. A mainland license allows you to get trade permits, food safety approvals and local supplier contracts.
Example 2. Software as a service selling to global clients: Choose free zone. You get 100 percent ownership, a flexi desk for lower cost and easier processing. Most software companies sell internationally and benefit from free zone setups.
Example 3. Import export trading: If your business re-exports or owns inventory for international customers, a free zone like JAFZA or DMCC makes sense because customs and logistics infrastructure are tailored for trading.
Example 4. Consultancy that also wants to work with UAE clients: Consider a dual structure. Register in a free zone for international clients and create a small mainland branch or commercial agent for local contracts. This keeps costs manageable and preserves local access.
Visas and Staffing explained
Mainland
- Visa numbers typically grow with office size. A small office gives fewer visas while larger leased space gives more.
- Hiring locally may be easier for certain activities.
- Mainland companies must follow UAE labour law for employees.
Freezone
- Many free zones offer visa packages that can be bought with flexi desk or office packages.
- Easier to hire remote staff but public sector contracting may be restricted.
- Some free zones are tailored to specific sectors and provide talent networks.
Tip: If you expect to scale a team quickly, factor visa cost and processing speed into your decision.
Bank accounts and payments
Both mainland and free zone companies can open corporate bank accounts. Bank acceptance depends on bank risk appetite, shareholder profile and business model.
What banks check:
- Clear company activity and trading plan.
- Source of funds and background of shareholders.
- Physical office or operations evidence depending on the bank.
- KYC documents and compliance policies.
Tip: Free zone companies often use specialised banks that handle international clients and multi currency accounts. Mainland companies typically find it easier to work with local corporate banking services.
Tax and Compliance in 2026
The UAE corporate tax regime applies across jurisdictions. Recent years brought more clarity around corporate tax, economic substance and transfer pricing rules. Whether you choose mainland or free zone, you must plan for:
- Corporate tax registration when applicable.
- Economic substance requirements for certain activities.
- VAT registration if taxable turnover exceeds the threshold.
- Annual audit if your license or activity requires one.
Do not make decisions assuming any automatic tax exemption. Check the current rules for your activity and jurisdiction.
Pros and Cons at a glance
Mainland pros:
- Direct local market access
- Ability to bid for government contracts
- Easier local hiring and procurement
- Suitable for retail and service businesses targeting UAE clients
Mainland cons:
- Higher office and setup costs in many cases
- More local approvals possible for some activities
- Visa quotas linked to physical office size
Freezone pros:
- 100% foreign ownership
- Fast setup and predictable fees
- Lower initial cost options like flexi desks
- Ideal for export and international services
Freezone cons:
- Limited direct access to UAE local market without an agent or branch
- Some banks have stricter onboarding rules for certain free zones
- Additional steps if you need local mainland presence later
Decision checklist
Use this quick checklist to decide:
- Who are your customers mainly local or international?
- Do you need to bid for government contracts or supply local businesses?
- How many visas will you need in the first 12 months?
- Do you want 100 percent ownership immediately?
- Will you handle inventory and import goods?
- Do you want the lowest initial cost or the broadest local access?
- Are there sector specific approvals you must get?
If most answers point to local customers and local operations choose the mainland. If your customers are mostly outside the UAE and you prefer faster setup and full ownership choose a free zone.
How AB Capital helps you choose and set up
Choosing the right jurisdiction is a strategic decision. AB Capital Services supports founders and companies with:
- A dedicated agency leader and relationship manager for every client
- Clear communication and step by step guidance from plan to launch
- Multilingual support in English Hindi Malayalam Arabic and Punjabi
- Full handling of license application, office selection, visa processing and bank introductions
- Guidance on corporate tax registration, VAT and compliance needs
- Practical advice on free zone to mainland migration if your business evolves
AB Capital focuses on the right structure for your business objective rather than pushing a single product.
Frequently asked questions
Can a free zone company sell directly to customers in the UAE
A free zone company can sell to UAE customers but usually through a local distributor or by establishing a mainland branch. Direct retail to onshore customers typically requires mainland licensing or a local agent.
Can I hold 100% ownership in mainland companies
Recent rules allow 100 percent foreign ownership for many business activities in the mainland. Certain specific activities may still require local partners or approvals. It is important to check the activity list.
How long does company setup take in 2026
A straightforward free zone setup can take a few days to two weeks. Mainland setup varies from two weeks to six weeks depending on approvals, office documentation and specific activity requirements.
Which option is cheaper to run in the first year
Free zone setups with flexi desk options are often cheaper in the first year. Mainland may cost more due to office lease, local approvals and higher visa costs depending on your needs.
Can I convert from free zone to mainland later
Yes conversion or establishing a mainland branch is possible, but it takes time and additional approvals. Plan ahead if you expect to expand into the local market.
Final thoughts
There is no universally correct answer. Mainland gives broad local access and is best for businesses that rely on UAE customers. Free zone gives speed, ownership and lower upfront cost which is ideal for export and digital businesses. Your decision should align with your customer base, scale plan and regulatory appetite.
If you want help choosing the right structure or getting a clear cost estimate, AB Capital can assess your business and recommend the most effective and compliant setup. Book a free consultation by filling the form below and get advice tailored to your business goals.