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Free Zone vs Mainland: Which one is right for you?

When starting a new business in Dubai, UAE, entrepreneurs are faced with two common setup types. These are free zone and mainland. Both bring their own advantages and conditions, and the one that’s right for you will depend on the size, location, and nature of your business.

That’s why, before you get too far into the UAE company formation process, it’s a good idea to sit down with an expert such as Business Incorporation Zone (BIZ). We will take the time to understand your business and its needs before advising on the most suitable setup type.

What’s more, when you start your business with us, the process is fast, affordable and hassle free. So, if you’re looking to make your mark in Dubai, here’s everything you need to know about free zone and mainland businesses before you get started.

What is a mainland company in Dubai?

A mainland company is incorporated onshore with licenses issued by the Department of Economic Development (DED) or equivalent municipality in another emirate.

Mainland companies are required to take on a physical workspace with a minimum size of 200 sq ft. This must be leased annually with a proof of lease or Ejari certificate as a condition of licensing.

Mainland businesses must also seek additional approvals from government bodies in order to trade. Depending on the nature of your business, you could require approvals from Ministry of Labor, Ministry of Interior, and trade-specific associations such as the Health Authority.

Benefits of starting a mainland company in Dubai

When operating a mainland company in Dubai, you are free to trade directly with the local market. You can also set up anywhere in the UAE mainland and can often take on lucrative government contracts.

Until recently, mainland companies could not be 100% owned by non-GCC investors as standard. A foreign investor could only hold a 49% stake with the remaining 51% held by an Emirati sponsor.

However, recent changes to the law allow for 100% ownership of mainland businesses in industries other than oil and gas, telecoms, and transport.

Mainland companies can apply for unlimited employee visas. However, visa eligibility is usually relative to the size of your business premises.

What is a free zone company in Dubai?

Free zone companies are incorporated in designated economic zones and are regulated by a managing authority. Many free zones are industry-specific, catering for the likes of healthcare, media, technology and more.

Free zone companies cannot take on government contracts and can only trade from within their designated free zone. The services of a local agent are required to trade with the local UAE market.

Benefits of starting a free zone company in Dubai

Free zone setups are often the most cost-effective way to start a business in the UAE. This is largely due to low licensing costs and no requirement to take on physical premises.

Free zone companies also benefit from 100% customs tax exemption, zero currency restrictions, and the ability to repatriate all capital and profits.

Free zone companies can be owned 100% by non-GCC investors in all circumstances, with no additional steps or approvals required.

When it comes to visas, free zone companies are usually limited as to the total number they can obtain. Many free zones offer license packages inclusive of visa eligibility – this often ranges up to six per license.

What is the cost of starting a mainland company in Dubai

The total cost of starting a mainland business will depend on its size and requirements. However, as a general guide, you can obtain a Dubai mainland company license package for around AED 25,000. This is inclusive of visa allocation, office address, and any required medicals and tests.

What is the cost of starting a free zone company in Dubai?

Free zone license packages are available at Meydan Free Zone. Here you can get your license for just AED 23.350 inclusive of allocation for one visa.

How to start your business in Dubai

When you work with BIZ, our expert team will assist you with the steps below and more.

1. Choosing your company name

The first step is to choose a name for your business. When choosing a company name out here in the UAE, you must abide by a strict set of naming conventions.

2. Making your license application

Next, you’ll need to apply for your trade license. If setting up on the mainland, you’ll need to apply to the DED. If setting up in a free zone, this application should be made to the relevant managing authority.

3. Making your visa applications
You will also need a residency visa to work in the UAE. The visa application process consists of several steps including biometric scanning, a blood test, medical and a chest x-ray.

As the holder of UAE trade license, you can also sponsor others for their visas too. This could be a spouse, parent or child, or a domestic worker such as a housekeeper.

4. Opening a corporate bank account

Finally, you will need a corporate bank account to trade in the UAE. It is not always easy for non-GCC citizens to secure banking services, so once again it’s a good idea to partner with a local expert at this stage.

Are you ready? 

Hopefully, this guide has made clear that if you’re armed with the right knowledge, setting up a business in Dubai doesn’t have to be overly complex.

That being said, it does require a level of prior knowledge of the process. What’s more, it is important to note that the application process is only straightforward if your license application is complete at the time of submission and free from errors.

To help you ensure that this is the case, it’s a good idea to work with a company formation specialist such as Business Incorporation Zone (BIZ) when establishing a new company in the UAE.

We are a team of company registration professionals who are passionate about bringing the dreams of aspiring entrepreneurs and SMEs to life.

As well as managing your license application, BIZ can also assist with the opening of corporate bank accounts and advise on the most appropriate financial institution to suit your specific needs.

We also offer visa and immigration services and can handle all government formalities, permissions, work permits and visas applications that are required to trade in the UAE.

In short, our experts can establish your company on your behalf, make your license and visa applications, and take care of all the necessary admin – leaving you free to get on with running your business.

A city full of possibilities only during Expo 2020! Explore them with your free zone license for only AED 14,999

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Start up with the flexible packages starting from AED 13,500 and scale your SME up to 15 visas without renting any physical office space. Get in touch with us to create your future.

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