Due to the UAE's economic stability and close proximity to the rest of the world, many entrepreneurs view establishing a firm here as a wise strategic choice. But the choices don't stop there. Companies still must decide whether to locate on the mainland or in a free zone. Let's examine the benefits and drawbacks of each choice so you can decide which is best for your organization.

Advantages Of Setting Up In A Free Zone

100% Foreign Ownership

One of the key attractions of the UAE free zones is the allowance for 100% foreign ownership. For foreign investors in the UAE who want to keep control over their businesses, this offers a big advantage.

Tax Benefits

Tax exemptions and lower customs duties are common features of the UAE free zones, which improve the financial environment for companies. These incentives, particularly for start-ups and small-scale businesses in Dubai, can have a favorable effect.

Simplified Import and Export Procedures

Free zones in the UAE promote easier international trade by simplifying import and export procedures.Due to the reduction of logistical complexities, this might be especially advantageous for companies engaged in international supply chains.

Limitations of Free Zones

Restricted Business Activities

Though UAE and Dubai free zones offer many benefits, the types of activities that businesses can engage in may be limited. It’s critical to determine whether these restrictions suit the objectives of your

Limited Market Access within the UAE

Setting up your business in a Dubai or Sharjah free zone may restrict your ability to reach the UAE market because these businesses frequently aren’t allowed to conduct direct business with customers in the UAE mainland. But, businesses operating within free zones are permitted to deal both domestically and internationally with other businesses.

Advantages of Setting Up in UAE Mainland

100% Ownership

As per the amendments in the latest Law, there is no mandatory requirement of UAE local Sponsors for a Mainland Company formation and so foreign investors can have 100% ownership. However, some activities are exempt.

Access to a Broader Market

Businesses in the Dubai mainland have unrestricted access to the entire UAE market. Businesses looking to expand and attract a wide range of customers may find this beneficial.

No Restrictions on Business Activities

Businesses on the UAE mainland is not restricted in the types of activities they are able to engage in, unlike businesses in the UAE free zones. This flexibility is particularly beneficial for companies that run diverse operations.

Opportunities for Government Contracts

Businesses on the mainland often find themselves in a better position to bid for government contracts.This can be a big benefit, particularly for businesses where the government is actively involved.

Limitations of Mainland Business

Possibility of Higher Business Setup Costs

Businesses on the UAE mainland may have greater company formation costs compared to those in free zones because of a few factors, including the cost of renting office space, license fees, and related legal requirements.

Factors to Consider When Choosing

Several factors should influence your decision between free zone and mainland business setup:

  • Nature of the business
  • Target market
  • Initial and ongoing costs
  • Regulatory requirements

Carefully evaluate these factors to make sure your business setup helps your long-term objectives.

How to Choose the Right Structure?

It’s important to consider the advantages and disadvantages of each business setup option, Free Zone or Mainland. To make sure your choice is in line with your company’s goals, consult with the best business set-up consultants in the UAE, such as Promptus Global.

Overcoming Challenges

Overcoming legal and regulatory hurdles can be difficult. Making solid local connections and staying up to date on changing laws are essential strategies for conquering difficulties.

Future Trends in Business Setup

The UAE’s business setup environment is always changing. To position your company for success in the future, keep up with emerging trends, such as changes in laws and new business opportunities.


It is important to carefully consider your business’s objectives, operating requirements, and nature before deciding between setting up your business in a free zone or on the UAE mainland. There’s no onesize-fits-all answer, and the choice you make should support your long-term goals. You can choose wisely and put your company on the path to success by analyzing the benefits and drawbacks of each option and consulting a professional business setup service in the UAE.

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