Guide
Basics
Dec 12, 2025
Free Zone vs Mainland: Which Should You Choose? Advice from a French Accountant and Lawyer!
Free Zone and Mainland: origins and initial objectives
When an entrepreneur decides to set up business in the United Arab Emirates, one question always comes up: should they establish their company in a Free Zone or on the Mainland? These two structures have coexisted for a long time, but their use has changed significantly. To shed light on the differences and help entrepreneurs make an informed choice, we spoke with Justine Basilio, a lawyer specializing in business and tax law.
This article summarizes the main points discussed in the video and provides a structured analysis to better understand the legal, tax, and operational issues involved in choosing between a Free Zone or Mainland license.
The importance of office location
Geographic location remains one of the main differences between a Free Zone company and a Mainland company.
A company incorporated in a Free Zone cannot rent offices outside its designated zone. The arrangements offered by certain business centers do not constitute a valid Ejari and are not recognized as a lease that can be used to justify the company’s premises.
In Mainland, a company can rent offices anywhere in the United Arab Emirates—except in Free Zones—provided it submits a valid Ejari when renewing its commercial license. This point is crucial, as attempting to bypass these requirements exposes the business to legal risks, particularly in the event of an inspection or dispute.
For entrepreneurs who need genuine commercial premises, retail space, or offices accessible to their teams and clients, a Mainland license offers far greater flexibility.
Access to the local market and participation in tenders
The choice between Free Zone and Mainland also affects access to government markets. A Mainland company can respond to public tenders and work freely with local authorities.
Free Zone companies only have access if their zone specializes in the sector concerned. For example, a media company based in a Free Zone dedicated to the sector benefits from this right, but a company registered in a generalist Free Zone will not have access.
For companies wishing to work with public institutions, respond to tenders, or develop a strong presence in the territory, Mainland is generally the most suitable structure.
Taxation: largely similar treatment between Free Zone and Mainland
From a tax perspective, the differences between Free Zone and Mainland are often overstated. In most cases, both structures are subject to the same regime, especially since the introduction of Corporate Tax in the UAE.
Some Free Zones may offer tax advantages, but only for activities that meet specific criteria, particularly those related to Qualifying Income. For the majority of entrepreneurs, the tax burden will be equivalent whether they choose a Free Zone or a Mainland license.
It is therefore essential to assess the actual activity being carried out, rather than relying solely on the tax reputation of Free Zones.
Company setup process: more advanced digitalization in Free Zones
For entrepreneurs who are not yet physically present in the UAE, Free Zones offer a clear advantage: a more advanced, digitalized setup process. Many formalities can be completed remotely.
By contrast, setting up a Mainland company often requires the physical presence of shareholders or the use of a notarized power of attorney (POA) to sign the incorporation documents. This can extend timelines and add complexity for entrepreneurs based abroad.
As a result, for projects that require a fast setup or a remote launch, a Free Zone can be a simpler and more efficient solution.
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