Should You Set Up a Free Zone Company or a Mainland Company in Dubai?
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One of the most common questions we get from people starting a business in Dubai is this:
Should I open a free zone company or a mainland company?
And to be honest, it’s a great question — because choosing the wrong one could lead to unnecessary expenses, regulatory issues, or the frustration of having to restructure everything later.
The problem is, if you search this online, you’ll run into a lot of confusion. You’ll hear things like, “You can’t serve clients in the UAE from a free zone,” or “Mainland companies are always better,” or “Free zones are just for offshore work.”
In reality, the answer is more nuanced.
So in this article, we’re going to clear things up. We’ll explain the difference between free zone and mainland companies, what each one is for, what you can and can’t do with each type, how much they really cost, and how to decide which one is best for your specific case.
And of course, if you want GenZone to just handle the entire process for you — from helping you choose the right setup to getting your license, e-visa, UAE residency, and bank account — you can book a free consultation call with our team.
Let’s get started.
Free Zone vs Mainland: What’s the Real Difference?
Here’s the simple breakdown:
Free Zone Company
A free zone company is registered in one of Dubai’s designated economic zones — areas designed to attract foreign entrepreneurs. Some of the popular ones include IFZA, DMCC, Dubai South, Meydan, and Shams.
What makes a free zone company attractive:
100% foreign ownership — no need for a local sponsor or partner
Easier and faster setup process
Lower costs (initial and ongoing)
No office lease required in many cases (you can use a flexi-desk or virtual address)
No requirement to register under the UAE’s Wage Protection System (WPS)
Ideal for businesses with clients outside the UAE or for online businesses (e.g., marketing agencies, IT firms, consultants, freelancers)
Sounds great, right? It is — for the right type of business.
Mainland Company
A mainland company is registered through the Dubai Department of Economic Development (DED) or equivalent authorities in other Emirates. This allows the business to operate anywhere in the UAE — including directly with UAE residents and other mainland businesses.
What makes a mainland company different:
Also allows 100% foreign ownership (as of recent legal changes)
Required for businesses that physically operate in the UAE (like restaurants, salons, real estate brokerages, cleaning services, construction, etc.)
Must lease a real physical office space
Must register employees under the WPS (mandatory salary payments through the bank)
More government reporting and compliance
Now let’s break this down in more detail so you can actually make the right decision.
What Can You Do with a Free Zone Company?
There’s a lot of bad information online that says things like:
“You can’t do business inside the UAE if you have a free zone company.”
That’s only partially true — and usually misunderstood.
If you’re offering professional services, such as consulting, digital marketing, coaching, e-commerce, software development, or any kind of online work, you can absolutely serve clients who live in the UAE.
Yes, even if those clients are based in Dubai or Abu Dhabi.
There is no rule stopping you from providing professional or digital services from a free zone company to individuals or businesses in the mainland.
Here’s where the limitation comes in:
If your business requires a physical presence inside the UAE — like cutting someone’s hair, fixing an AC, running a delivery fleet, or operating a physical store — a free zone company won’t be enough. That’s where you need a mainland setup.
But if your business is remote, digital, or service-based — free zone works just fine.
What Can You Do with a Mainland Company?
With a mainland company, you can do everything that a free zone company can do — plus more.
You can:
Offer services directly to UAE mainland individuals and companies
Open a physical shop, office, or warehouse anywhere in the city
Work with government contracts (in some cases)
Hire employees who physically work inside the UAE
Own a commercial space that’s customer-facing
So why doesn’t everyone just go for a mainland company?
Because it costs more, takes longer to set up, and comes with more compliance requirements.
Let’s explain.
Cost Comparison: Free Zone vs Mainland
Here’s a realistic breakdown of what you can expect to pay.
Free Zone Setup
Company license + flexi-desk package: starting from USD 8,000–10,000
Visa and Emirates ID: included or an additional USD 1,000–2,000
Bank account: most free zones help you open it
Ongoing costs: usually minimal (license renewal + optional visa renewals)
You don’t need a physical office. You don’t need to pay employee salaries via WPS. And you’re not tied to a specific location.
Mainland Setup
Company license: similar to free zone (around USD 9,000)
But you must lease an office, which adds at least USD 2,500 to USD 10,000 per year
Add to that: deposits, DEWA (electricity and water), internet, fit-out costs
You must also register with WPS and process monthly payrolls — even if it’s just for your spouse or co-founder
Government inspections are more common, and non-compliance can lead to fines (USD 3,000–8,000)
Bottom line: mainland companies cost more both upfront and in the long run
What Happens If You Try to Cut Corners?
Some people try to “trick” the system by using a virtual office for their mainland license.
They pay around USD 2,500–3,000 for a no-frills lease just to register the business.
And for a while, it works.
Until there’s an inspection.
The government has been cracking down on fake offices. If they visit the address you registered and find no actual office, they’ll issue a fine — sometimes up to USD 8,000. Then they’ll require you to rent a real office anyway.
So you end up paying double: the fine and the new lease.
If you’re going to go mainland, do it properly.
Otherwise, you’re much better off sticking with a free zone setup.
So, Who Should Choose a Free Zone Company?
Free zone is the right choice if:
You’re starting a consulting, coaching, or freelance business
You run an e-commerce, dropshipping, or digital product store
You do software development, IT, design, or marketing
You want to keep costs low and avoid unnecessary office expenses
You just want a visa and residency for yourself and your family
You’re not planning to open a storefront or provide services in-person
In fact, 90% of our clients at GenZone go the free zone route — and it works perfectly for them.
And Who Should Go for a Mainland Company?
Mainland is the right choice if:
Your business is location-based (salons, cafes, gyms, shops, etc.)
You want to open a storefront or showroom
You run a construction, real estate, or facility management business
You want flexibility with office location
You want to work with government entities
You need to employ staff under WPS with standard UAE payroll
If your business physically operates in Dubai, then yes — you need a mainland setup.
But if it doesn’t, mainland might just drain your budget for no added benefit.
One More Thing: Free Zone Doesn’t Mean Offshore
A lot of people think “free zone” = “offshore” = “sketchy.”
That’s not true.
Free zone companies are legally recognized UAE businesses. They are proper registered companies that can get you a UAE residency, corporate bank account, and tax residency certificate.
You can sign contracts, send invoices, hire employees, and even get funded — depending on your business model.
The Final Verdict: Free Zone vs Mainland
If you’re starting a digital or service-based business, don’t overthink it. Free zone is the right choice. It’s faster, cheaper, and has fewer compliance requirements.
Only go for a mainland company if you:
Need a physical location
Are doing manual services
Want office flexibility
Or are legally required to do so for your business activity
And remember — whatever you choose, the setup should match your business needs. Don’t let a sales agent push you into something more expensive just because they make more commission on it.
At GenZone, we’ll tell you straight up what’s best for you — even if it’s the cheaper option.
Need Help Choosing and Setting Up Your Company?
We help founders, freelancers, consultants, and entrepreneurs set up the right kind of business in Dubai, without stress or overpaying.
We’ll help you choose between free zone or mainland
We’ll register your license
Get your e-visas and Emirates ID
Get your bank account opened
And complete the entire setup in 30 days or less
No hidden costs. No upselling. Just straight-up transparency.
Book a free call with our team using the link below and we’ll walk you through the best option for your situation.
And if you want to learn more about the exact steps to set up a company in Dubai, check out our full guide — it’s linked at the bottom of this page.
