Dubai Properties | What Rental Yields Should You Expect?
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If you are planning to start a business in Dubai in 2025, one of the biggest decisions you will face is choosing between a mainland company and a free zone company. This choice will affect everything from your business operations to your taxes, office space, client base, and even how much ownership you have in your company.
Dubai has become one of the most attractive destinations in the world for entrepreneurs, investors, and freelancers. The city offers a strong economy, no personal income tax, modern infrastructure, and a strategic location that connects you to markets across the Middle East, Asia, Africa, and Europe. However, the UAE has more than 40 free zones along with a flexible mainland setup structure, and both options have unique benefits and trade-offs.
In this detailed guide, we will break down the differences between mainland and free zone business setups in 2025, covering ownership rules, costs, legal requirements, tax policies, and operational flexibility. By the end, you will have a clear idea of which option fits your business goals.
1. Understanding Mainland and Free Zone Companies
Before you can compare the two, you need to understand what they mean.
Mainland Company
A mainland company is licensed by the Department of Economy and Tourism (DET) in Dubai. It allows you to operate anywhere in the UAE and internationally. In most cases, you can work with both local and foreign clients without restrictions.
Free Zone Company
A free zone company is licensed by a specific free zone authority. There are more than 40 free zones in the UAE, each with its own rules and benefits. Free zones are designed to attract foreign investment and typically offer benefits such as 100 percent foreign ownership and tax exemptions. However, they limit your ability to directly trade with the UAE mainland unless you work with a local distributor or have the right approvals.
2. Ownership Rules in 2025
One of the biggest reasons entrepreneurs prefer Dubai is the ownership flexibility.
Mainland
Since 2021, most mainland businesses in Dubai allow 100 percent foreign ownership. There are some sectors where a local partner is still required, especially in strategic industries such as oil and gas, security, and legal services. For most commercial and professional activities, you can own the company fully in your name.
Free Zone
Free zones have always offered 100 percent foreign ownership. You do not need a local partner at all. This makes them attractive to entrepreneurs who want complete control over their business.
Key takeaway: Ownership is no longer the deciding factor it once was. Now you can get full ownership in both structures for most business types, so you need to look at other aspects before deciding.
3. Business Activities Allowed
Mainland
Mainland companies can engage in almost any legal business activity. You can work with clients and suppliers anywhere in the UAE, including the local market, without restrictions. If you plan to operate a retail store, restaurant, consultancy, real estate agency, or logistics company serving UAE residents directly, a mainland license is often the better choice.
Free Zone
Free zones are more specialized. Each free zone usually focuses on a specific industry such as technology, media, logistics, healthcare, finance, or education. While you can serve international clients without restrictions, working directly with mainland UAE clients requires either a local distributor or a branch license from the DET.
Key takeaway: If your target customers are in Dubai or the wider UAE, a mainland company offers more flexibility. If your focus is on global clients, a free zone may work well.
4. Office Space Requirements
Mainland
In most cases, mainland companies require you to have a physical office space. The size and cost will depend on your license type and the number of visas you need. For example, a consultancy may need a smaller office compared to a manufacturing business.
Free Zone
Free zones offer more flexible office requirements. Many allow you to start with a flexi-desk or shared office, which is cheaper than renting a full office. This can be helpful for startups and solo entrepreneurs looking to keep costs low.
Key takeaway: If you want to minimize upfront costs, a free zone with a flexi-desk option might be more suitable.
5. Visa Eligibility
Mainland
Mainland companies can apply for multiple visas depending on their office space. The general rule is that larger office space allows for more visas.
Free Zone
Free zone companies also issue visas, but the number allowed often depends on the package you choose. Some free zones start with 1 to 6 visas, and you can increase by upgrading your office space or package.
Key takeaway: Both structures offer visas, but mainland companies often allow more flexibility for scaling.
6. Costs and Fees
Mainland
Mainland setup costs vary widely based on your business activity, office size, and number of visas. You will also have renewal costs each year.
Free Zone
Free zones often have more transparent packages, including license fees, office space, and visas bundled together. These packages can be more affordable for small businesses or freelancers.
Key takeaway: Free zones can be cheaper for starting small, but if you need a large operation with many employees, the mainland could be more cost-efficient in the long term.
7. Taxation in 2025
Tax policy is an important consideration for any business.
Mainland
Mainland companies in the UAE are subject to the 9 percent corporate tax on profits over AED 375,000 unless they qualify for exemptions. However, there is still no personal income tax.
Free Zone
Free zones offer corporate tax benefits, especially if you earn qualifying income. Many free zone companies can remain exempt from corporate tax if they only conduct business outside the UAE or meet specific qualifying rules. However, if you earn income from mainland clients, that portion may be subject to the 9 percent corporate tax.
Key takeaway: Free zones still provide tax benefits if your revenue comes from outside the UAE. Mainland companies are better if you mainly serve the UAE market.
8. Regulatory and Compliance Requirements
Mainland
Regulated by the Dubai Department of Economy and Tourism, mainland companies follow standard UAE commercial laws. You may need additional permits for certain activities.
Free Zone
Each free zone authority has its own regulations and may require fewer compliance steps for certain activities. However, you still need to follow UAE federal laws on matters like tax, labor, and anti-money laundering.
9. Branding and Reputation
Some businesses find that having a mainland license improves credibility with local clients since it signals that the company is fully established in the UAE market. On the other hand, certain free zones, especially well-known ones like Dubai Multi Commodities Centre (DMCC) or Dubai Internet City (DIC), carry strong international reputations.
10. Decision-Making Guide for 2025
Here is a simplified way to decide:
Choose Mainland if you plan to sell directly in the UAE market, want unlimited client access, or expect to scale quickly with many employees.
Choose Free Zone if you work mainly with overseas clients, want lower startup costs, prefer 100 percent foreign ownership with minimal restrictions, and value tax benefits.
Final Thoughts
The decision between mainland and free zone business setup in Dubai in 2025 depends entirely on your target market, budget, and growth plans. With changes in ownership laws, both options are now more attractive than ever. The key is to focus on your long-term strategy rather than just the cheapest setup cost.
At GenZone, we specialize in guiding entrepreneurs through every step of Dubai business setup. Whether you choose mainland or free zone, our team ensures your company is registered quickly, your visas are processed smoothly, and your banking setup is hassle-free.
Your business journey in Dubai starts with one decision. Make it the right one
