Company Incorporation Dubai, Company Incorporation Dubai, Dubai Mainland

Difference Between Dubai Mainland and Dubai Free Zone

by Manish Kumar

Most people who want to start a business in Dubai and have researched a bit on the Dubai company registration topic are familiar with two terms, namely, Dubai Mainland and Dubai Free Zone. Both Dubai mainland companies and Dubai free zone companies are great choices for company formation in Dubai. However, which one is the best in your case can only be decided once you can understand the difference between Dubai mainland and Dubai free zone companies.

What is Dubai Mainland Company?

Dubai Mainland company is a company which is authorized by the Dubai Department of Economic Development (DED) to carry out business activities in Dubai. When a company is registered as a mainland company in Dubai, it does not have any restrictions on its commercial activities.

What is Dubai Free Zone Company?

Dubai Free Zone company is a company which is located in one of the 26 free zones in Dubai. It is authorized by the free zone authority to carry out its business activities in a particular free zone in Dubai.

Dubai Mainland vs Dubai Freezone: Key Differences

The following comparison table will help you to understand Dubai Mainland vs Dubai Free Zone easily. 

Parameters Dubai Mainland Company Dubai Free Zone Company
Permitted Area to Conduct Business Entire UAE Limited to Free Zone
Concerned Authority for Business Authorization Department of Economic Development (DED) Concerned Free Zone Authority. It differs for every free zone.
Foreign Ownership 100% Foreign Ownership 100% Foreign Ownership
Office Space Requirements Physical office space of at least 200 square feet. No strict regulations enforce a physical office. Companies can opt for actual offices, work from home or use virtual office services.
Auditing Requirements Mainland companies are mandated to undergo an annual audit at fiscal year’s end.  Annual audit’s requirement isn’t uniformly enforced across all the free zones.
Customs and Import Dubai Mainland companies must pay for customs duties when importing goods. Dubai free zone companies are generally exempt from customs duties on imports within the free zone.
VAT Subject to a 5% VAT on applicable goods and services. Typically, the VAT is 5%. However, some zones offer 0% VAT under specific conditions.

Conclusion

Mainland companies in Dubai can conduct commercial activities in the UAE without any restrictions. However, free zone companies in Dubai can only carry out business in their respective free zones. While a physical office isn’t required for a Dubai free zone company registration, it is mandatory for a mainland company. Now that you know the major differences between Dubai mainland company vs Dubai free zone company, you can choose either of them based on your requirements. If you wish to know more about these two types of companies in Dubai, you can speak with our consultants at Licensebox.