Free zone companies offer 100% ownership, customs exemptions, and simplified setup but historically limited UAE mainland business; mainland (LLC) allows full local market access — now with 100% foreign ownership in most activities too. Choose by customer location.
Decision framework: (1) If customers are inside the UAE mainland (local distributors, government, retail) → mainland LLC (post-2021 amendment allows 100% foreign ownership for most activities, no local sponsor needed for most sectors). (2) If doing re-export, e-commerce fulfillment, holding, or serving regional/international customers → free zone (JAFZA for logistics/re-export, DMCC for commodities/trading, IFZA/RAKEZ for cost efficiency). (3) Corporate tax since June 2023: 9% on profits above AED 375,000 — applies to BOTH free zone and mainland; free zone Qualifying Income can still be 0% with substance and audited accounts. (4) VAT: 5% registration threshold AED 375,000. Common Chinese pattern: DMCC trading entity + JAFZA logistics.
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