What is the difference between a free zone and any other territory of the United Arab Emirates (UAE) for business setup?
The territory of the United Arab Emirates is defined as the area of each individual Emirate with the exception of the free zones . Depending on where you wish to incorporate your company, you must comply with rules and regulations of the respective Emirate or free zone. Both areas especially differ when establishing a company with limited liability. In the territory, it is mandatory to appoint an Emirati majority shareholder (so-called sponsor). In free zones on the other hand, 100% of the shares can be held by foreigners.
A Free Zone license will give you 100% ownership of your company and complete control of your business. Incorporating your business in a Free Zone also tends to be a cheaper and easier process.
An advantage of a Non Free Zone setup, a local DED (Department of Economic Development) Mainland license, is that this type of license allows you to freely operate in any area of the UAE. Even though a local Emirati sponsor who would have 51% ownership of your company, certain businesses simply work better with a Non Free Zone license. In other words, when you have a Free Zone license, you are allowed to operate only within that Free Zone but with a Non Free Zone license, you will not be restricted to one area.