You want to start a company in Dubai, but you’re confused about which setup to choose.
Free zone, mainland, offshore. Each term gets thrown around, but what do they actually mean for your business?
Here’s a clear breakdown of the business setup options in Dubai and which one fits different situations.
Three Main Types of Business Setup Dubai
Dubai offers three primary business structures for entrepreneurs and companies.
Free zone companies operate from designated business parks with special benefits. Mainland companies work anywhere in the UAE under local jurisdiction. Offshore companies exist for international business without a physical UAE presence.
Each type has different rules about ownership, taxation, licensing, and where you can operate. Your choice affects everything from costs to customer access to banking.
As we covered in our guide on why business setup isn’t one-size-fits-all, the right option depends on your specific business model.
Let’s break down each Dubai company setup choice in detail.
Free Zone Business Setup Options in Dubai
Free zones are special economic areas created to attract international businesses.
When you register a free zone company, you get 100% foreign ownership, zero corporate tax on profits, and full repatriation of capital and earnings. You don’t need a local sponsor or partner.
Dubai has over 30 free zones. Each focuses on different industries. DMCC works well for trading and commodities. IFZA suits service businesses and consultancies. Ajman Free Zone offers budget-friendly options. RAKEZ provides flexible packages for various business types.
Free zone companies can trade internationally without restrictions. You can import, export, and work with clients worldwide. However, selling directly to UAE consumers requires appointing a local distributor.
Most free zones require you to rent office space within their jurisdiction. This can be a physical office or a virtual office depending on your license type and needs.
Mainland Business Setup and Company Setup Options UAE
Mainland companies are licensed by the Department of Economic Development in each emirate.
Dubai mainland and Abu Dhabi mainland companies can operate anywhere in the UAE. You can sell directly to local customers, open retail shops, and bid on government contracts.
Since 2021, foreigners can own 100% of mainland companies in most business activities. You don’t need to give 51% ownership to a UAE national anymore.
Some activities still require a local service agent. This person doesn’t own shares but provides registered services for an annual fee. The agent helps with government paperwork and local compliance.
Mainland setup costs more than free zones because of additional approvals and requirements. But you get unrestricted market access across all seven emirates.
If your customers are primarily in the UAE, mainland makes more sense than free zones. What experienced business owners know is that customer location drives this decision.
Offshore Company Setup Options in Dubai
Offshore companies are registered in Dubai but don’t conduct business within the UAE.
RAK ICC Offshore, JAFZA Offshore, and Ajman Offshore are popular choices for international structures.
Offshore companies work well for holding assets, international trading, or investment vehicles. They offer privacy, asset protection, and tax efficiency.
You can’t get business visas through offshore companies since they don’t operate in the UAE. You also can’t open a UAE-based office or hire local employees.
Offshore setup is cheaper than free zone or mainland because you don’t need office space or extensive licensing. It’s the simplest option if you only need a legal entity for international operations.
Comparing Company Setup Options UAE Across Key Factors
Let’s compare the main business setup options in Dubai side by side.
- Ownership: Free zones and most mainland options allow 100% foreign ownership. Offshore companies also allow full foreign ownership but can’t operate in the UAE.
- Taxation: Free zones offer zero corporate tax. Mainland companies pay 9% corporate tax on profits above AED 375,000. Offshore structures have no UAE tax obligations.
- Market Access: Mainland companies can work anywhere in the UAE. Free zones can trade internationally but need distributors for local UAE sales. Offshore companies can’t do business in the UAE at all.
- Office Requirements: Free zones require office space within their jurisdiction. Mainland companies can lease anywhere that’s properly zoned. Offshore companies don’t need UAE offices.
- Visa Eligibility: Free zone and mainland licenses let you sponsor yourself and employees for UAE residency visas. Offshore companies don’t qualify for business visas.
Get Expert Help Choosing Your Business Setup Option
With three main types and dozens of specific jurisdictions, the business setup options in Dubai can feel overwhelming.
Smart Zone has guided over 35,000 entrepreneurs through choosing the right setup for their specific situation. We don’t push one option over another. We listen to your business model and recommend what actually works.
Ready to figure out which company setup option fits your business? Book a free consultation and let’s find the right structure for your Dubai company.
