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Company Establishment

When setting up a company in the UAE, the first major decision you must make is where to establish your business: within the mainland, one of the free zones or as an offshore entity. Choosing the right jurisdiction is critical as it defines the scope of your activities, ownership structure and tax obligations.

Below is a brief breakdown of each option:

Mainland

Refers to areas outside the free zones, regulated directly by the UAE government under federal and emirate-level laws.
Mainland companies have no territorial restrictions on business activities. They can operate across the UAE, the GCC region and even within free zones.
Taxation:
- 5% Value Added Tax (VAT)
- 9% Corporate Tax (for profits above AED 375,000 / USD 100,000)
- No personal income tax
Best For: Businesses targeting local UAE markets, government contracts and those seeking broad flexibility.

Free Zones

Specially designated areas, often sector-specific, with their own regulations and licensing authorities.
Primarily focused on international business. However, six free zones offer dual licenses enabling onshore and offshore operations.
Foreign investors can retain 100% ownership of their companies.
Key Benefits:
- 100% exemption from corporate tax, customs duty, VAT and income tax
- Full repatriation of capital and profits
Best For: Startups, SMEs and global companies seeking tax advantages, ease of setup and international reach.

Offshore Companies

An offshore company is a legal entity set up in the UAE but intended to conduct business outside its registered jurisdiction.

Advantages:

Tax-free environment
100% foreign ownership
Flexibility to run global operations

Restrictions:

Prohibited from engaging in insurance, banking or financial services (unless specifically licensed). Not allowed to conduct commercial operations within the UAE.
Limited real estate investment rights (specific jurisdictions permit this)

Popular Offshore Jurisdictions in the UAE:

Ras Al Khaimah (RAK)
Jebel Ali Free Zone (JAFZA)
Abu Dhabi Global Markets (ADGM)
Dubai International Financial Centre (DIFC)

Choosing the Right Jurisdiction

With multiple setup options in the UAE, it can be challenging to decide which structure best fits your business goals. Each jurisdiction—Mainland, Free Zone, and Offshore—comes with its own benefits, limitations and tax implications. To help you make an informed decision, here’s a quick comparison at a glance:

Mainland vs. Free Zone vs. Offshore in the UAE

Feature Mainland Free Zone Offshore

Ownership 100% foreign ownership allowed (post-2021 reforms) 100% foreign ownership 100% foreign ownership

Business Scope Can operate across the UAE, GCC, and globally Mainly international; some zones allow dual licenses for onshore + offshore Only outside UAE (no local trade)

Taxes 5% VAT; 9% Corporate Tax above AED 375,000; No income tax 0% corporate tax, VAT, customs duty, income tax 0% tax

Market Access Full access to UAE and global markets Limited to free zone + international (onshore only with dual license) Global markets only (no UAE market activity)

Repatriation of Profits Allowed 100% repatriation of capital & profits 100% repatriation of capital & profits

Setup Speed Moderate (depends on activity & approvals) Fast and simplified (sector-specific zones) Quick setup (with restrictions)

Restrictions Subject to UAE government regulations & taxes, Cannot trade directly in UAE market without local distributor/dual license Cannot conduct local business; restricted sectors (banking, insurance, finance)

Best For Businesses targeting UAE market & GCC expansion Startups, SMEs, and global companies looking for tax advantages International investors, holding companies, asset protection, global trade

Costs are approximate and can vary based on specific business activities, chosen zone and other factors. It's advisable to consult a local business setup consultant for precise estimates tailored to your business needs.

If you need further assistance or a customized quote, feel free to reach out!

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