9 Aug 2025
By Vista CorpWhen starting a business in Dubai, choosing the right jurisdiction is one of the most important decisions an entrepreneur has to make. Among the three main choices: Mainland, Free Zone, and Offshore company, the right one mainly depends on the type of your business. With its pros and cons, it’s vital to understand each jurisdiction in detail in terms of cost, structures, sponsorship, and others to add to your company’s long-term growth vision.
From the free zone company’s easy setup advantage, the Mainland UAE’s market access, and the Offshore company’s asset protection, understand the difference between each to put the best foot forward from the very beginning.
Therefore, this blog explains it all.
What is a Freezone, Mainland, and Offshore Company in Dubai?
Before we proceed, understand what each company means.
Free Zone Company: Any company that is established, registered, and operates in the UAE’s free zone is called a Free Zone Company. A free zone is an economic area in the UAE that is regulated by a free zone authority.
Mainland Company: A mainland company is considered an onshore company (as opposed to offshore), regulated by the Dubai Economy and Tourism (DET, formerly DED). A mainland company established in Dubai permits trading in any part of the UAE and internationally.
Offshore Company: Offshore companies are international businesses registered with an offshore registry in the UAE, such as JAFZA offshore, RAK ICC, or Ajman Offshore. An offshore company cannot undertake business activities in the UAE, and is set up in Dubai to get tax incentives, protect assets or hold properties.
Key Differences Between a Mainland, Free Zone, and Offshore Company in Dubai
Understanding the difference between a Mainland, Free Zone, and an Offshore company in Dubai will help you make a more informed decision while deciding on a jurisdiction for your company. Here’s a detailed comparison:
| Criteria | Mainland Company Setup | Free Zone Company Setup | Offshore Company Setup |
| Ownership | 100% foreign ownership with a local sponsor or partner. | 100% foreign ownership (no local sponsor needed). | 100% foreign ownership. |
| Business Activities | Unlimited activities across various sectors. | Restricted to activities within the Free Zone’s scope. | Limited to specific activities allowed by the offshore jurisdiction. |
| Geographical Reach | Can trade anywhere in the UAE and internationally. | Limited to Free Zone operations or international markets. | Cannot operate within the UAE market, only international operations. |
| Office Space Requirement | Must have a physical office in Dubai. | Office space is required, but sizes and costs vary. | No physical office required unless opening a local branch. |
| Visa Sponsorship | Offers mainland company visa sponsorship in Dubai for employees. | Visa sponsorship is available based on office size and business activity. | No visa sponsorship available. |
| Taxation | Subject to VAT and corporate tax regulations. | Tax benefits may include tax exemptions for 15-50 years, depending on the Free Zone. | Offshore companies are typically tax-free in their respective jurisdictions but must comply with international regulations. |
| Capital Requirements | Minimum capital may be required based on business type. | Free zones have varying minimum capital requirements. | Most offshore jurisdictions have no minimum capital requirements. |
| Bank Account | Can open a corporate bank account in Dubai. | Can open a corporate bank account either in the Free Zone or outside Dubai. | An offshore company bank account in Dubai can be opened with specific banks. |
| Company Name Approval | Must be approved by DED, and naming conventions are strict. | The Free Zone authority must approve the company name. | The offshore jurisdiction approves the company name. |
| Company Structure | Can set up LLC, Sole Proprietorship, or Branch Office. | Only certain company types, like LLC, Free Zone Establishment, etc. | Typically set up as an LLC or IBC (International Business Company). |
| Licensing | Requires a Dubai mainland company license issued by DED. | Requires a Free Zone business license issued by the Free Zone Authority. | Offshore company registration in Dubai is done via the offshore authority. |
| Business Location Flexibility | Can operate anywhere in Dubai and the UAE. | Restricted to Free Zone or international markets. | Limited to international markets only. |
| Cost of Setup | Generally higher due to office space, licensing, and local sponsorship costs. | A free zone is the cheapest way to set up a business in Dubai compared to others. | Generally, the most cost-effective option for business owners. |
| Tax Benefits | Tax incentives are available, but not tax-free. | Many Free Zones offer Dubai free zone company advantages, like full tax exemptions for a period of time. | Offshore jurisdictions typically offer tax-free status. |
| Trade License Types | General trade license, industrial, commercial, or professional. | Specific licenses based on the business activity in the Free Zone. | Limited to specific offshore business types (e.g., holding companies). |
| Ease of Setup | More complex setup process due to regulatory requirements and sponsorship agreements. | The free zone company setup process is quick and straightforward with minimal paperwork. | The offshore company formation guide is simple, with fewer formalities. |
| Company Expansion | Can freely expand within the UAE and internationally. | Expansion is typically limited to international operations or within the Free Zone. | Expansion is limited to international operations. |
| Office and Facility Options | Must have a physical office space (size depends on business activities). | Flexible office space options, including shared office setups. | No office required; virtual offices are common. |
| Privacy and Confidentiality | Moderate privacy; subject to UAE regulations. | Moderate privacy; companies must comply with Free Zone reporting regulations. | Offshore company privacy in Dubai is high, with minimal disclosure requirements. |
| Annual Fees | Higher annual fees due to office space, licensing, and regulatory requirements. | Generally lower fees, especially in small Free Zones. | Offshore companies have minimal ongoing costs. |
| Employee Requirements | Employee visas are available, but dependent on office space and activity. | Employee visa options vary based on office size and Free Zone regulations. | Limited to the owner’s own visas, or may not have employee visa capabilities. |
| Regulatory Compliance | Must adhere to local laws, labour laws, and commercial regulations in Dubai. | Must comply with Free Zone’s specific regulations and laws. | Must comply with offshore jurisdiction rules, but minimal regulation within Dubai. |
| Business Continuity | High level of business continuity with access to all markets. | Can limit operations to the Free Zone and international markets. | Can continue business internationally but not in the UAE market. |
| Funding and Investment Opportunities | Access to local and international investors. | Limited access to local investors, more focused on international markets. | Limited access to local investments; focused on international ventures. |
Documents Required for a Freezone Company Setup in Dubai
For a free zone company setup, the following documents are required:
- Passport copies of shareholders and managers
- UAE Visa or Entry stamp copy (if applicable)
- Proof of address (recent utility bill or bank statement)
- Completed application form
- Business plan
- Memorandum of Association (MOA) / Articles of Association (AOA)
- Bank reference letter
- No Objection Certificate (NOC) from current sponsor (if applicable)
- Initial approvals from relevant authorities (if required by business activity)
- Shareholder and manager CVs
Documents Required for a Mainland Company Setup in Dubai
For a mainland company setup, the following documents are required:
- Passport copies of shareholders and managers
- UAE Visa or Entry stamp copy (if applicable)
- Proof of address (recent utility bill or bank statement)
- Completed application form
- Memorandum of Association (MOA) / Articles of Association (AOA)
- No Objection Certificate (NOC) from current sponsor (if applicable)
- Lease agreement for office space
- Trade name reservation certificate
- Initial approvals from government authorities (if applicable)
- Shareholder and manager CVs
- Power of Attorney (if applicable)
Documents Required for an Offshore Company Setup in Dubai
For an offshore company setup, the following documents are required:
- Passport copies of shareholders and directors
- Proof of address for shareholders and directors
- Completed application form
- Memorandum and Articles of Association
- Bank reference letter(s)
- Due diligence documents (source of funds, business plan)
- Power of Attorney (if applicable)
- Signed declaration forms
Disclaimer: These are common document requirements; however, the exact documentation may vary depending on the specific free zone, mainland department, or offshore jurisdiction, as well as the nature of the business and licensing requirements. Always check with the relevant authorities or consultants for precise and updated requirements.
Which One’s Right for You?
Mainland Company Setup
- Ideal if you want to operate in the local UAE market.
- Offers freedom to trade anywhere in Dubai and the UAE.
- Suitable for flexible business activities.
- Visa sponsorship is available for employees.
- Requires a physical office space.
- Higher setup costs due to office and sponsor requirements.
Free Zone Company Setup
- Best for businesses targeting international markets.
- 100% foreign ownership with no local sponsor needed.
- Offers tax exemptions and quick setup.
- Office space is required, but it is more affordable compared to the mainland.
- Limited to Free Zone or international operations.
- Easier and faster setup with minimal paperwork.
Offshore Company Setup
- Ideal for international businesses with no local market presence.
- Offers maximum privacy and minimal disclosure.
- Tax-free status in many offshore jurisdictions.
- No need for physical office space.
- Typically, the most cost-effective setup.
- Limited to international trade, cannot operate in the UAE market.
When to Choose Each Option?
Mainland
- Want to operate within the UAE market.
- Need freedom to trade anywhere in Dubai/UAE.
- Need visa sponsorship for employees.
- Ready to meet regulatory requirements for local operations.
Free Zone
- Want to focus on international markets.
- Need 100% foreign ownership and tax exemptions.
- Want a faster, cost-effective setup.
- Limited to Free Zone or international operations.
Offshore
- Focus on privacy and low-cost operations.
- Plan to operate internationally without a physical presence in the UAE.
- Interested in asset protection and tax benefits.
- Prefer minimal compliance and no office requirements. This is one of the best Dubai offshore company benefits.
Conclusion
Choosing the right business setup in Dubai can significantly impact your company’s success. Mainland companies allow you to trade anywhere in the UAE but require a physical office and adhere to mainland company office requirements in Dubai, which can be more costly. Free Zone companies allow 100% foreign ownership and are easier and faster to set up. They are great for companies looking to do business internationally and benefit from tax exemptions. Offshore companies offer privacy and low costs, but cannot operate inside the UAE market.
Knowing the differences between offshore, free zone, and mainland Dubai will help you decide what fits your business best, whether it’s access to the local market, cost savings, or simple setup.
If you want help setting up your business the right way, Vista Business Setup is here for you. We offer expert guidance and ensure your business setup is smooth and compliant with UAE regulations. Our team will help you choose the best option based on your goals and provide ongoing support throughout the process. Let us handle the complexities while you focus on growing your business.
