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Mainland vs Free Zone vs Offshore: The Complete UAE Jurisdiction Comparison
Ownership, market access, tax, visas and cost compared across UAE mainland, free zone and offshore companies, so you choose the right one first time.
Every UAE company starts with one decision: mainland, free zone or offshore. The choice decides who you can sell to, how many visas you can hold, what you pay to set up and how your profits are taxed. Changing it later usually means closing one company and opening another.
Mainland Companies
A mainland company is licensed by an emirate's economic department, such as Dubai's Department of Economy and Tourism. Since the 2021 reform of the Commercial Companies Law, foreign investors can own 100% of a mainland company for most commercial and industrial activities; a small list of strategic activities still needs a UAE partner.
Mainland companies can trade anywhere in the UAE, bid for government contracts and hold visas in line with their office space.
Free Zone Companies
The UAE has more than 40 free zones, each with its own authority, rules and price list. Free zone companies are fully foreign-owned, usually quicker and cheaper to set up, and well suited to international trade, consulting and e-commerce.
The limit is the local market: a free zone company generally cannot sell directly to mainland customers without a distributor or a mainland branch. Its tax position also depends on meeting the Qualifying Free Zone Person conditions.
Offshore Companies
Offshore companies, registered with bodies such as RAK ICC or JAFZA Offshore, are holding and asset vehicles. They cannot trade in the UAE, rent an office or sponsor visas. They suit holding shares, property or intellectual property.
An offshore company incorporated in the UAE is still a UAE tax resident, so it must register for corporate tax.
Side by Side
The key differences at a glance:
- Ownership: 100% foreign in all three for most activities
- Sell to UAE mainland customers: mainland yes; free zone only through a distributor or branch; offshore no
- Visas: mainland and free zone yes, tied to office space or package; offshore none
- Corporate tax: mainland 9% above AED 375,000; free zone 0% on qualifying income if all QFZP conditions are met; offshore taxed like any resident company
- Office: mainland needs a physical office (Ejari); free zones offer flexi desks; offshore needs only a registered agent
How to Choose
Start from your customers. If most of them are UAE businesses or consumers, mainland is usually right. If you trade internationally or serve other free zone companies, a free zone is often cheaper. If you only need to hold assets, consider offshore.
Compare current free zone package prices on our free zone cost pages before you decide.
Frequently Asked Questions
Can a foreigner own 100% of a mainland company in the UAE?
Yes, for most commercial and industrial activities since 2021. A short list of activities with strategic impact still needs UAE ownership.
Can a free zone company sell to customers on the UAE mainland?
Generally not directly. It needs a mainland distributor or a mainland branch, and selling to the mainland can also affect its 0% corporate tax position.
Do offshore companies pay UAE corporate tax?
An offshore company incorporated in the UAE is a resident taxable person, so it must register and file returns.
Which is cheaper to set up, mainland or free zone?
Free zones usually have the lower starting price, with zero-visa licences from around AED 6,000 in some emirates. Mainland costs depend on the activity and the office.
Sources
- UAE Government portal: Full foreign ownership of commercial companies
- Federal Tax Authority: Corporate Tax legislation
This article is general information, not advice for your situation. Rules change; check the current position or speak to an advisor before acting.
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