Setting Up a Company in the UAE: Mainland, Free Zone or Offshore
How to choose between a mainland, free zone and offshore company, and the licensing, visa and compliance steps that follow.
Last reviewed 24 September 2026 · Updated · 6 min read
In short
Foreign investors can now own 100% of a UAE mainland company in most sectors, so the choice between mainland, free zone and offshore depends mainly on where you will trade and what the company is for. Mainland companies can trade across the UAE, free zone companies trade within their zone and internationally but need a distributor or mainland licence to sell locally, and offshore companies are mainly holding vehicles that, in JAFZA's case, cannot trade with persons in the UAE. Whichever you choose, the company must register for Corporate Tax within three months of incorporation and keep a register of its beneficial owners.
Can foreign investors own 100% of a mainland company?
Federal Decree-Law No. 26 of 2020 removed the requirement for a majority Emirati shareholder, and the rules are now consolidated in Federal Decree-Law No. 32 of 2021 on Commercial Companies. Foreign investors can own up to 100% of a mainland company in most sectors, and foreign company branches no longer need a UAE national service agent.
The exception is activities classed as having a 'strategic impact', such as security and defence, banking and insurance, and telecommunications. The UAE Government portal lists these, together with activities such as commercial agencies and fishing, as activities that cannot be wholly owned by foreign investors, and the Cabinet sets their licensing conditions.
Mainland licence types include commercial, industrial, professional, tourism, agricultural and crafts. The UAE Government portal also notes that businesses wholly owned by non-GCC nationals may need a UAE local service agent, so confirm the position for your activity and emirate.
What are the steps to set up a company on the mainland?
The UAE Government portal sets out the standard process, run by the economic department of each emirate. Investors can also apply online, for example through the Basher platform. The usual order is:
- Choose the business activity. It decides the legal form and the type of licence.
- Choose the legal form, such as a limited liability company (LLC).
- Register a trade name with the economic department of your emirate.
- Get initial approval, which confirms the government has no objection to the business but does not yet let it trade. Foreign investors first need approval from the General Directorate of Identity and Foreigners Affairs.
- Sign the Memorandum of Association or, where the business needs one, a local service agent agreement.
- Rent premises. Every business needs a physical address, and in Dubai the tenancy contract must be registered with Ejari.
- Get any further approvals your activity needs, then collect the business licence.
- Open a corporate bank account, which follows the licence.
- Apply for Corporate Tax registration within three months of incorporation, and submit the register of beneficial owners within 60 days of licensing.
- Apply for residence visas for owners and staff.
How do free zone companies work?
Free zones allow companies to be fully owned by foreign investors. Common forms include the Free Zone Establishment (FZE), the Free Zone Company (FZ Co.) and branches of local or international companies, although not every free zone registers every type.
Access to the mainland market is regulated. To sell goods or services locally, a free zone company generally needs a licensed mainland distributor or a mainland branch or company. In Dubai, it can also apply for a licence or permit from the Department of Economy and Tourism under Executive Council Resolution No. 11 of 2025. Goods become subject to UAE customs duty only if they move into the mainland market.
For Corporate Tax, a free zone company can be a Qualifying Free Zone Person and pay 0% on qualifying income, provided it meets conditions that include adequate substance and audited financial statements. Other income is taxed at 9%.
What are offshore companies used for?
Offshore registries, such as JAFZA Offshore and RAK ICC, are used mainly for holding shares, property and international structures. A JAFZA offshore company receives a certificate of incorporation rather than a business licence and cannot carry on commercial activity with persons in the UAE.
JAFZA issues its offshore companies a No Objection Certificate to own property, so they can be used to hold real estate. Offshore companies are not outside the tax system: they remain subject to UAE Corporate Tax at 0% or 9% depending on taxable income.
How do mainland, free zone and offshore companies compare?
The main differences, as set out in the sections above:
| Mainland | Free zone | Offshore | |
|---|---|---|---|
| Main use | Trading anywhere in the UAE | Trading within the zone and internationally | Holding shares, property and international structures |
| Selling to the mainland market | Yes | Through a licensed mainland distributor, or a mainland branch or company, unless it holds mainland licences or approvals | Not with persons in the UAE, in JAFZA's case |
| What it receives | A mainland licence: commercial, industrial, professional, tourism, agricultural or crafts | Registration in its free zone, for example as a Free Zone Establishment (FZE) or Free Zone Company (FZ Co.) | A certificate of incorporation, not a business licence (JAFZA) |
| Corporate Tax | 0% up to the threshold and 9% above it | 0% on qualifying income for a Qualifying Free Zone Person, 9% on other income | 0% or 9%, depending on taxable income |
| Corporate Tax registration | Within three months of incorporation | Within three months of incorporation | Within three months of incorporation |
How do owners and staff get residence visas?
Owners and partners can obtain residence through their company. The five-year Green Visa is available to investors and business partners, and in Dubai the GDRFA requires the investor's paid share to be at least AED 1 million. Investors with at least AED 2 million in a UAE company may qualify for the 10-year Golden Visa.
Employees normally hold a standard work visa, valid for two years and renewable, for which the employer applies.
How do you open a bank account and stay compliant?
A corporate bank account is opened after the licence is issued. You can bank with local or international banks operating in the UAE, and each bank sets its own documents and checks. Once trading, the main compliance points are:
- Corporate Tax: apply for registration within three months of incorporation, even if no tax is expected.
- VAT: register once taxable supplies and imports exceed AED 375,000 over 12 months.
- Beneficial ownership: record anyone who owns or controls 25% or more, submit the register to the registrar within 60 days of licensing, and record changes within 15 days (Cabinet Decision No. 109 of 2023, which does not apply in the financial free zones).
- Audited accounts: required for Corporate Tax where revenue exceeds AED 50 million, and from every Qualifying Free Zone Person and Tax Group.
- Economic Substance Regulations: reporting was cancelled for financial years ending after 31 December 2022, but obligations and penalties for earlier years remain.
Frequently asked questions
Can a foreigner own 100% of a UAE mainland company?
Yes, in most sectors. Activities classed as having a strategic impact, such as banking, insurance, telecommunications, and security and defence, cannot be wholly foreign-owned and need additional approvals.
Can a free zone company trade in mainland UAE?
Not directly in most cases. It must use a licensed mainland distributor or set up a mainland branch or company, unless it holds the required mainland licences or approvals.
Do I still need to file an Economic Substance report?
No. Economic Substance reporting was cancelled for financial years ending after 31 December 2022. Companies remain responsible for earlier years, and substance still matters for free zone companies claiming the 0% Corporate Tax rate.
When must a new company register for Corporate Tax?
A UAE company incorporated on or after 1 March 2024 must apply within three months of incorporation. Late registration carries a penalty of AED 10,000, so registration should follow promptly after licensing.
How Indigo Group can help
Indigo Group can help with company formation across the UAE emirates, branch and representative offices, SPVs and holding companies, and visa processing through our Corporate Services team. We also handle VAT registration and filing, and Corporate Tax filing, so the compliance steps follow on from the licence. Indigo Group's regulated entity, Indigo Financial Analysis and Consultancy LLC, is licensed by the UAE Capital Market Authority (CMA), licence no. 706042.
Read more about our company formation and business set-up services in the UAE.
To talk this through, book a consultation or message us on WhatsApp.
Related guides
Sources
- Full foreign ownership of commercial companies, The Official Platform of the UAE Government (u.ae)
- Steps to start a business on the mainland, The Official Platform of the UAE Government (u.ae)
- Running a business in a free zone, The Official Platform of the UAE Government (u.ae)
- Starting a business in a free zone, The Official Platform of the UAE Government (u.ae)
- RAK ICC Foundations FAQs, RAK International Corporate Centre
- Green visa, The Official Platform of the UAE Government (u.ae)
- Green visa issuance (investor/partner), GDRFA Dubai
- Issuing a golden residence permit (investors), GDRFA Dubai
- Work visa, The Official Platform of the UAE Government (u.ae)
- Banking, The Official Platform of the UAE Government (u.ae)
- FTA Decision No. 3 of 2024 on the Timeline for Corporate Tax Registration, Federal Tax Authority
- Corporate Tax Registration, Federal Tax Authority
- Registration for VAT, Federal Tax Authority
- Cabinet Decision No. 109 of 2023 regulating Beneficial Owner procedures, Ministry of Economy and Tourism
- Ministerial Decision No. 84 of 2025 on Audited Financial Statements, UAE Ministry of Finance
- Basic Tax Information Bulletin: Free Zone Persons, Federal Tax Authority
- Ministry of Finance announces amendment to Cabinet Decision on Economic Substance Requirements, UAE Ministry of Finance
- Offshore Company Letters, Jebel Ali Free Zone (Jafza)
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (consolidated, January 2026), UAE Ministry of Finance
Last reviewed 24 September 2026. This article is for general information only and does not constitute financial, legal or tax advice. Rules change, so please speak to a qualified adviser about your circumstances.
