Business License in UAE – Free Zone vs. Mainland vs. Offshore

In the competitive business scenario of the United Arab Emirates, entrepreneurs must select the appropriate business license option. This overview will explore the distinctions between Free Zones, Mainland business setups in Dubai, and Offshore setups by providing valuable insights into each alternative’s advantages, requirements, and considerations.

Business License in UAE – Free Zone vs. Mainland vs. Offshore

Free Zone License in the UAE

Free zones in the United Arab Emirates are specific areas that offer multiple incentives and advantages to businesses that look forward to seeking to establish a presence in the region. These zones are specifically designed to attract foreign investment and promote economic diversification.


100% Foreign Ownership

Open business in Dubai free zone as it is fully owned by foreign investors without the assistance of a local sponsor or partner.

Tax Benefits

Free zone are exempted from any corporate and personal income taxes for particular tenure which often ranges from 15 to 50 years.

Custom Duty Exemption

Goods that are imported into Free Zones are always exempted from customs duties, which makes them ideal for companies that are involved in import-export activities.

Repatriation of Capital and Profits

Open business in Dubai free zone to fully enjoy repatriation of capital and profits, which helps them to transfer funds without any hindrances.

Simplified Procedures

Free zones often streamline registration and licensing procedures that help businesses set up operations swiftly and efficiently.

Modern Infrastructure

Free zones offer state-of-the-art infrastructure that includes office spaces, warehouses, and manufacturing facilities, which are equipped with advanced technologies and amenities.

Types of Licenses

Trading License

Set up a company in Dubai free zone which are engaged in buying, selling, and distributing goods within the free zones and internationally

Industrial License

Manufacturing and industrial activities that include production and assembly of goods.

Service License  

Service-oriented businesses such as consultancy, IT services, marketing, and media

Offshore License

Free zones offer offshore company setups that offer tax optimisation and asset protection benefits.

Free Zones in the UAE continue to attract foreign investors who are seeking to capitalize on the region’s strategic location, business-friendly policies, and lucrative incentives. Set up a company in the Dubai free zone as they serve as an ideal platform for businesses to thrive and expand in the dynamic Middle Eastern market. 

Mainland License in the UAE

Mainland in the United Arab Emirates refers to the area outside the designated Free Zones, which provide a distinct business setup option with its own set of advantages and considerations.


Access to the wide marketplace

Mainland business setup in Dubai operates across the entire UAE, this helps in tapping into a diverse consumer base and access government contracts and tenders.

No restrictions on business activities

On the contrary to free zones, mainland businesses are not limited to the activities they undertake. This offers greater flexibility and diversification.

Potential for government contracts

Mainland companies are eligible to bid for government initiatives, which helps in providing opportunities for appealing business ventures.

Flexibility in selecting a location

Mainland business setups in Dubai have the flexibility to select their preferred location. They can opt for their location considering factors like proximity to clients, suppliers and workforce.

Cultural and Market Integration

Operating in the Mainland allows businesses to work closely with local culture and market dynamics, which helps foster strong relationships and networks.


Local sponsorship requirements

Company setup in Dubai mainland should have a local sponsor who typically holds a 51% share in the business.

Compliance with UAE Laws

Mainland businesses must always adhere to all the UAE Federal Laws and regulations. This counts on labor laws and commercial regulations.

Higher Operating Costs

Mainland setup may involve higher operating costs compared to free zones. The costs usually include sponsor fees, office rent, and license fees.

Establishing a business in the UAE Mainland offers entrepreneurs access to the wide marketplace. They offer greater flexibility and opportunities for growth and expansion. Although the setup process may be quite tedious, the potential rewards from operations in the Mainland make it an attractive option for entrepreneurs.

Off-Shore License in the UAE

Offshore company formation in the United Arab Emirates offers alternative business setup options. They provide distinct merits primarily in terms of tax optimization, asset protection, and confidentiality.


Tax Optimization

Offshore companies are usually exempt from corporate and personal income taxes. They offer substantial tax savings for international business plans.

Asset protection

Offshore structures offer enhanced asset protection that shields assets from potential legal liabilities and credit claims.


Offshore jurisdictions in the UAE always give priority to confidentiality and privacy. With strict regulations that govern the disclosure of companies information and beneficial ownership.

Easy and Simplified Incorporation Process

While setting up an offshore company in the UAE, you can expect to engage in a straightforward and streamlined process, with minimal bureaucratic obstacles and documentation requirements.

No Requirement for Physical Presence

Offshore companies are not required to have a physical office place in the UAE. This allows for cost savings and operational flexibility. 

Setup Process

Selection of offshore jurisdiction

Select the offshore jurisdiction in the UAE that aligns best with your business objectives and requirements.

Registered Agent Appointment

Engage the services of professional registered agents that are authorized to offer offshore company formation in the specific jurisdiction.

Submission of Documents

Furnish all the documents that are necessary for the procedure, this includes passport copies, proof of address, and other personal details like shareholders’ and director’s details.

Minimum Capital Requirements

Fulfill any minimum capital requirements set by the offshore jurisdiction.

Appointment of Directors and Shareholders

Appoint directors and shareholders for your offshore establishment to ensure compliance with local regulations.

Issuance of Incorporation Documents

After approval, the offshore company will be issued with incorporation documents. This includes a certificate of incorporation, memorandum, and article of association. 


Restrictions on Business Activities

Offshore companies frequently encounter limitations on conducting business within the UAE. It limits involvement in certain activities.

Compliance Requirements

Offshore companies must adhere to the laws and reporting requirements of the chosen jurisdiction. This includes annual filing and renewal fees.

International Perception

Offshore structures may face scrutiny from international regulatory authorities and stakeholders due to perceptions of tax evasion or avoidance. Consequently, these entities must navigate complex legal and regulatory landscapes.

Offshore company formation in the UAE offers attractive options for businesses on an international level. They seek tax optimization, asset protection, and confidentiality. With their favorable regulatory environment and streamlined setup process, entrepreneurs can exploit the strategic platform for global expansion and wealth management.

Visit us at NH Management for comprehensive information.

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