Free Zone vs Mainland vs Offshore: the three options
Mainland — a company registered with the emirate's economic department (DET in Dubai, ADRA in Abu Dhabi). It can trade across the whole UAE market.
Free zone — a company in one of the free zones, each with its own authority and rules. It suits international trade, services and holding activities with an office and visas in the UAE.
Offshore — a company that does not operate inside the UAE: it holds assets, shares or intellectual property. Registries include RAK ICC and JAFZA's offshore regime.
Comparison table
| Factor | Mainland | Free zone | Offshore |
|---|---|---|---|
| Where you can trade | the whole UAE market and abroad | within the zone and abroad; the UAE market via a distributor, branch or special permit | outside the UAE only |
| 100% ownership | yes, for most activities (except “strategic impact” activities) | yes | yes |
| Government contracts | available | usually via a mainland entity | no |
| Office | registered lease required | flexi-desk, office or warehouse in the zone | not required (registered agent) |
| Visas | yes, depending on office and approvals | yes, within the package/office quota | no |
| Corporate Tax | 9% on profit above AED 375,000 | 0% on qualifying income if Qualifying Free Zone Person conditions are met, otherwise 9% | standard rules for UAE residents |
| Banking | easiest to open an account | depends on zone and activity | hardest — no operating presence |
The table reflects the general rules; specific activities and emirates may have exceptions.
When the mainland makes sense
- Your customers are businesses and individuals in the UAE: retail, on-site services, construction, restaurants.
- You want to bid for government contracts.
- You need a larger team and an office anywhere in the emirate.
Since 2021, foreign investors can own 100% of a mainland company for most activities; “strategic impact” activities (banking, insurance, telecoms, defence and others) remain restricted or conditional. Some professional licences may require a local service agent.
When a free zone makes sense
- International trade, re-export, consultancy, IT, media, online business.
- You need visas for yourself and a small team with minimal office costs.
- The zone's focus matters — commodities at DMCC, logistics at JAFZA, financial services at DIFC or ADGM.
The 0% Corporate Tax rate is not automatic: the company must meet the Qualifying Free Zone Person conditions, including adequate substance in the zone and audited accounts. Selling to mainland customers needs separate structuring. See zone profiles in the free zone catalogue.
When offshore makes sense
- A holding company for shares in UAE or overseas companies.
- Owning property in areas open to such companies.
- Holding assets and intellectual property.
An offshore company gives no visas and no right to trade in the UAE, and banks apply stricter scrutiny. A UAE-incorporated company is still tax resident and must comply with Corporate Tax and beneficial ownership rules.
How we help you choose
At the diagnosis stage we look at where your customers are, how many visas you need, which banks will suit you and how profits flow. We then recommend a structure and jurisdiction with reasons and an estimate. We discuss tax in general terms rather than giving formal tax advice; where needed, this is covered under tax & compliance. For more, read our blog post “Free zone or mainland” and see company setup costs.
FAQ
Yes, with limits: through a local distributor, a mainland branch or, in Dubai, a separate mainland operating permit. The right option depends on the activity and the zone.
For most activities, no — 100% foreign ownership is allowed. Restrictions remain for strategic activities, and some professional licences may need a service agent.
A free zone company can apply 0% to qualifying income if it meets the Qualifying Free Zone Person conditions. Other income is taxed at the standard 9%.
No. Offshore companies do not sponsor residence visas and cannot operate inside the UAE.