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Mainland vs Free Zone vs Offshore: Which Business Setup is Right for You in the UAE?

What is Mainland setup?

  1. Mainland companies operate under the local Department of Economy (or equivalent) and can trade anywhere in the UAE.
  2. Key features: Access to local UAE market, more license types, local sponsor or agent may still be needed depending on activity (although reforms are ongoing).
  3. Considerations: Often higher cost, more regulatory/office footprint requirements than some Free Zones.
 

What is Free Zone setup?

  1. Definition: Special economic zones in the UAE where registered companies enjoy specific incentives and regulatory regimes.
  2. Key advantages (2025 updates): 100% foreign ownership, full profit/capital repatriation, streamlined set-up.
  3. Limitations: Free-zone companies typically have restrictions on trading directly into the UAE mainland (unless via distributor/agent) and may require separate license to service mainland.
  4. Recent update: Dubai Resolution No. 11 of 2025 allows free-zone entities to more easily operate outside their zone.
 

What is Offshore setup?

  1. Definition: A company registered in UAE (often in a free zone or offshore jurisdiction) but intended to carry business outside UAE or hold assets rather than trade within UAE.
  2. Advantages: Asset-holding, privacy, tax efficiency.
  3. Considerations: Cannot carry out business in UAE local market, may face banking or substance requirements.
 

Comparison Table (2025 Snapshot)

Which should you choose?

  1. Ask: Where is your customer base (UAE-local vs international)? What activities do you want to carry out (trading, manufacturing, holding)? What budget/office requirement do you have?
  2. For startups focused on international trading or digital business: Free Zone often fits.
  3. For business targeting UAE domestic market: Mainland may be necessary.
  4. For holding or investment vehicles: Offshore may work best.
  5. Also consider cost, visa quota, regulatory compliance, substance rules (especially post-2023 CT & TP environment).
 

2025 Key Updates You Must Know

  1. Free Zone reforms: Dubai’s Resolution No. 11 of 2025 streamlines ability of FZ entities to operate outside zone.
  2. Corporate Tax regime in UAE: Even Free Zone companies must meet substance and qualifying income criteria.
  3. Increasing emphasis on substance, real economic activity, and regulatory compliance for all forms of setup.
 

FAQs

Can a free-zone company trade freely in the UAE mainland?

Not automatically — usually need local distributor/agent or a mainland entity unless the zone offers specific permissions.

 

Is full foreign ownership available everywhere?

Yes, in most Free Zones; Mainland rules vary by activity.

 

Which is cheaper to set up?

Free Zone setup often offers lower cost or flexible office options; Mainland may cost more due to office/visa/agent costs.

 

Conclusion

Choosing the right jurisdiction is not one-size-fits-all. Map your business goals, market, budget, and compliance capacity, then select the model that provides the best trade-off. As your consulting partner, Think Biz Management Consultancies can guide on the best setup for your specific case and help navigate the nuances of 2025’s updated regulations.

Schedule a private consultation today.

 

Contact us today for a free consultation.

Contact number: ‪+971 50 983 0334

Email ID: info@thinkbizpro.com

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