Business Setup in the UAE
Choosing the right jurisdiction was our biggest challenge. MSL’s guidance was clear, transparent, and made the entire process simple.
Choosing Your Optimal Jurisdiction
Starting a business in the UAE – a global powerhouse of commerce – is a strategic move. However, your long-term success hinges on one crucial, initial decision: selecting the right jurisdiction.
FOUNDATION CONCEPTS
The 3 Core Structures Every Entrepreneur Must Understand
Before diving into specific Free Zones or Mainland options, you must first understand the three fundamental legal structures available in the UAE. Each serves a distinct business purpose—choosing the wrong one can cost you thousands in restructuring fees later.
Mainland Companies (DED Licensed)
FOR LOCAL MARKET DOMINANCE
Licensed by the Department of Economic Development (DED) in Dubai or equivalent authority in other Emirates.
✓ Unrestricted UAE Market Access
The only structure that grants you full, unrestricted trading rights across the entire United Arab Emirates. You can sell directly to consumers, bid on lucrative government contracts, open physical retail locations, and establish branches in any Emirate—without needing a distributor or local agent.
✅ Ideal For:
- Companies targeting UAE residents and businesses
- Retail operations requiring physical storefronts
- Government contractors and suppliers
- Service providers building local reputation
- Businesses requiring high visa quotas (10-50+ visas)
Free Zone Companies (FZ Licensed)
FOR INTERNATIONAL BUSINESS & TAX OPTIMIZATION
Licensed by specific Free Zone Authorities like DMCC, RAKEZ, ADGM across all seven Emirates.
✓ Key Advantage
- 100% Foreign Ownership – Zero local partner requirement
- 0% Corporate Tax* – On qualifying income from international trade
- 100% Profit Repatriation – No capital restrictions
- 0% Import/Export Duties – Within Free Zone boundaries
- Simplified Administration – Single-window approvals
- Flexible Office Solutions – From flexi-desk to warehouses
*Subject to qualifying criteria under UAE Corporate Tax Law
✅ Ideal For:
- International trading companies (import/export)
- Technology, software, and SaaS businesses
- Professional services (consultancy, legal, accounting)
- E-commerce businesses shipping globally
- Companies prioritizing tax efficiency
Startups requiring low initial capital
⚠️ Trading Restriction: Free Zone companies cannot sell directly to UAE Mainland customers without appointing a local distributor or establishing a Mainland branch. However, Free Zone-to-Free Zone and international trade face no restrictions.
Offshore Companies (IBC Structure)
FOR GLOBAL ASSET PROTECTION & HOLDING STRUCTURES
Non-operational entities for international transactions,registered in RAK ICC, Ajman Offshore, or JAFZA Offshore.
✅ Ideal For:
- Zero taxation on international income
- Maximum privacy and confidentiality
- Ideal for holding international assets
- No physical office requirementsInternational holding companies
🚫 CRITICAL RESTRICTION: Offshore companies are NON-OPERATIONAL within the UAE. They cannot:
- Open bank accounts in UAE (in most cases)
- Sponsor visas for UAE residence
- Conduct any trade within UAE territory
- Rent office space or establish physical presence in UAE
They are purely for international transactions and asset management.
Mainland vs. Free Zone: The Complete Comparison
The choice between Mainland and Free Zone directly affects your trading scope, ownership structure, and legal liabilities.
|
COMPARISON FACTOR |
MAINLAND COMPANY (DED) |
FREE ZONE COMPANY |
|---|---|---|
|
Ownership Structure |
100% foreign ownership for most professional licenses. Commercial/trading requires 51% UAE national partner (with IPA protection). |
100% Foreign Ownership guaranteed across all business activities. Zero local partner needed. |
|
Trading Scope |
✅ UNRESTRICTED access to entire UAE market, government contracts, direct B2C retail sales, open branches anywhere |
⚠️ RESTRICTED to other Free Zone companies and international markets. UAE Mainland requires local distributor or Mainland branch office |
|
Office Requirements |
Mandatory physical office with Ejari-registered contract. Minimum space based on activity & visa quota. |
Flexible options: Flexi-desk (2-6 visas), Shared office (6-15 visas), Dedicated space (15-50+), Warehouse facilities, Virtual office (some FZs) |
|
Corporate Tax (2024) |
9% Corporate Tax on taxable income exceeding AED 375,000. Small Business Relief for revenue under AED 3M. |
Often eligible for 0% Corporate Tax IF qualifying income derived from international trade and substance requirements met |
|
Visa Quotas |
HIGH quotas possible based on office size (typically 10-50+ visas), scalable with space expansion |
LIMITED by office package: Flexi-desk (2-6), Shared (6-15), Dedicated (15-50+). Additional quota requires higher office fees |
|
License Renewal |
More complex: Multiple government department approvals (DED, Municipality, Civil Defence). 4-6 week timeline |
Simplified: Single Free Zone Authority, centralized renewal, faster processing (1-2 weeks), less documentation |
|
Banking Access |
✅ EASIER: Local banks prefer DED companies, faster approvals, lower documentation burden |
⚠️ MORE CHALLENGING: Banks scrutinize Free Zone companies heavily, requires substance proof. |
|
Best For |
B2C Retail & E-commerce, Restaurants & Hospitality, Professional Services (legal, medical), Real Estate Agencies, Government Contractors, Local Trading & Wholesale |
B2B International Trading, Technology & SaaS, Consultancy (global), E-commerce (export focus), Logistics & Freight, Media & Creative Services, Manufacturing (export) |