How Can I Set Up a Company in Dubai? – Mainland vs Free Zone vs Offshore

In recent years, Dubai has attracted a growing number of entrepreneurs, international firms and wealth management structures. Its appeal lies in a mix of tax efficiency, investor-friendly regulation, strategic location and ease of doing business. From tech startups and e-commerce brands to professional consultancies and global holding companies, the city offers a flexible base for a wide range of activities.

That flexibility, though, depends heavily on how the business is set up. Dubai offers three main structures: mainland, free zone and offshore. Each one comes with its own rules on ownership, licensing, permitted activities and market access. Some allow full trading rights across the UAE, others are more limited or specialised. This article breaks down the key differences to help you choose the model that fits your actual goals and operations.

Mainland setup: Full market access with onshore presence

A mainland company is registered with the Dubai Department of Economy and Tourism and is treated as an onshore business. It can trade across the entire UAE, open physical outlets, and take on government contracts. As a result of the 2021 amendments to the UAE Commercial Companies Law, most commercial and professional activities now permit full foreign ownership, with no need for a local partner or sponsor.

You must lease office space in Dubai and maintain an active business licence. The company falls under federal tax and regulatory rules, including corporate income tax and economic substance requirements where applicable. You also need to keep proper accounts and meet compliance deadlines set by the relevant authorities.

Mainland structures are most suited to businesses that deal with local clients, need visibility in the domestic market, or want the broadest operational scope. They offer the most access but also come with the most regulatory touchpoints. While recent changes let some free zone entities apply for mainland permits, those fall under separate rules and serve a different purpose.

Free zone setup: Independent structure, defined scope

There are over 40 free zones in the UAE, located across the different emirates, each operating as a self-contained commercial zone. They’re designed to attract foreign investors by offering 100% ownership, simplified setup and streamlined visa and licensing processes. Many also provide purpose-built infrastructure and cluster businesses by sector, making them a practical choice for tech, media, logistics and trading firms.

Each free zone sets its own rules, but none allow direct trading with the mainland by default. Companies can generally only sell to the UAE market through a local agent or distributor. That said, recent changes introduced under Executive Council Resolution No. (11) of 2025 now give some free zone businesses the option to apply for a permit from the Dubai Department of Economy and Tourism, allowing limited mainland activity without full relocation. This is covered in more detail in the next section.

For firms that export goods or provide cross-border services, free zones often offer a low-friction base with fewer regulatory steps. But those looking to target the local market at scale should weigh the licensing and structural limits carefully.

New mainland access for free zone firms

Executive Council Resolution No. (11) of 2025 introduced a new route for Dubai free zone companies to operate in the mainland without restructuring. Under the policy, most free zone entities, excluding DIFC financial firms, can apply to open a branch or obtain a DET-issued permit for specific mainland activities. Each case is subject to approval and financials and operations must remain separate across both sides of the business.

The permit is valid for one year and can be renewed. Both DET and individual free zones are expected to release lists of approved activities, which will shape how widely this model can be used.

This is a clear shift from previous workarounds such as dual licensing or appointing agents. Instead of setting up a new mainland entity or outsourcing local work, businesses can now formalise access through a more direct, regulated path. For some, it may replace the need for complex setups, though others may still need a full onshore presence depending on the scale and nature of activity.

Offshore companies: Asset holding and international structuring

Offshore entities such as RAK ICC, JAFZA Offshore, and Ajman Offshore are set up outside the UAE mainland and free zone regulatory frameworks. They’re built for asset holding, international structuring, or managing intellectual property. These companies can’t lease office space, sponsor visas, or conduct any business activity within the UAE.

They’re often used to hold Dubai property, company shares, or overseas investments, particularly in private wealth or cross-border planning. Compliance obligations are lighter than for mainland or free zone firms, but their use is also far more restricted.

Because they’re barred from trading or operating locally, offshore companies don’t suit active commercial ventures. Their role is structural, not operational. For many investors, they offer a clean separation between ownership and day-to-day activity, but only when used within the narrow scope allowed by local rules.

Choosing the right structure for your business

The right setup depends on what you do, where your customers are and how you plan to operate. If you need to lease space, hire staff, or sell in the local market, a mainland licence makes that easier. If you’re exporting, offering services remotely, or need a leaner setup, a free zone may be more practical.

Asset holding or international structuring points to an offshore vehicle. If you’re building an active business, consider how each option affects your tax exposure, compliance duties, and future plans.

In many cases, a hybrid structure works best. A free zone entity might handle core operations while a mainland branch or licence gives you the ability to trade across the UAE. Each part has a role, and getting the mix right can give you both reach and control.