Business setup in the UAE: mainland, free zone and offshore explained

Mainland means a company licensed by the economic department of an emirate and free to trade anywhere in the UAE. The UAE Government portal lists the licensing authorities: the Dubai Department of Economy and Tourism (DET, formerly DED), the Abu Dhabi Department of Economic Development (ADDED), the Sharjah Economic Development Department (SEDD), the economic departments of Ajman, Umm Al Quwain and Ras Al Khaimah, and Fujairah Municipality. Mainland companies take one of the legal forms in Article 9 of the Commercial Companies Law: general partnership, limited partnership, limited liability company (LLC), public joint stock company or private joint stock company. A single person may own an LLC (Article 71), and foreign companies may open a branch with a licence from the competent authority and approval from the Ministry of Economy and Tourism (Article 336).

Free zone means a company licensed by a free zone authority inside a designated area. The Ministry of Economy and Tourism states that entities established in free zones "shall be subject to the laws and regulations governing the respective free zone authorities" and lists the legal forms as Free Zone Limited Liability Company, Free Zone Company (FZC or FZCO) and Free Zone Establishment (FZE). Article 9(3) of the Companies Law confirms that every company established in the UAE, "including free zones and financial free zones", has UAE nationality. ADGM and DIFC are financial free zones under Federal Law No. 8 of 2004 and operate their own courts and regulators; they are not ordinary commercial free zones.

Offshore means a company registered at a corporate registry such as RAK ICC or the JAFZA Offshore section. These companies are formed through registered agents and are used for holding and structuring rather than for trading inside the UAE. Read our offshore page before assuming an offshore company can do what a licensed company does.

The UAE Government portal states that Federal Decree-Law No. 26 of 2020, in force from early 2021, "overhauled the UAE's Commercial Companies Law No. 2 of 2015 by permitting 100 per cent foreign ownership of mainland companies" and "removed the requirement for 51 per cent Emirati ownership or a local agent for most business activities". The changes were consolidated in Federal Decree-Law No. 32 of 2021, which is the current Companies Law.

The exception is activities of strategic impact. Article 10 of the Companies Law lets a Cabinet committee define these activities, and the competent authority in each emirate may set a UAE-national shareholding or board ratio for them. The portal lists the restricted categories as security and defence, activities of a military nature, telecommunications, banks, exchange, financing, insurance and currency production, plus commercial agencies, Hajj and Umrah organising, Holy Quran recitation institutes, and fish, natural pearl and marine animal catching. Dubai publishes its own restricted list on the Invest in Dubai portal.

One honest caveat: the portal's "Steps to start a business on the mainland" page still lists an attested service-agent contract for civil establishments and companies wholly owned by non-GCC nationals, while its foreign-ownership page says the local-agent obligation for foreign branches has been eliminated. Practice for professional and civil establishments varies by emirate. We explain the conflict on the mainland page and recommend confirming with the licensing authority for your activity rather than relying on either page alone.

A licence is issued for a legal form and a set of activities. The UAE Government portal, citing the Ministry of Economy and Tourism, lists six mainland licence types: industrial, commercial, professional, tourism, agricultural and crafts. Emirates add product names on top of those categories. Dubai lists industrial, commercial, professional, eTrader, dual, instant, SME and Intelaq licences; Abu Dhabi lists the Abu Dhabi trader, dual, freelancer, Mobdea, small producers, standard and virtual licences. The portal says there are more than 2,000 business activities to choose from.

In free zones the Ministry of Economy and Tourism lists commercial, consultancy or service, industrial, educational, media, e-commerce, offshore, freelancer, warehouse, innovation and manufacturing licences, among others. Each zone publishes its own activity list, and the same activity name can sit under different licence types in different zones.

Two rules apply everywhere. First, the trade name and the trademark are different registrations: the local economic department registers the trade name, the Ministry of Economy and Tourism registers the trademark. Second, an initial approval "does not grant the authority to run or practice the business activity"; you can operate only once the licence itself is issued.

A licence does not let you sponsor anyone. To issue residence visas for owners and staff, the company needs an immigration file, known as the establishment card, with ICP or, for Dubai files, GDRFA Dubai. A mainland employer that falls under the Labour Law also needs a MOHRE establishment file. The MOHRE service card requires a valid trade licence, a copy of the ICP establishment card, an approved rental contract (except for instant licences) and personal identification numbers for owners and authorised signatories; the signatory must also be authorised with ICP. MOHRE lists a Ta'qeem fee of AED 406 and a completion time of two working days.

Free zone companies obtain their establishment card through the free zone authority; the federal pages we read do not describe that process, so treat each zone's own guidance as the source. Visa capacity also differs. The Ministry of Economy and Tourism states that on the mainland "there is no limit to the number of visas", while in free zones "residency visas can be issued depending on the size of the office / workplace". Once the establishment card exists, the owner or partner applies for residence through the routes on our investor and partner visa page.

Corporate tax. The Corporate Tax Law (Federal Decree-Law No. 47 of 2022) applies to financial years beginning on or after 1 June 2023. The rate is 0% on taxable income up to AED 375,000 and 9% above it, with a different rate reserved for large multinationals under the Pillar Two framework. The Ministry of Finance states that all taxable persons, including free zone persons, must register for corporate tax and obtain a registration number, and must file a return within nine months of the end of each tax period. Registration deadlines follow FTA Decision No. 3 of 2024, and the FTA lists an administrative penalty of AED 10,000 for late registration. A free zone company only pays 0% on qualifying income if it meets the Qualifying Free Zone Person conditions, and it then loses the AED 375,000 band. The old "no corporate tax in free zones" line still appears on some government pages and many private sites; it is outdated.

VAT. VAT has applied since 1 January 2018 at 5%. The FTA requires registration when taxable supplies and imports exceed AED 375,000 over the previous 12 months or will do so in the next 30 days; voluntary registration opens at AED 187,500. Non-resident businesses making taxable supplies in the UAE must register regardless of value unless another UAE party accounts for the VAT. Full detail, including Small Business Relief and the free zone rules, is on our corporate tax and VAT page.

The table matches common situations to the structure the verified rules point towards. It is a starting point, not a substitute for checking your activity against the authority's list.

Authorities publish their own step lists, and the mainland list on u.ae has nine items. Across mainland and free zone formations the work falls into seven stages in this order. Each stage depends on the one before it.

1. Fix the activity and check it. Confirm the activity appears on the authority's list, whether it is regulated by a third body (for example the TDRA for telecoms, the Central Bank for finance, MOHRE for manpower supply) and whether it sits on the strategic-impact list.
2. Choose the jurisdiction and legal form. Mainland LLC, one-person company or branch; free zone FZE, FZCO or branch; or an offshore company. Use the mainland versus free zone comparison if the choice is not obvious.
3. Reserve the trade name and obtain initial approval. Trade names must carry the legal-form abbreviation, match the activity, avoid religious or government names and not already be registered. On the mainland, u.ae states that foreign investors must obtain GDRFA approval before the initial approval is issued.
4. Sign the constitutional documents. A mainland MOA must be drafted in Arabic and attested by the competent authority (Companies Law Article 14). Free zones issue their own MOA and articles, often for electronic signature.
5. Secure premises. All UAE businesses must have a physical address; in Dubai the lease is registered with Ejari. Free zones require office space, and the office chosen sets the visa allocation in most zones.
6. Pay for and collect the licence. On the mainland the licence must be paid for within 30 days of receiving the payment voucher, with the attested lease, MOA and any extra approvals submitted together.
7. Open the immigration and tax files. Apply for the establishment card (ICP or GDRFA Dubai, plus MOHRE where applicable), then the owner and staff residence visas, then register for corporate tax with the FTA within the FTA Decision 3/2024 timeline and for VAT once thresholds are reached. Bank account opening usually runs alongside this stage; no official page sets a timeline for it.

Use the business setup finder to narrow the structure and jurisdiction to your activity, visa needs and customer base, then read the page for that route. If you would rather talk it through, send us the activity, where your customers are and how many visas you expect to need, and a consultant will map the sequence for you with the official sources attached.