Which UAE License is Right for You? Mainland vs Freezone vs Offshore — Expert Insights

 

Hello everyone! This article is about the differences between a Mainland, Free Zone, and Offshore business license. My name is Malika and I’m a Business setup Consultant at Radiant Biz.

Can you briefly explain what Mainland, Free Zone, and Offshore company structures in the UAE are?
Sure! The biggest differentiator between Mainland, Free Zone, and Offshore depends on your business activity. For example, if you’re doing business locally — trading in Dubai, Sharjah, Ajman, or any of the Emirates — and you want to tie up with the government in the future, then a Mainland license is best suited.
If you’re doing trading and distribution, and want to re-export — say importing from the UK and reselling in India — a Free Zone license suits best.
However, with an Offshore company, you cannot do business inside the UAE. Offshore is for international business only.

What about ownership?
With a Mainland license, you can get 100% ownership, but certain activities may require a local service agent or 51% shareholding by a local.
In Free Zone and Offshore structures, you get 100% ownership.

Why is it important to understand the difference before starting a business?
It’s crucial to understand your business activity first. Based on that, we recommend the right jurisdiction. Unlike other countries, each UAE jurisdiction and Emirate has its own regulations and compliance requirements.

Can a foreigner own 100% of a company in each jurisdiction?
Yes, foreigners can own 100% in all three structures. However, some Mainland activities still require a local service agent or 51% Emirati ownership — especially industrial licenses.

What roles do local sponsors or agents play in Mainland companies?
Previously, local sponsorship or agents were mandatory. Now regulations are lenient. Adding a local agent may reduce license costs and increase your credibility — especially when applying for government projects.
Local service agents don’t have shareholding — they are paid an annual fee and only provide documentation.

Where is each type of company allowed to operate — locally, regionally, or internationally?
Mainland: You can operate locally and internationally.
Free Zone: Primarily B2B and international. With special approval, Free Zone businesses can also operate in the Mainland.
Offshore: Only international operations are allowed.

Can a Free Zone company trade directly with the UAE Mainland?
Traditionally, no. But now with government approval, Free Zone companies can do business in the Mainland too. RadiantBiz helps clients acquire this special approval.

What activities are allowed in each jurisdiction?
There’s a vast list.

• Manpower supply? Only Mainland.
• Retail/showroom business? Depends on location — Mainland if the shop is in non-Free Zone areas.
• Car trading or repair? Depends on the chosen area (e.g., Al Quoz = Mainland).
• Supermarket in BurJuman Mall? Requires Mainland license.
• Store in JLT? Requires DMCC (Free Zone) license.
  So location also influences the license type — not just business activity.

How flexible is each option for adding new activities?

• Mainland: Related activities only (e.g., trading + trading).
• Free Zone: Some allow mix-and-match like trading + consultancy.
• Offshore: No restrictions, since activities are international.

Do all three require physical office space?
Yes, to issue a license, office space is usually mandatory.

• Mainland: You can initially get a license without office space, but it must be arranged later.
• Free Zone: Flexi-desk options are available.
• Offshore: Office space is not mandatory, but a lease agreement is usually provided for license issuance.

What about bank accounts and taxation?
RadiantBiz specializes in opening corporate bank accounts for all types — Mainland, Free Zone, and Offshore.
Banking may seem complex, especially for Offshore, but RadiantBiz simplifies it.
Taxes:

• 5% VAT: Applies if revenue exceeds AED 375,000 (USD 100,000).
• 9% Corporate Tax: On net profit over AED 375,000.
• 0% Corporate Tax: If annual revenue is under AED 3 million.
• Free Zones: VAT is waived for Free Zone-to-Free Zone business (in designated Free Zones).
• Offshore: No VAT. 9% Corporate Tax applies on profits.

What documents are required to set up a company and how long does it take?
Basic documents:

• Passport copy
• Photograph
• Proof of address
• UAE residence visa & Emirates ID (if applicable)
• 3 proposed company names

Additional documents may include proof of income, bank statements, etc.
Timeline: Generally 4–5 working days for all types of setups.

Can you get investor or employment visas with each structure?

• Mainland: Visa quota depends on office size.
• Free Zone: Some offer visas with flexi-desk packages (3, 5, or 10 visas).
• Offshore: No visas, no office space, no UAE residency.

Final advice for someone unsure about business activity?
Always take a free 30-minute consultation with RadiantBiz. We assess:

• Your business goals
• Future plans
• Shareholding
• Space and employee needs

Based on this, we recommend the right license and jurisdiction.
Malika shares a client success story where a trader wanted a Mainland license but, after a consultation, started with Free Zone. Within 6 months, his business flourished, and he later expanded into multiple licenses.

Conclusion
UAE offers immense opportunity, but the right setup is crucial. If you have questions, drop them in the comments. If you know someone who would benefit from this info,