There is no doubt that Dubai continues to shine as a modern city with easy rules in setting up a business, which is why it’s attracting entrepreneurs from everywhere. But picking the right way to setup your business in Dubai: mainland, free zone, or offshore, can make or break your plans. I have to tell you that each option has its own perks and drawbacks, depending on what you want to do. In this article, we’ll break it down simply and help you decide which one is the right option for your business. We’ll look at ownership, costs, taxes, operations, and more. Remember, the “best” choice isn’t one-size-fits-all; it depends on your goals, like trading locally or going global.
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What is a Mainland Company Setup?
A mainland company setup lets you run your business anywhere in the UAE, not just in special zones. It’s registered with the Department of Economic Development (DED) in Dubai. There were some changes in the legalities in 2021, and it was updated recently in 2025, so as of now, foreign owners can hold 100% of the company in most fields, like tech or retail, without needing a local partner. But some areas, like oil or banking, still require backing from any UAE nationals.
Pros:
- You can sell directly to customers across the UAE market, which is huge, I mean, give or take it would be somewhere 10 million people.
- No limits on where you operate or who you hire.
- In the mainland, it is easier to get government contracts.
Cons:
- You must follow UAE labour and tax rules strictly.
- Setup costs are higher because you need a physical office lease.
According to a report published on the executivecentre.ae website, mainland companies face VAT and other tax laws but can trade freely across the UAE. So, imagine you’re starting a coffee shop chain. You want to open branches in malls and sell to locals in Dubai and Abu Dhabi. Mainland is ideal here because you can deal directly with UAE customers without middlemen. But you might have to pay around AED 10,000-20,000 in setup fees, plus ongoing office rent.
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What is a Free Zone Company Setup?
Free zones are basically special areas in Dubai, like Dubai Media City or Jebel Ali Free Zone, designed for certain industries. There are many free zones in Dubai; as of 2025, the number is 45. In these zones, you get 100% foreign ownership, no questions asked, and big tax breaks. But your business is mostly for export or serving other free zone companies. If you want to do trading in the local UAE market, you are going to need a distributor or extra permits.
Pros:
- No corporate tax on profits from qualifying activities, and no import/export duties in the zone.
- Quick setup, often in days, with visa perks for employees.
- Modern facilities and industry clusters, like tech hubs.
Cons:
- Restricted from direct local sales without extra steps.
- You might need to renew licenses yearly, and some zones limit activities.
According to a report published on the dmcc.ae, free zone business setup offers different ownership structures and lower setup costs compared to the mainland. Say you’re launching an e-commerce business selling gadgets online to customers worldwide. A free zone like Dubai CommerCity is the best choice, you get tax-free profits on exports, easy visas for your team, and setup costs around AED 10,000-15,000. But if you want to sell to UAE locals, you’ll need a mainland partner to handle distribution, and it is going to be some hassle. However, keep in mind that companies in UAE free zones can save up to 40% on setup costs compared to mainland companies.
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What is an Offshore Company Setup?
Offshore companies are for international business only, registered in places like Ras Al Khaimah (RAK) or Ajman free zones. They’re not for operating inside the UAE, you can’t have offices or employees here, and that is why the majority of offshore business setup companies are those that require port access for their business. Think of them as paper companies for holding assets, trading abroad, or banking.
Pros:
- Full privacy, no public shareholder info.
- Zero taxes on worldwide income, and super low setup costs.
- No need for physical presence or audits in many cases.
Cons:
- No UAE residency visas or local banking (though you can open a bank account internationally).
- Can’t trade or hire in the UAE at all.
According to a report published on the sntpartners.ae, offshore setups are the cheapest, followed by free zones, with mainland costing more due to office leases and taxes. Imagine you’re a real estate investor from Europe with properties in multiple countries. An offshore setup in RAKEZ lets you hold those assets tax-free, with RAKEZ offshore business setup fees as low as AED 10,000-20,000. It’s excellent for protection and privacy, but if you want to buy property in Dubai, you’ll need a separate mainland entity; offshore won’t cut it for local deals.
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Key Comparisons in 2025
Here’s a simple breakdown to compare the three. Costs and rules can change, so always check with experts.
| Aspect | Mainland | Free Zone | Offshore |
| Ownership | 100% foreign in most sectors | 100% foreign always | 100% foreign always |
| Operations | Anywhere in UAE, local trading OK | Mostly exports/free zones; local via partners | International only, no UAE ops |
| Taxes | 9% corporate tax on profits over AED 375,000; 5% VAT | 0% corporate on qualifying income; VAT if applicable | 0% taxes generally |
| Setup Costs | AED 20,000-50,000 (higher due to office) | AED 15,000-35,000 | AED 10,000-25,000 (lowest) |
| Visas | Up to 10+ per company | 3-6 per office space | None available |
| Setup Time | 1-2 weeks | 3-7 days | 1-3 days |
According to a report published on thevistacorp.com, the mainland requires a physical office, while free zones and offshore have fewer space needs. This might save you some money.
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Some examples of what zone to choose
Let’s get practical with examples based on common 2025 business types.
- Local Retail or Services: Go mainland. A salon owner wants to serve customers in Dubai directly. A free zone would force you to use agents for local sales, adding costs. Offshore? It is not going to be possible since you need a physical spot.
- Export-Focused Manufacturing: Free zone wins. For example, A clothing maker exporting to Europe benefits from tax exemptions and logistics in Jebel Ali. Mainland might work, but with higher taxes, and offshore can’t handle production.
- Holding or Investment Company: Offshore is the top choice. An investor managing stocks abroad gets privacy and no taxes. But if they need UAE visas for family, you might have to combine with a free zone setup.
- Hybrid Approach: Many do this now. A trading firm uses a free zone for imports/exports and a mainland branch for UAE sales. It’s realistic for growth, but doubles some costs.
Which One is the Best in 2025?
There’s no single “best”; it depends on your setup. For most businesses, people aim for a quick, low-cost solution with a global focus; free zones are often the winner in 2025. But if you want to target the citizens directly, then the mainland is the top choice no matter what.
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According to a report published on the jsb.ae, free zones suit Europeans for benefits like 100% ownership, while offshore is for privacy, and that makes sense since offshore shines for pure international or asset protection plays. But, I would suggest you think ahead: Dubai’s economy grew 3.5% in 2025, driven by tourism and tech, so pick based on your industry. Always double-check with official sources. If you’re having trouble figuring it out, perhaps consulting with experts in business setup, such as Universus Consulting, can fast-forward your entire process.