To form a company in the UAE, foreign investors must choose between setting up on the mainland, in a free zone, or as an offshore company. The optimal choice depends on the business's activities, market access needs, and budget. Recent reforms have made 100% foreign ownership possible in both free zones and the mainland for many business activities. Key business entity structures Mainland company A mainland company is licensed by the Department of Economic Development (DED) in the relevant emirate and can operate anywhere in the UAE. Ownership: Foreign investors can hold 100% ownership in most commercial and industrial sectors, removing the need for a local Emirati partner. Market access: These companies have unrestricted access to the entire UAE market and can engage in government contracts. Physical office: A physical office or workspace is generally required to secure a mainland license. Free zone company Free zones are designated economic areas offering international investors special incentives. The UAE has numerous free zones, each with its own regulating authority and specific rules. Ownership and taxes: Free zone companies benefit from 100% foreign ownership and full repatriation of capital and profits. Many free zones offer tax exemptions. Market access: Historically, free zone companies were restricted to operating within their zone or internationally. Recent reforms, such as Dubai's Executive Council Resolution No. 11 of 2025, now allow many free zone companies to operate in mainland Dubai by obtaining a special permit. Cost and visas: They offer affordable startup packages and streamlined visa processing. Flexi-desk and shared office space options are available and often included in the package. Offshore company Offshore companies are virtual entities registered in the UAE for international business and asset protection, not for trading within the local market. Benefits: These companies offer 100% foreign ownership, privacy, asset security, and tax incentives. They can hold bank accounts in the UAE. Limitations: Offshore companies do not grant residence visas and cannot conduct business within the UAE. Office requirement: No physical office space is required. The company formation process Define your business activity and license type: Clearly outline your business activities, as this will determine the type of license you need (e.g., commercial, professional, industrial) and the best jurisdiction (mainland or free zone). Select a business jurisdiction: Choose between a mainland, free zone, or offshore setup based on your business model, customer base, and market access needs. Choose and register a trade name: Propose a unique company name that complies with UAE naming conventions. Your trade name must be followed by the company's legal form (e.g., LLC, FZE). Complete the application and documents: Gather required documents, including passport copies, a visa, and a business plan. The application is submitted to the relevant authority (e.g., DED for mainland, specific free zone authority). Secure office space: Based on your jurisdiction and license, you will need a physical office, shared workspace, or a virtual option. Open a corporate bank account: Once your license is issued, you can open a corporate bank account in a local UAE bank to manage your business's financial transactions. Apply for visas: If you need to reside and work in the UAE, you can apply for an investor visa. This process includes status change, medical examination, and biometrics. Complete post-setup compliance: Register with the Federal Tax Authority for VAT if your annual turnover exceeds AED 375,000 and set up accounting and bookkeeping systems. Using a business setup consultant Working with a business setup consultant can simplify the process, especially for foreigners navigating the paperwork, approvals, and legal requirements. Consultants can offer expert guidance and handle most of the procedures on your behalf, often making the process quicker and more efficient.
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