Dubai Company is your partner for efficient company formation solutions in Dubai & the UAE. Let one of our incorporation experts advise you on how we can support you.
Self-employed people and entrepreneurs worldwide are continuously looking for ways to optimise their tax burden and increase their financial efficiency. In this context, Dubai and the United Arab Emirates, as an internationally recognised business location, open up a particularly attractive perspective.
By setting up a company in the UAE, you take the first step towards effectively reducing your tax burden. The business-friendly tax legislation in the UAE allows you to reduce the tax burden of your company to a minimum. In many cases, with the right company structure, it is even possible to operate completely tax-free. This strategic step opens up immense opportunities for you to organise your business activities efficiently and profitably.
Dubai and the UAE are known for their economic attractiveness and business-friendly environment. Setting up a company in this emerging region immediately brings with it many direct benefits that enable companies to grow efficiently and expand their businesses profitably.
One of the most important considerations when setting up your own business in Dubai is choosing the right type of company. Here you have three main options: Mainland company, Freezone company and Offshore company. Each legal form has its own advantages and disadvantages, with the right choice depending on the business activity carried out by your company, the intended trading partners, ownership structure and other factors.
Establishing a Freezone company is an attractive option for companies that want to focus on the international market and conduct their business mainly outside the UAE. The UAE offers a wide range of free trade zones covering different needs and industries.
A Mainland company is the best choice for companies that mainly want to serve customers locally in the UAE. Mainland companies usually have higher tax rates than Freezone companies, but they are the only type of company that has unlimited access to the local market and a larger customer base.
Establishing a Offshore company in Dubai is a strategic solution that can be used for certain forms of tax planning and is relevant for companies that wish to conduct international business, effectively protect assets and benefit from a business-friendly environment.
If you are considering setting up a business in Dubai or the UAE, it is important to know the differences and advantages between a Freezone, Mainland or Offshore construction. Below is a brief overview of the most important factors.
| Freezone | Mainland | Offshore | |
|---|---|---|---|
| Property | 100% Property Freezone Companies can be 100% foreign owned. Foreign individuals or entities can fully own and control the company without the need for a local sponsor or partner. | 100% Property (as a rule) Meanwhile, Mainland companies can also be 100% foreign-owned. Only some very specific business activities still require a local Emirati partner or sponsor holding a significant stake in the company. | 100% Property Offshore Companies can be 100% foreign owned. Foreign individuals or legal entities can fully own and control the company without the need for a local sponsor or partner. |
| Taxation | 0% Taxes possible For most business models, Freezone companies are fully exempt from taxes for a certain period, usually up to 50 years. | 9% Corporate income tax, 5% VAT. Mainland Companies are subject to corporate tax of 9%, but only on profits earned domestically locally in the UAE and only on profits exceeding AED 375,000. 5% VAT is levied on goods & services supplied in the local UAE market. | 0% Taxes Offshore companies are fully exempt from all taxes. |
| Foreign business | Unrestricted foreign business Freezone companies have unrestricted access to international markets and are also usually completely exempt from all customs duties on imports and exports. | Unrestricted foreign business Mainland companies have unrestricted access to international markets. | Unrestricted foreign business Offshore Companies have unrestricted access to international markets. |
| Domestic business | Restricted domestic business Freezone companies have limited access to the local UAE market. Generally, you can only do business within your designated free zone and outside the UAE. | Unrestricted domestic business Mainland companies have unlimited access to the UAE local market, including the government and private sectors, without the need for intermediaries. | No domestic business Offshore companies are generally not allowed to conduct direct business activities in the UAE local market. |
| Profit repatriation | Unlimited profit repatriation Freezone Companies can repatriate capital and profits to 100% and without any restrictions to their home country or to any other country abroad. | Unrestricted profit repatriation (after tax) Mainland Companies can repatriate capital and profits (after tax) at 100% and without any restrictions to their home country or to another country abroad. | Unlimited profit repatriation Offshore Companies can repatriate capital and profits 100% and without any restrictions to their home country or to another country abroad. |
| Visa entitlement | UAE Resident Visa Option Several residence visas can usually be applied for through one Freezone company. Most Freezoness offer licence packages that include a certain number of visas - often up to 6 visas per company. | Option for unlimited UAE Residence Visa Mainland Companies can theoretically apply for an unlimited number of employee residence visas. However, the maximum number of visas usually depends on the size of the company. | No eligibility for residence visas Offshore Companies generally do not provide direct entitlement to a residence visa. |
| Operating site | Physical premises required Freezone companies usually need to have a physical presence in their respective Freezone. In each Freezone, there is therefore a wide choice of office spaces, ranging from virtual desks to offices and flexi-desks. | Physical premises required Mainland Companies must have a physical presence within the UAE. | No physical premises required Offshore UAE companies are not required to have a permanent establishment in the UAE. |
| Location flexibility | Within the Freezone Freezone companies are limited to the boundaries of the respective Freezone in which they are registered. They cannot establish a presence outside the jurisdiction of the respective Freezone. | Free choice of location throughout the UAE Mainland companies have the opportunity to establish themselves anywhere in the UAE. | Worldwide For a Offshore company, it does not matter where the company operates from. |
| Remote foundation | Remote foundation of your company possible Freezone companies can be incorporated remotely, i.e. you do not need to be physically present in Dubai or the UAE to incorporate the company. The incorporation process can be initiated and completed remotely by authorised company formation agents and service providers. | Presence required for foundation For Mainland companies, it is usually required that at least one shareholder or legal representative is present for the incorporation in Dubai or the UAE. This person may need to visit government offices, attend meetings and comply with other legal and administrative requirements related to the incorporation of the company. | Remote foundation of your company possible Offshore companies can be incorporated remotely, which means you do not need to be physically present in Dubai or the UAE to set up the company. The incorporation process can be initiated and completed remotely through authorised agents and business setup service providers. |
| Opening an account | Relatively hassle-free account opening For Freezone companies, a company account can be opened in the UAE in most cases. With the right support, this normally complex and time-consuming process can be carried out in a straightforward and expeditious manner. | Problem-free account opening Mainland companies can open a company account in the UAE with relative ease. With the right support, this normally arduous process can be straightforward and smooth. | Rather difficult account opening Offshore companies can open a corporate account in the UAE or in international jurisdictions. However, most banks have strict limitations or restrictions on opening accounts for Offshore companies. |
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