Choosing the right jurisdiction is one of the most consequential decisions you make when it comes to setting up a company in the UAE. Lack of foresight in this regard could mean that you may be boxed out of local markets, face unnecessary regulatory hurdles, and lose the right to operate flexibly. On the contrary, a well-thought-out choice here could help you gain leverage in terms of strategic agility, cost efficiency, and various tax incentives.
Main Types of Business Licenses in Dubai
Mainland Business License:
A Mainland company is licensed by the Department of Economy and Tourism (DET) in Dubai or the relevant departments of economy in other emirates. With a Dubai Mainland license, you can trade freely across the UAE, bid for government and municipal contracts, and import or sell directly within the local market. One of the limitations of operating out of the Dubai Mainland, however, is that it is mandatory to have a physical office in the city, and compliance requirements and regulatory red tape often tend to be more detailed.
Free Zones:
Free Zones in Dubai function as purpose-built havens that operate according to their respective regulations. They are structured to attract foreign capital by providing lucrative options like 100% foreign ownership, corporate tax incentives, and flexible office solutions. Historically speaking, one of the key limitations was that Free Zone companies could not trade directly with the UAE mainland or bid on local contracts unless companies used either a local distributor or set up a branch in the mainland.
However, on October 8th, 2025, Dubai launched the Free Zone Mainland Operating Permit, which allows Free Zone companies to operate in the Mainland in certain non-regulated sectors without the necessity to establish a separate Mainland entity.
Offshore Companies:
Offshore companies are primarily structured for asset holding and cannot conduct business or hold assets within the UAE. However, RAK ICC offshore companies are permitted to hold freehold property in Dubai and Ras Al Khaimah. Offshore structures are additionally great entities for asset protection, intellectual property ownership, and cross-jurisdiction structuring.
Key Considerations While Picking a Jurisdiction
Below are a few aspects to consider before narrowing down on a jurisdiction
1. Core Source of Revenue:
If your key source of business is international trading, then a Free Zone license may be a better choice for you. If you are looking to provide services to a domestic market and bid for local and government contracts, then a Mainland license may suit you better.
2. Ownership and Control Needs:
If retaining 100% ownership and minimum local dependency is your top priority, both Free Zone and Offshore structures meet the requirement. In the case of Mainland company setup, most business owners can hold 100% ownership, provided their business activity is not a part of the regulated business category.
3. Compliance and Cost Considerations:
Free Zone company setup usually comes with lower overhead costs, quicker licensing, and bundled visa and office setup packages. Mainland companies typically have higher overhead costs, owing to the requirement of a physical office space. Compliance requirements also tend to be more stringent. Similar to their Free Zone counterparts, Offshore entities have minimal costing and compliance requirements
4. Long-Term Vision Considerations:
If your long-term plans include expanding operations, opening multiple branches, or tapping into the UAE’s domestic market, then a Mainland company is your best bet to avoid restructuring hassles at a later period. If cross-border trade with flexible setup and tax structures is your key area of focus, then a Free Zone structure will provide you with the flexibility you need. If you are an investor on the lookout for asset protection and global portfolio management, an Offshore company remains the most strategic route.
In 2025, the distinction between business setup in Dubai Mainland and Free Zones in Dubai is less rigid than ever, thanks to the new Free Zone Mainland Operating permit. But that very flexibility demands sharper decision-making. The right jurisdiction for you depends on your business model, target market, and growth trajectory.
If you are looking for expert guidance to map your business plan against jurisdictional frameworks, factoring in permit eligibility, tax structure, licensing, visa strategy, and more, Zone10x can provide you with quality assistance. With a transparency-first ethos, Zone10x is structured to deliver smart, scalable business solutions and help you set up your company in UAE.
Ready to make your move? Talk to the Zone10x experts and let us help you choose the jurisdiction that works best for your future.
