An onshore company, also known as a mainland company, is a business entity that is established within Dubai’s mainland. It operates under the country’s laws and regulations, enabling businesses to directly engage with the UAE market, including local clients, suppliers, and government entities, without restrictions.

Onshore companies are subject to the UAE’s tax, labor, and economic regulations. They are ideal for businesses that plan to tap into the local consumer base, form regional partnerships, or bid for government contracts and tenders. Establishing an onshore company provides credibility, visibility, and access to the broader UAE economy, making it a preferred option for long-term growth and stability within the country.

Historically, foreign nationals could not own a majority stake in mainland companies in Dubai. However, since 2021, changes to the federal Commercial Companies Law (CCL) now allow foreign investors to fully own their onshore businesses, providing opportunities to integrate fully into the UAE’s thriving business environment.

What is an Offshore Company in Dubai?

An offshore company is a business entity that is registered in a jurisdiction outside the UAE, typically within one of Dubai’s designated free zones. Offshore companies are primarily designed to facilitate international business activities without subjecting the company to the full range of UAE regulations or taxes.

Offshore companies are commonly used for holding assets, managing investments, and conducting global trade, often without the need for a physical presence in Dubai. These companies offer several benefits, including privacy, asset protection, and reduced tax liabilities. Offshore companies are an attractive choice for investors seeking flexibility and a cost-effective structure for international business operations.

However, offshore companies are not allowed to engage in direct business activities within the UAE, nor can they interact with local clients. The primary advantage of an offshore company is its ability to operate globally, while maintaining complete foreign ownership. Offshore structures also benefit from Double Taxation Avoidance Agreements (DTTAs) with 115 countries, including the United Kingdom, which can help reduce tax exposure on international earnings.

Offshore vs. Onshore: Key Differences

To summarize, the primary difference between an offshore and an onshore company in Dubai lies in their scope of operations and regulatory obligations:

• Onshore Company: Based in Dubai’s mainland, an onshore company can conduct business directly within the UAE market, making it ideal for businesses that need a local presence. Onshore companies are subject to UAE’s regulations and taxes but benefit from credibility, access to government contracts, and integration with the local economy.
• Offshore Company: Primarily set up for international business activities, an offshore company cannot engage with the UAE market. It benefits from tax advantages, full foreign ownership, and fewer regulatory requirements, making it suitable for holding assets or conducting global trade without the need for a physical presence in the UAE.