Company in Dubai: Free zone or offshore?
After extensive research, you have identified Dubai as the ideal location to establish your company. Now that the location has been determined, another question arises: which legal structure should you choose?
In Dubai, United Arab Emirates, foreign business owners can choose in particular between an offshore company and a free-zone company.
The two models do not meet the same needs. It is therefore important to compare their characteristics before starting the process.
Offshore or Free-zone: the two models
The offshore company in Dubai
Offshore companies are exclusively concerned with activities carried out outside the United Arab Emirates.
They do not allow you to have a physical office in Dubai, hire local employees, work with suppliers in the United Arab Emirates, or obtain a residence and work visa for you and your family.
They can be used in particular for import-export, service provision, or a holding company.
The Free Zone company in Dubai
By contrast, a free-zone company allows you to open offices in Dubai, hire employees, and obtain work and residence visas.
You can work with suppliers and business customers, but not directly with individuals.
Possible activities include import-export, services, and investment.
Differences to consider before choosing
Where would you like to operate your business?
An offshore company in Dubai is only for activities conducted outside the United Arab Emirates.
By contrast, a free-zone company allows you to establish a real presence in Dubai, including offices, employees, and visas.
Do you need offices or employees?
An offshore company does not allow you to have physical offices or employees in the UAE, whereas a Free-zone company does.
Do you need visas?
With a Free-zone company, it is possible to obtain residence and work visas. An offshore company does not allow you to obtain these visas.
Who would you like to work with?
The free-zone model allows you to work with suppliers and business customers in the UAE, while offshore remains geared toward operations conducted outside the country.
What about taxation?
Both models benefit from an attractive tax framework.
For the offshore company, the tax benefits are associated with a non-resident structure. For the Free-zone company, the United Arab Emirates notably has a double taxation treaty.
The choice should therefore not be based solely on taxation: it mainly depends on how you intend to operate your company on a day-to-day basis.
Which option for your business in Dubai?
If you wish to establish a company in Dubai, conduct business there, hire staff, and obtain residence and work visas, the Free-zone solution is the most suitable option in this case.
Conversely, if your business is primarily international and you do not need premises, employees, or visas in the UAE, an offshore company may be considered.
It is essential to define your project precisely before making a choice. Merritt supports both executives wishing to establish an offshore company and those wishing to set up a Free-zone company.