Having an onshore company in Dubai is the most attractive form of company registration for foreign investors or international corporations wishing to operate in the United Arab Emirates. An onshore company, or so-called mainland company, is registered directly with the Department of Economy and Tourism (DET), Dubai. Unlike companies registered in free zones, an onshore Dubai company may trade within the UAE market, execute government contracts and open offices all over Dubai.
Whether you are launching a retail business, starting a professional consultancy, or expanding a multinational corporation, understanding the setup process is essential for long-term growth.Â
This detailed guide covers every step of onshore company formation in Dubai, including legal structures, ownership rules, costs, setup steps, and tax obligations.
What is an Onshore Company in Dubai?
An onshore company is a business entity registered under the regulatory framework of the local emirate’s economic department – specifically the DET in Dubai – and governed by UAE Commercial Companies Law (Federal Decree-Law No. 32 of 2021).
Key Characteristics of a Dubai Onshore Entity
- Geographical Reach: Permitted to trade anywhere within Dubai, across the wider UAE, and internationally without geographic limitations.
- Physical Presence: Requires a physical office space or commercial property verified through an Ejari tenancy contract.
- Government Contracting: Fully eligible to submit tenders and execute business contracts with UAE local and federal government bodies.
- Licensing Authority: Regulated and licensed directly by the Dubai Department of Economy and Tourism (DET).
Onshore vs. Free Zone vs. Offshore: Core Structural Differences
Understanding how onshore entities compare to other UAE entity types helps ensure you select the appropriate corporate form:
Onshore (Mainland) Entities
- Local Market Access: Full direct access to the UAE local consumer and commercial market.
- Office Requirements: Mandatory physical office address or DET-approved shared facility registered via Ejari.
- Government Bidding: Allowed without restriction.
- Visa Quota: Dependent on office floor space (scale as your office footprint grows).
Free Zone Entities
- Local Market Access: Limited to international markets and within the designated free zone. Local market access requires an onshore distributor or dual license.
- Office Requirements: Flexi-desks, virtual offices, or leased zone premises.
- Government Bidding: Generally restricted or requires local onshore representation.
- Visa Quota: Fixed according to the chosen package.
Offshore Entities
- Local Market Access: Prohibited from carrying out commercial operations within the UAE.
- Office Requirements: Registered address provided by a registered agent only (no physical office permitted).
- Government Bidding: Prohibited.
- Visa Quota: Zero visa eligibility.
Foreign Ownership Rules for Dubai Mainland Companies
A common concern for international investors looking into onshore company setup in Dubai is the ownership structure. Historic regulations required a local Emirati sponsor to hold 51% of company shares in a mainland business. Major legislative reforms have changed this landscape.
100% Foreign Ownership Framework
Following amendments to the UAE Commercial Companies Law, foreign entrepreneurs can now retain 100% full ownership of an onshore company in Dubai across more than 2,000 commercial, industrial, and trading activities. This update removes the need for a local Emirati partner or service agent for most business types, giving foreign owners full managerial authority, profit entitlement, and operational control.
Strategic Sectors Requiring Local Participation
While full foreign ownership applies broadly across the economy, the UAE government maintains specific restrictions for activities considered to have a strategic impact. These sectors include:
- Security and defense activities.
- Banking, finance, and insurance operations.
- Telecommunications infrastructure.
- Water and electricity utilities.
- Commercial agency activities reserved for UAE nationals.
For standard commercial trading, professional services, software development, consulting, construction, and retail, 100% foreign ownership is fully supported.
Types of Legal Structures for Onshore Business Setup
Selecting the proper legal form is a foundational step when planning how to set up an onshore company in Dubai. The legal structure defines your liability, management setup, and operational scope.
1. Limited Liability Company (LLC)
The Limited Liability Company is the most popular corporate vehicle for onshore company formation in Dubai. An LLC can be formed by 1 to 50 shareholders (either individuals or corporate entities). The personal liability of each shareholder is limited strictly to their capital contribution to the business. An LLC can conduct commercial, industrial, and trading activities.
2. Sole Establishment / Sole Proprietorship
Sole Establishment is a business set-up owned by 1 (single) owner, the management is simple but the owner is personally responsible for all of the debts and as such takes on unlimited liability. Sole Establishments are used by professionals, freelancers and small service businesses.
3. Civil Company
A Civil Company is designed for professionals offering specialized services, such as accountants, lawyers, engineers, and consultants. It allows two or more professionals to partner together to practice their profession.
4. Branch of a Foreign or Local Company
An existing foreign or domestic company can register a branch office in Dubai. A branch office is not a separate legal entity; it acts as an extension of the parent entity. The parent company assumes full legal and financial responsibility for its branch operations. A branch must conduct the same business activities as its parent company.
Unsure which legal structure fits your business model? Contact the setup consultants or an activity review.
How to Setup an Onshore Company in Dubai (7-Step Process)
The process for onshore company setup in Dubai follows a structured regulatory workflow managed by the DET. Following these steps systematically will help avoid delays:
Step 1: Select Business Activities and Legal Structure
Begin by identifying your exact commercial operations using the official DET economic activity directory. You can group multiple related activities under a single license. Your selected activities will dictate whether your company operates as an LLC, Civil Company, or Branch, and will determine whether third-party approvals are required.
Step 2: Reserve Your Trade Name
Select and submit your proposed trade name through the DET portal or an authorized service center. The trade name must comply with official guidelines:
- Must be followed by the legal structure designation (e.g., “Middle East Trading LLC”).
- Must not violate public morals, contain political references, or include government body titles.
- Must match the nature of the intended business activity.
- Must not duplicate any existing trademark or registered business name.
Step 3: Secure DET Initial Approval
Apply for Initial Approval from the DET. This official certificate acknowledges that the UAE government has no objection to your business establishing an onshore presence. Initial Approval allows you to move forward with lease negotiations, document drafting, and secondary government permit applications.
Step 4: Draft and Notarize the Legal Agreements
Prepare the company’s Memorandum of Association (MOA) (for LLCs) or a Local Service Agent (LSA) agreement, per the company’s needs. The MOA specifies shareholder equity shares, business profit sharing, board of director appointments, and operational management procedures. The agreement should be signed at a notary public or electronically, using the DET portal.
Step 5: Secure Commercial Space and Register Ejari
A valid physical address in Dubai is a mandatory legal requirement for any onshore business license. You must lease a commercial office, retail storefront, or warehouse. For initial setups or service-based firms, DET-approved flexible desks or shared office options can satisfy the requirement. Register the commercial lease in the Ejari system to receive a tenancy contract certificate.
Step 6: Obtain External Approvals and Pay DET License Fees
If your business involves regulated sectors, secure final clearances from the relevant authorities:
- Dubai Municipality: Food services, general trading, health, and environmental activities.
- Real Estate Regulatory Authority (RERA): Property management and real estate brokerages.
- Dubai Health Authority (DHA): Medical facilities and healthcare services.
- Central Bank of the UAE: Financial, payment, and currency exchange services.
Submit all approval receipts, notarized MOA documents, and Ejari certificates to the DET. The DET will issue a payment voucher covering government and licensing fees. Once paid, your commercial trade license will be issued.
Step 7: Issue Establishment Card, Process Visas, and Open Corporate Bank Account
With your trade license in hand, complete the remaining post-licensing steps:
- Register with the Ministry of Human Resources and Emiratisation (MOHRE) and immigration authorities to obtain a company Establishment Card.
- Apply for investor and employee entry permits.
- Complete medical fitness testing, biometrics, and Emirates ID processing for residence visas.
- Submit your license, Ejari, shareholder passports, and business profile to a bank to complete Know Your Customer (KYC) checks and open a corporate bank account.
Dubai Onshore Company Setup Costs Breakdown
The cost of setting up an onshore company in Dubai depends on your business activity, office size, and visa requirements. Below is an overview of the typical financial requirements:
Government and Administrative Licensing Fees
The base DET commercial license fee generally ranges between AED 8,000 and AED 15,000 per year. This covers initial registration, trade name reservation, and license issuance. Specialized or regulated activities may incur additional government fees.
Dubai Municipality Market Fees
Onshore licenses are subject to a Dubai Municipality fee, which is calculated at 5% of your annual commercial lease value (or a baseline minimum fee determined by the DET).
Legal Documentation and Notarization
Notarization of the Memorandum of Association (MOA) at the notary public typically costs between AED 1,500 and AED 3,500 depending on company capital and legal complexity.
Premises and Ejari Registration
Commercial office rentals vary based on location:
- Shared Desks / Co-Working Spaces: AED 8,000 to AED 15,000 annually.
- Private Offices (Business Bay, Downtown, Sheikh Zayed Road): AED 35,000 to AED 120,000+ per year based on square footage.
Immigration File and Residence Visas
- Establishment Card Registration: AED 1,500 to AED 2,200.
- Residence Visas (per applicant): AED 3,000 to AED 5,500, which includes entry permits, medical checks, Emirates ID fees, and visa stamping.
Benefits of Onshore Company Formation in Dubai
Choosing an onshore setup offers key strategic advantages for expanding businesses:
1. Unrestricted UAE Local Market Access
The primary advantage of an onshore entity is the freedom to trade directly with B2B clients, B2C consumers, and retail customers throughout the UAE without intermediary distributors.
2. Government and Semi-Government Bidding Eligibility
UAE federal and local municipal authorities require suppliers to hold an onshore license to participate in public procurement contracts. An onshore structure allows your business to access these high-value government projects.
3. Flexible Office Space and Scalable Visa Quotas
Unlike free zones that cap employment visas based on pre-set office packages, an onshore business allows you to expand your team as needed by increasing your physical office space.
4. Simplified Corporate Banking and Financial Reputation
UAE corporate banks often view mainland entities favorably due to their physical presence, verified Ejari contracts, and clear local regulatory oversight. This can streamline account opening and compliance reviews.
Mandatory Compliance and Post-Setup Obligations
Operating an onshore company in Dubai requires ongoing compliance with UAE tax laws and regulatory frameworks.
Corporate Tax Registration
Under Federal Decree-Law No. 47 of 2022, UAE Corporate Tax applies to onshore companies:
- 0% Rate: Applies to net taxable income up to AED 375,000.
- 9% Rate: Applies to net taxable income exceeding AED 375,000.
All onshore entities must obtain a Corporate Tax Registration Number (TRN) from the Federal Tax Authority (FTA) and submit annual tax returns, regardless of their revenue levels.
Value Added Tax (VAT) Compliance
Businesses making taxable supplies and imports within the UAE must monitor their registration thresholds:
- Mandatory Registration: Required if taxable turnover exceeds AED 375,000 in the preceding 12 months.
- Voluntary Registration: Permitted if taxable turnover or expenses exceed AED 187,500.
Registered entities must file quarterly or monthly VAT returns and maintain structured accounting records.
Ultimate Beneficial Owner (UBO) Filing
Onshore companies must maintain an Ultimate Beneficial Owner (UBO) register at their premises and submit UBO details to the DET. This framework ensures transparency regarding natural persons who own or control 25% or more of the company’s capital or voting rights.
Frequently Asked Questions (FAQs)
What is the primary difference between an onshore company and a free zone company in Dubai?
An onshore company is licensed by the Dubai Department of Economy and Tourism (DET) and is permitted to trade freely anywhere in the UAE without restriction. A free zone company is licensed by a specific free zone authority and as the law can only trade within a free zone or outside the UAE unless it appoints a mainland distributor or holds a dual license.
Can a foreign investor own 100% of an onshore LLC in Dubai?
Yes. Revised provisions contained in the new Commercial Companies Law in the United Arab Emirates would enable foreign nationals to hold 100% ownership of an onshore Limited Liability Company (LLC) of most commercial, trading and industrial endeavors. Still, an Emirati local partner would be need for certain strategic endeavors.
Is a physical office space mandatory for onshore company formation in Dubai?
Yes. Every onshore entity registered with the DET must maintain a valid tenancy agreement verified through Ejari. However, startups and service-based companies can utilize DET-approved flexi-desk setups or shared co-working spaces to satisfy this legal requirement at a lower cost.