Mainland company: what it means for UAE businesses.

What mainland company means

Also called: Onshore company.

A mainland company, also called an onshore company, is a business licensed by the economic department of one of the seven emirates rather than by a free zone authority. Most are limited liability companies formed under the Commercial Companies Law (Federal Decree-Law No. 32 of 2021), and they can sell directly to customers anywhere in the UAE, including government bodies.

Since the 2020 amendments to the companies law, carried into the 2021 law, foreign investors can own up to 100% of most mainland companies. The old requirement for a majority Emirati shareholder has gone, although activities of strategic impact, such as banking, insurance and defence, keep their own ownership conditions.

The tax position is the standard one. A mainland company is a Resident Person for Corporate Tax, pays 0% on taxable income up to AED 375,000 and 9% above it, and has no access to the Qualifying Free Zone Person regime. VAT follows the normal rules, including mandatory registration once taxable supplies pass the threshold. For an SME, the choice against a free zone is mainly market access set against a possible 0% rate on qualifying free zone income.

How it works

• The legal form must match the activity. Mainland forms listed by the Ministry of Economy and Tourism include the sole establishment, civil company, limited liability company, branches of local and GCC companies, holding companies and joint stock companies.
• Before the licence is issued, the business needs a trade name, initial approval, a registered lease, an authenticated Memorandum of Association where the form requires one, and any sector approvals.
• It must apply for Corporate Tax registration within three months of incorporation and register for VAT once taxable supplies pass the mandatory threshold.
• A limited liability or joint stock company must appoint an auditor every year and prepare annual accounts under international accounting standards (Commercial Companies Law, Article 27).
• Establishments registered with MoHRE pay staff through the Wage Protection System.

Worked example

A Dubai mainland LLC distributes office equipment to businesses across the UAE. It is VAT registered, its revenue is above the Small Business Relief limit, and its taxable income for the year is AED 500,000.

Sales to UAE customers before VAT	AED 2,400,000
Output VAT at 5%	AED 120,000
Taxable income for Corporate Tax	AED 500,000
Corporate Tax on the first 375,000 at 0%	AED 0
Corporate Tax on the remaining 125,000 at 9%	AED 11,250

A mainland company pays the standard Corporate Tax rates with no free zone 0% regime, but it sells anywhere in the UAE without a local distributor.

Common mistakes

• Assuming full foreign ownership applies to every activity. Check whether the activity is one of strategic impact before choosing the structure.
• Changing partners or capital without registering the amended Memorandum of Association. Unregistered changes cannot be relied on against third parties, and the authority must be told within 15 working days (Article 15).
• Missing the three month Corporate Tax registration window because the licence was issued before trading started.

The law

• Federal Decree-Law No. 32 of 2021 on Commercial Companies, Articles 9 (forms of companies), 11 (licences), 15 (registration of the Memorandum of Association) and 27 (auditors and annual accounts)
• Federal Decree-Law No. 47 of 2022, as amended, Article 3, Clause 1 (rates) and Article 11, Clause 3 (Resident Person)
• Cabinet Decision No. 116 of 2022 on the annual Taxable Income subject to Corporate Tax at 0% (AED 375,000)

Frequently asked questions

Does a mainland company need a UAE national partner or service agent?

Not for most activities. Full foreign ownership is allowed outside the strategic impact list, and a limited liability company files a Memorandum of Association. The Ministry of Economy and Tourism lists a local service agent agreement for sole proprietorships, not for LLCs.

Can a mainland company sell to free zone companies?

Yes. Nothing in the licensing rules stops it. The VAT treatment of goods delivered into a designated zone has its own rules, so check those before invoicing.

Related terms

Limited liability company · Free zone company · Trade licence · Small Business Relief · VAT registration threshold. See every term in the UAE tax glossary.

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