What is the real use of an onshore company in Free Trade Zone of the UAE?

November 07, 2018

An onshore company, also known as a mainland company, is established within the jurisdiction of the UAE outside of its free trade zones. While free trade zones offer various incentives and benefits for businesses, onshore companies have their own advantages and use cases within the UAE:

1. Local Market Access: Onshore companies have the advantage of being able to operate and trade directly within the local UAE market without restrictions. This can be beneficial for businesses that primarily target local customers or need to establish a physical presence in the country.
2. Flexibility in Business Activities: Onshore companies have greater flexibility in the types of business activities they can undertake compared to free zone companies, which are often limited to specific industries or sectors. This allows onshore companies to engage in a wider range of business activities based on their preferences and requirements.
3. Access to Government Contracts: Onshore companies may have better access to government contracts and projects within the UAE, as many government tenders and initiatives are open exclusively to locally registered companies.
4. No Currency Restrictions: Onshore companies can transact in any currency without restrictions, whereas free zone companies may have limitations on currency exchange and repatriation of funds.
5. Lower Operating Costs: While free zones offer certain tax exemptions and incentives, onshore companies may benefit from lower setup and operating costs, as they are not subject to free zone-related fees and regulations.
6. Flexibility in Employment: Onshore companies have more flexibility in hiring local and expatriate employees compared to free zone companies, which often have specific visa and employment regulations.

Overall, the real use of an onshore company in the UAE’s free trade zones lies in its ability to access the local market, operate with greater flexibility in business activities, and benefit from lower operating costs compared to free zone alternatives. However, the choice between establishing an onshore or free zone company ultimately depends on the specific needs and objectives of the business.