For business owners and other investors eager to enter the industry, Dubai provides a myriad of attractive opportunities. You have the option of forming a company in a free zone or on the mainland in Dubai.
Furthermore, the UAE supports enterprises of all kinds and sorts, allowing expats to pursue their goals in the area. You’ll need to pick where you want to start your business after you’ve arrived in Dubai.
It may be a mainland company based in Dubai, where you can form an LLC with 100 percent ownership and gain access to the local market. You can, on the other hand, choose from any of the free zone administrations.
From the perspective of an investor, not having a clear and exact grasp of the many business jurisdictions in the UAE is like to boarding a bus without knowing its route or final destination. If you want to invest in the UAE, you must first learn the facts, basic rules, and regulations, as well as the distinctions between the two jurisdictions. Mainland, Free Zone, and Offshore are the business jurisdictions. Let’s find out more about them.
What is a Mainland Company
A mainland company is just an onshore firm that is registered with the government of the Emirate in question. The Department of Economic Development of the particular Emirate issues the trade license. A mainland UAE corporation is originally differentiated by its ability to trade without any restrictions. When a foreign investor invests in a mainland firm in the UAE, the company is allowed to trade both locally and internationally.
What is a Free Zone Company
A free zone corporation is one that is founded under a special jurisdiction that falls under the jurisdiction of a certain Emirate. There are currently around 40 free zones functioning across the UAE. Free zone countries have their own regulations and are governed by the Free Zone Authority, a government regulatory organisation. The Free Zone Authority is responsible for issuing trade licenses. The benefits of 100% foreign ownership and tax reductions characterise a UAE free zone. A free zone corporation can only trade within the free zone and not outside the UAE.
Differences between Mainland and Free Zone Companies in the UAE
Starting a business in UAE is a great option, but you need to understand the differences between the Mainland and Free Zone companies in the UAE.
Ownership
If you want to begin trading on the mainland, you’ll require a UAE national in order to get a mainland license. A local sponsor or service agency could be involved. If a commercial license is chosen, a foreign investor who establishes a company in the mainland United Arab Emirates can own up to 49 percent of the company, with the remaining 51 percent held by UAE National.
However, in terms of a professional license, overseas investors can purchase 100 percent shares but still require the services of a local service agent. The local service agent’s responsibilities include signing all government applications, although he or she has no financial stake in the business.
Unless otherwise agreed upon, the foreign investor is totally responsible for the business activities, with zero interference from the local service agent.
Foreign investors enjoy entire ownership of the business in comparison to mainland companies. It is not required that the license include a United Arab Emirates national. This is by far the most advantageous feature of a Dubai free zone company.
Business Scope
Companies with a strong presence on the mainland The United Arab Emirates has no restrictions on its business scope. Business can be done everywhere in Dubai, including free zones and also outside of the city. Apart from banking and insurance, they can pursue commercial, professional, and even industrial endeavours.
A free zone firm can only operate within the authorised free zone territory, as opposed to a mainland company. If they need to conduct business in the local market, they’ll need the assistance of a local distributor or agent. The majority of the free zones are located near ports and airports. Import and export-related services are therefore the most famous business for these establishments.
Work Space
For a mainland corporation, the minimum yearly leased out area need is 200 sqft. A license will be provided to your mainland company by the Department of Economic Development once you have gotten the corporation with the requisite area.
While a free zone company is not required to have physical office space, it is recommended. The business may or may not have a proper office, depending on the activity and nature of the company. One benefit that a free zone company can choose is a flexi desks service, which is also cost effective. With this license, a business can use the common centre desks for a minimum of 5 hours, which is available to any common business, saving new ventures the cost of registration.
Conclusion
There are differences between the Mainland and Free Zone companies in the UAE. Understand them carefully and then choose your business’ location. All the best!
