You can start a business in the UAE in either the mainland or one of the many free zones. The country has a lively business environment. Each choice has its own pros and cons, making them suitable for various business tasks and needs. To make an informed choice that fits your business goals, you need to know the main differences between mainland and free zone companies.
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Mainland Companies
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Mainland companies, which are also called “onshore” companies, need to get a license from the emirate’s Department of Economic Development (DED). These businesses can do business anywhere in the UAE and around the world without any problems.
Key Features of Mainland Companies:
1. Business Scope:
- Can operate anywhere in the UAE and abroad.
- Can engage in a broad range of business activities, including commercial, professional, and industrial.
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2. Ownership:
- Requires a UAE national to hold at least 51% ownership for commercial and industrial licenses
- Professional licenses can allow for 100% foreign ownership with a local service agent.
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3. Office Space:
- Must have a physical office space within the UAE, meeting the minimum office space requirements set by the DED.
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4. Visas:
- No limitations on the number of visas, subject to the size of the office space.
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5. Government Approvals:
- May require additional approvals from various government bodies depending on the business activity.
Free Zone Companies
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Free zone companies are set up in special areas called “free zones.” These zones are meant to encourage international business by letting foreigners own 100% of the company and giving them other benefits. There is a governing body in charge of each free zone.
Also Read: Choosing the Right Free Zone in the UAE for Your Business
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Key Features of Free Zone Companies:
1. Business Scope:
- Can operate within the free zone and internationally.
- Restricted from directly conducting business in the mainland without appointing a local distributor or agent.
2. Ownership:
- Allows 100% foreign ownership without the need for a local partner or sponsor.
3. Office Space:
- Flexibility in office space options, including virtual offices, flexi-desks, and traditional offices
4. Visas:
- Visa quotas depend on the office package and size chosen.
5. Customs and Taxation:
- Generally, free zones offer exemption from import/export duties.
- Often provide tax holidays and other financial incentives.
6. Regulatory Framework
- Governed by the specific free zone authority, which simplifies the setup process with streamlined procedures.
Choosing Between Mainland and Free Zone
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Mainland Company:
Ideal For:
- Businesses wanting to trade directly within the UAE market.
- Companies needing a flexible business structure to operate across different emirates.
- Enterprises planning to secure government contracts.
Considerations:
- Requirement for a local sponsor or service agent.
- Physical office space necessity and associated costs.
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Free Zone Company:
Ideal For:
- International businesses seeking to use the UAE as a regional base.
- Start-ups and SMEs looking for cost-effective setup options with flexible office solutions.
- Companies that do not require direct access to the UAE local market.
Considerations:
- Restrictions on direct business activities within the mainland.
- Dependence on local distributors or agents for mainland market entry.
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Conclusion
Using local brokers or distributors to get into the mainland market.
In the UAE, whether you choose a mainland company or a free zone company relies on your business needs, operations, and long-term goals. Each choice has its own set of perks and rules that must be followed. DXB-VIP has a team of experts who can help you with any part of the service you need, making sure you make the best choice for setting up your business in the UAE.
