Whenever an investor thinks of investing capital in the UAE market, the first thing that comes to their mind is to figure out the differences between the free zone and the mainland of Dubai.
From the perspective of an investor, without an exact and clear grasp of the many business jurisdictions in the UAE is like boarding a ride without knowing its final destination or the route it will take.
That’s why, If you want to invest in Dubai, you must first learn the facts, basic rules, and regulations, and the aspects that differentiate both the economic zones from each other. Mainland, Free Zone, and Offshore are the legal business jurisdictions in the Emirates. The investor or entrepreneur should know everything in-depth about these distinctions and choose the jurisdiction that best matches their business goals.
Fresh entrepreneurs or newbie businessmen who are having trouble figuring out or comprehending the differences between the zones can call Riz and Mona business consultancy right away.
Let’s move on and find out the major factors and all the information that separates the free zone from the mainland in Dubai, UAE.
Free Zone Company in UAE
A free zone corporation is one that is established inside a special economic zone that falls under the jurisdiction of a certain Emirate. There are currently approximately 40 free zones in operation around the state. Free zones have their own set of rules and are governed by the Free Zone Authority, a government regulatory authority.
The issuance of trade licenses is the responsibility of the Free Zone Authority. The advantages of tax exemptions and 100% foreign ownership are some of the hallmarks of a UAE free zone. A company established in the free zone is only allowed to trade within the jurisdiction instead of the rest of the country.
Advantages of Setting Up a Free Zone Company in UAE
Free zone companies also benefit from 100% customs tax exemption, zero currency restrictions, and the ability to repatriate all capital and profits.
Free zone companies can be owned 100% by non-GCC investors in all circumstances, with no additional steps or approvals required.
When it comes to visas, free zone companies are usually limited as to the total number they can obtain. Many free zones offer license packages inclusive of visa eligibility – this often ranges up to six per license.
The most cost-effective approach to starting a business in the UAE is to set up a company in a free zone. This is mainly because of the lack of a physical location requirement and extremely low licensing fees.
Companies operating in free zones may also enjoy wonderful benefits such as the flexibility to repatriate all profits & capital, zero customs taxes, and no currency limitations.
Non-GCC investors can own 100% of free zone enterprises in any case, without any need for additional permissions or steps.
When it comes to visas, free zone businesses are frequently restricted in the number of visas they can receive. Many free zone jurisdictions provide visa eligibility as part of their licensing packages, which can number above six per license.
Major Free Zones in the UAE
- Fujairah Creative City (FCC) – Media, Consulting, Communications, Design, and Technology
- Dubai Multi Commodities Center (DMCC) – Commodities Trade and Exchanges
- Pharmaceuticals, and Medical Equipment
- Ras Al-Khaimah (RAK) – Trading, General Trading, Service, Industrial, and Educational
- Jebel Ali Free Zone (JAFZA) – Trading, General Trading, Service, Logistics, and Industrial
- Dubai Healthcare City (DHCC) – Healthcare, Medical Education, and Research,
- Dubai World Central (DWC) – Aviation, Logistics, Light industry, and Ancillary Services
- Dubai International Financial Center (DIFC) – Banking, Financial Services, and Legal
- Dubai Knowledge Park (DKP) – Human Resources Management, Training, and Personal Development
- Dubai Media City (DMC) – Media related activities
- Dubai Internet City (DIC) – Internet, and Communications Technology
- Dubai Silicon Oasis (DSO) – Information Technology, Telecom, Electronic, and Engineering
Mainland Company in Dubai
Mainland Firm is an inland company that can operate outside the UAE and in the local market of the country as well. In the case of professional and commercial licenses, mainland companies have complete flexibility to conduct business activities. A local sponsor or a UAE national is required for the formation of a mainland business in Dubai. According to the standard shareholding arrangement for a company formed in the Dubai mainland, the Foreign Shareholder (s) holds 49% and the UAE national Sponsor holds 51% of the company.
The Department of Economic Development (DED) is in charge of licensing, registration, commercial acceptance, and consumer protection for mainland businesses in Dubai.
The mainland corporation provides foreign investors and local sponsors a customized legal arrangement in which the annual fee or some percentage of their sales & profits is given to the local sponsor. The local partner is uninvolved in the day-to-day business operations whereas the foreign investor has complete control of the firm.
Advantages of Setting Up a Mainland Company in Dubai
When you run a mainland business in Dubai, you have complete freedom to trade with the local market of the UAE. Furthermore, you can capitalize on lucrative government contracts and open a business anywhere on the UAE mainland.
As mentioned earlier, companies in the mainland could not be owned 100 percent by non-GCC investors until recently. Only 49% of shares could be owned by a foreign investor, with the remaining 51% held by an Emirati sponsor.
However, recent legislative reforms have made it possible to hold 100% of mainland enterprises in sectors except for telecommunications, transportation, and oil & gas.
Employee visas can be applied for indefinitely by mainland companies. The size of your business premises, however, is frequently a determining factor in visa eligibility.
Because of the numerous other advantages than these ones, Dubai mainland is the most popular alternative for business setup in Dubai. These advantages include:
In Dubai, Mainland Companies are exempt from paying corporate tax.
For a Mainland Company to be established, there is no minimum capital requirement.
Mainland corporations can do business in Dubai or the UAE with other mainland companies. They have the freedom to do business elsewhere in the Emirates or beyond. Because free zones are often restricted to conducting business exclusively within their specific free zones, this feature gives them an upper hand over other enterprises.
Mainland enterprises, unlike those in free zones, have a variety of options for conducting business. There are no restrictions for mainland businesses because they can serve the larger UAE economy and offer a wide range of services.
Mainland companies can choose from a variety of office locations in Dubai. This feature not only allows them to conduct business with the local market but also allows them to open various branches of the company, enabling them to create a strong presence across the country.
Mainland corporations are allowed to work on government contracts, whereas free zone enterprises are only allowed to work on private commercial projects.
Having a mainland license gives you the freedom of issuing any number of visas. However, obtaining permits for mainland companies will be totally dependent on the amount of office space purchased.
There are no currency restrictions in Dubai for mainland companies. Capital and profits can be repatriated in their entirety. And lastly, the company registration process for mainland businesses is surprisingly simple and does not demand a yearly audit.
That was all about the major differences between free zones and the mainland of Dubai. If you want to start your business in UAE, you can contact us to book a free appointment.