If you’re seeking to set up your business in Dubai, one of the core questions that ought to crisscross your mind is deciding the operating jurisdiction of your organization. This might help you to plan and confine yourself to certain jurisdictions that might help your business in the future.
Dubai gives more than one alternatives to an entrepreneur, among them you can only opt for a; Mainland Limited Liability Company or Free Zone Company.
Generally, your decision on the type of the area to locate your business will rely upon nature and business activities you want to set for your business. For instance, in case you are a trading organization and need to alternate inside UAE, you’ll be compelled to choose a mainland limited liability Company.
On the flip side: if you need to have full possession over your business, control entirely everything therein in your business, maintain and revamp to befit your needs, and have tax advantage exemptions, then the best area to locate your business will be in a free zone area, which is laced with such stunning benefits.
There are pretty a few variations among each of these forms of organization with every having its very own boons and restrictions.
Therefore, in this article, we’ve documented a detailed guide expounding more about each zone and its advantages. Moreover, we’ve highlighted some of the main differences between Mainland Company and Free Zone Company you must know before poking your nose into these areas.
Sounds good, right?
Below is what you’ll learn:
- What is a Mainland Company?
- What Defines a Free Zone Company?
- Advantages of Company formation in Mainland Area
- Advantages of Business setup in Free Zone Areas
- What is the difference between Mainland Company and Free Zone Company?
With this in mind, let’s jump in:
What is a Mainland Company?
Mainland Company in Dubai is an onshore organization certified through the Department of Economic Development (DED).
Mainland organization isn’t always geographically restrained to perform its enterprise operations. It can work outsides United Arab Emirates with no restrictions as well as in the local markets.
What Defines a Free Zone Company?
Free Zone Company is set up in a separate enterprise jurisdiction known as Free Zone in Dubai. It is a separate enterprise entity with its very own policies and regulations.
It is authorized to conduct its business activities within the Free Zone area or out of doors of the UAE. This is the fundamental distinction between mainland and Free Zone that Free Zone Company cannot work in non-Free Zone area without the help of a nearby distributor or an agent while a mainland organization can work everywhere in UAE.
In addition, there are numerous Free zones in Dubai. The most important reasons as to why the majority of foreign business investors subscribe to operate in Free Zone areas is due to the following reasons:
- Ownership benefits
- Use of the stunning and amazing infrastructure in Dubai
- Enjoy tax exemptions
- To guard their assets and other properties.
So, after acquainting yourself with the paradigms that lie within the Mainland Company formation and Free Zone area, it is prudent to see the advantages that each zone comes with.
Advantages of Company formation in Mainland Area
As aforementioned, Mainland is licensed by the Department of Economic Development (DED).
Therefore, setting your business in Mainland will have the following benefits as opposed to when starting a company in a Free Zone area:
- You have more alternatives on which type of business activities to embrace
- Permission to conduct your business in any part of the UAE with government authorities and local.
- There are no confinements on the number of Visa to take.
- You can locate your office anywhere in Dubai Mainland
- Less visa and nationality restrictions compared to other jurisdictions.
Advantages of Business setup in Free Zone Areas
If your budget and the nature of your business don’t resonate with Dubai Mainland, you can opt for a Free zone area that is accompanied by the following advantages:
- Repatriation of profits and capital is assured
- Tax exemptions i.e both the corporate and personal income tax
- Full foreign ownership of your business
- Exemption from all the export duties and imports.
Also read: Difference between representative office VS branch office
What is the difference between Mainland Company and Free Zone Company?
Ownership Structure
Mainland Company restricts the possession of foreign investors to the utmost 49% and it demands a nearby sponsor with possession of 51%. The local or nearby sponsor can be a UAE national. On the flip side, a free zone area accords total business ownership to foreign investors. So, an entrepreneur has 100% possession and manipulates his enterprise operations.
Operational Structure
Mainland Company can do enterprise everywhere in UAE inclusive of free zone and out of doors UAE as well.
They can do all commercial; industrial sports activities except insurance and banking. Operations of Free Zone Company are confined to free zone or out of doors UAE.
If they need to visit a nearby marketplace then they may look for assistance from a nearby distributor or an agent.
Some examples of businesses that would possibly make use of this shape are export and import businesses and courier services.
Work Space
For Mainland Company, there may be a minimum requirement of two hundred sq. ft. to be leased out annually.
After that, an organization can be issued a license through DED. On the opposite hand, there may be no procedures for the tangible workplace for free zone companies. Also, they may lack physical offices depending on the nature of their work.
There is a unique provider for marketers in free zone regions that are known as “plugin and pass” via which licensees can use not unusual place enterprise middle desks for a minimum of five hours according to week. This degree offers safety to the brand new marketplace entrants to keep on preliminary charges of registration. This facility is also known as “flexi desks”.
Visas Facility
Mainland businesses don’t have any hindrance to the issuance of visas for employees. Ministry of Labor issues an E-quota for the most important land organization which suggests its visa eligibility.
It relies upon the workplace area. More work area calls for the extra body of workers, so extra visas you could get. Whereas without spending a dime sector licenses, there are visas supplied for smart workplace package.
Maybe in case you need extra visas then you ought to rent out a physical workplace area to satisfy this purpose.
Approval from Government Authorities
In order to attain a license, Mainland Company calls for approval from DED (Department of Economic Development), DM (Dubai Municipality), and Ministry of Labor (MOL), Department for Naturalization and Residency affairs of Ministry of interiors or Immigration (MOI).
Also for unique enterprise sports e.g. for scientific associated sports, additional approval is needed from the Dubai fitness authority (DHA).
Free sector businesses commonly do now no longer require approval from the outside government except there may be a few more unique hobby which calls for approval.
Also read: What are the differences between Freezone and Offshore companies
Time Frame to Setup Business
For Mainland, the timeframe for its setup relies upon locating the proper nearby associate as a sponsor, and without spending dime sector businesses it relies upon selecting the proper free zone areas for enterprise operations.
Usually, it takes three to six weeks for each mainland and unfastened sector setups.
These had been a number of the foremost variations among each of those sorts of organization setups in Dubai.
