What is the difference between Mainland and Free zone
The United Arab Emirates (UAE) is among the greatest destinations in the Middle East to launch a company. It’s a crossroads for many different economic sectors and nations. Foreign investors are attracted to the country’s liberal, stable, and business-friendly climate as well as the country’s numerous measures aimed at promoting economic growth.
A free zone or the mainland are both viable options for establishing a business. Many people before you have probably wondered, “What is the difference between the two?” Or, “How do I determine the best option?”
Depending on the specifics of your firm, both have advantages, disadvantages, and investment potential. In this essay, we’ll do our best to address some of those concerns. The following topics will be discussed:
What is a mainland company in Dubai?
A mainland corporation is an onshore organization that is officially recognized by the government of the relevant emirate. The Emirate’s business licenses are issued by the DED, or Department of Economic Development. A corporation based on the mainland has complete freedom in all of its business dealings. Some business endeavors, however, necessitate the presence of a local sponsor or an Emirati national as a company partner.
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What is a free zone company in Dubai?
The free zones are a fantastic substitute for the mainland if you’d like to maintain full ownership of your business. Since the 1980s, when the first free zone in the UAE opened, these zones have expanded in both size and scope. Over 45 such areas exist throughout the country right now. Each free zone is independently governed and operates in accordance with its own set of rules and regulations.
What is the difference between Mainland and Free zone Companies?
Then, what distinguishes a free zone from the mainland? There is a wide range of jurisdictions, each catering to a specific type of business. Here are the main distinctions between them to help you pick the best option.
- Full Foreign Ownership: You could only own up to 49% of a mainland company as a foreign investor until very recently; the other 51% had to go to the Emirati sponsor. The mainland UAE government, however, now permits full foreign ownership of some types of businesses. In a free zone, you can be the sole owner from day one without having to find a local sponsor.
- Limitations: A free zone corporation cannot conduct business outside the free zone without the assistance of a local agent, which is the primary distinction between free zone and mainland companies. Companies based on the UAE’s mainland are not limited in their operations throughout the country.
- Office Space: The bare minimum for an office on the mainland is 200 square feet. The DED will grant your business a permit once you have found suitable quarters for it. Companies in free zones are not required to secure a physical location, as many of these zones permit the use of remote workers.
- Number of Visas: The number of visas awarded to a mainland company is not limited in any way by constraints on the size of the company’s office space. Your business will need to acquire or lease more office space before applying for any more visas. Companies operating in free zones are limited in the amount of work permits they can apply for, unlike their mainland counterparts. Depending on the rules of the free zone, the number of possible visas can be anything from one to six.
- Business Setup Approvals: In order to legally operate a business on the mainland, you will need permission from multiple departments. The Dubai Municipality, the Ministry of Labor, the Department of Economic Development, etc. In contrast, new enterprises operating within a free zone are subject to the laws and regulations of that particular zone. In addition, setting up a business in a free zone doesn’t necessitate approval from any governments or agencies that aren’t part of the zone.
- Annual Audit: At the close of each fiscal year, businesses on the mainland are required by law to conduct an audit of their financial records. However, not all tax-free zones mandate that businesses do annual audits. An annual audit is required only of FZE and FZCO enterprises, which are based in free trade zones.
Advantages of a Mainland Company in Dubai
If you are planning to setup a mainland company in Dubai, then here are some of the best advantages you would like to know:
- Ability to conduct business anywhere in the United Arab Emirates (No Restrictions)
- Tax benefits: No income / personal tax
- Profits and investments can be repatriated in full.
- Ability to Compete for and Perform Government Contracts in the UAE
- There are no visa quotas in place.
- Can develop a physical presence in the local market by opening multiple branches anywhere in the registered emirate.
- Freedom to enter any market in the world
Advantages of a Free zone Company in Dubai
Some of the advantages of locating a business in a free zone include:
- Complete ownership with no requirement for a sponsor in the UAE
- Forming a company in a flash
- 100% repatriation of investments and earnings
- 100% exemption from import and export duties
- The identities of the shareholders are kept confidential
- Recruitment policy is easy and elementary
- Free zones offer counseling for starting a business and access to a vast professional network
ReCorporate can help you make a wise decision
Now that you know how a free zone firm differs from a mainland one, hopefully you can make an informed decision. Which choice is best for you depends on the nature of your enterprise and the tasks you plan to undertake. Your requirements and objectives are the primary considerations.
Whether you’re setting up a business in a free zone or on the mainland, ReCorporate can get you up and running. All interactions with authorities will be handled by our trained staff, guaranteeing a trouble-free launch.
Since its founding in 2011, ReCorporate has helped over 34,000 business owners in the United Arab Emirates effectively incorporate their companies.
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Helping new businesses get off the ground quickly, reliably, and without any unnecessary difficulty is what we do best.
Helping you establish your company in Dubai is just the beginning. Among the many other services we offer are tax returns, legal counsel, HR management, and more.
There are many more advantages. Every ReCorporate client has access to a robust network of fellow business owners through our proprietary networking tool, CZ Connect. You can meet other businesspeople in the area and build important connections with them.
In order to determine which UAE business formation option is the best fit for your needs, take advantage of our free consultations today.
If you are also thinking of starting a business in Dubai but are not able to decide whether you should start your business in free zone or in Dubai Mainland, then we would like to tell you here that you can contact us and consult ReCorporate’s experienced business setup experts. Business setup advisors will help you decide whether Free Zone or Dubai Mainland is better for your business.
Now, as you know what the difference between Mainland and Free zone in Dubai is, if you want a professional business setup expert to share guidance, please feel free to call or WhatsApp us at +971 58 586 5477 and book free business consultation NOW!