UAE has a gross domestic product (GDP) of US$501 billion (AED 1.84 trillion) in 2022 and is the fifth largest in the Middle East. Launching a business in UAE is a dream for many. But where in UAE should you set up your business? Many potential investors who want to launch a business in the UAE market frequently wonder what the difference between Mainland and Freezone company setup is. Therefore, it is imperative to learn the facts, the fundamental laws, regulations, and distinctions between different jurisdictions if you are interested in investing in the UAE. Offshore, Freezones and Mainland are the different business jurisdictions. The investor or business owner should weigh these distinctions carefully and choose the jurisdiction that best matches their goals for their company. In relation to factors like Ownership and scope of Business, Office Space, Visa Eligibility, Company Audit, and other factors, this article highlights the key differences between Mainland and Freezone jurisdictions.
Mainland Company Setup in UAE
A mainland corporation is just an onshore business that has been registered with the relevant Emirate’s government. The Department of Economic Development of the specific Emirate is responsible for issuing the trade license. A mainland UAE corporation is primarily distinguished by the availability of unrestricted trade. When a foreign investor invests in a mainland UAE company, the company is permitted to conduct business both domestically and internationally.
Advantages of Establishing Business in UAE Mainland
- You can break into the lucrative government market by founding a mainland company. The UAE government releases a number of official consignments each year, and your mainland establishment can take advantage of this chance.
- Foreign businesses operating on the mainland are not affected by the UAE’s currency limitations, hence they are not a concern. Furthermore, the procedure of applying for a visa is made simpler by having a mainland business in Dubai. Additionally, you can quickly apply for an unlimited number of visas to guarantee your family’s security during their stay in the Emirates.
- With a mainland business, you have access to the renowned local market in Dubai. Additionally, this gives you the ability to launch the company of your dreams. Businesses on the mainland see enormous growth across a wide range of industries.
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Freezone Company Setup In UAE
A Freezone company is a business established within a certain Emirate’s exclusive authority. Currently, there are more than 40 Freezones operating around the UAE. The Freezone Authority is a government regulatory organization that oversees Freezone areas, which have their own laws. Issuing commercial licenses falls under the purview of the Freezone Authority. The advantages of 100 percent foreign ownership and tax breaks define a UAE Freezone. A Freezone corporation may only conduct business inside the Freezone and outside the United Arab Emirates.
Advantages of Establishing Business in UAE Freezone
- Anyone can register a Freezone company in Dubai, whether they are an aspiring Indian businessperson or a local investor. Additionally, for company establishment in the Freezones, foreigners need the assistance of a local service agency. Despite helping with paperwork and company registration, they will not have any official authority within the company.
- Because Freezones have their own laws and focus on particular economic sectors, your private information is never made available to the wider public. Additional corporate support in the form of resources, labor, and other factors is also provided by this distinct legislation.
- You can repatriate 100% of your profits if you start a corporation in a Freezone in Dubai. Additionally, both personal income tax and capital gains tax are completely waived for you. Additionally, there are seldom any taxes levied on imports and exports.
Difference Between Mainland Business Setup from Freezone
Even while the companies registered in the two countries share some similarities, there are also significant variations that might significantly influence investors’ judgments over which jurisdiction to invest in.
All businesses established in the UAE’s Freezones are eligible for 100% foreign ownership. The requirement that a local Emirati sponsor holds 51 percent of the shares in any company established on the mainland has been abolished except for selected activities like law firms, audits, schools, or any kind of business that has government involvement.
Numerous activities are now permitted to have 100% mainland ownership as of November 2020 onwards. The list of these activities for Dubai and Abu Dhabi may be found here.
For mainland business owners, the trade between UAE mainland companies and companies in Freezones, other UAE mainland companies, and companies outside the UAE is permitted.
Enterprises operating in the UAE Freezones that trade in tangible items are only permitted to do so worldwide and with other Freezone businesses, or they must partner with a third-party distributor(local service agent) to conduct business with the mainland.
Company Formation Process
If you want to establish a mainland corporation, you must be physically present in the nation. You could also use a Power of Attorney, which needs to be certified, attested, and then again in the UAE at the Ministry of Foreign Affairs, both of which must be done in your home country. Without the owner’s personal presence in the UAE, the Freezone business setup process can be completed remotely.
Setup Time for Businesses
A Freezone commerce license typically takes 3-5 days to be awarded. This period for the mainland is typically between 5 and 10 days.
All firms operating in the UAE mainland must be registered at a physical location with a minimum space requirement of 140 sq. ft. The physical address can be for a Flexi desk, a co-working area, or an office.
All enterprises operating in Freezones must, however, secure their actual offices only within the Freezone or on the mainland but through a business center only. Typically, professional operations (like consulting) can even perform without an actual office.
Mainland companies can have an unlimited number of visas whereas Freezone companies have strict restrictions.
The most important aspect for a business is opening a corporate account. It is faster to set up an account through a mainland license in comparison to a Freezone one due to the availability of work premium which makes it easier for bank verification and speeds up all approvals.
Launch your business in the UAE
The performance of your firm in the UAE is greatly influenced by its location. If you do not pick the right one right away, you will have to pay overhead expenditures like moving expenses. It is therefore advisable to work with A&A Associate, and our professionals will take care of everything for you. We cover every facet of forming a business, such as paperwork, finance, and licensing. Contact us. This is only a brief summary. The efficiency of your procedures can be ensured by working with a reputable business consultant like A&A Associate. And you will undoubtedly benefit from our advice.
There has been an increase in global inquiries about all things business-related. When choosing the best business ventures and the shortest possible acquisition of trade license papers, your firm can profit from our advice. You may hone your entrepreneurial abilities and maintain the operations of your business with the assistance of Dubai’s most respected business consulting firm. You can receive assistance from A&A Associates professionals while you set up and register a Mainland or Freezone company in the UAE. Contact us for information at [email protected]. Fill out the below form to get a callback from our team.