The UAE is among the top places in the Middle East for business establishment.
It is an international hub that offers matchless opportunities to entrepreneurs across the globe.
Due to its business-friendly environment, it attracts international investors.
You can establish your business on the mainland or in a free zone.
Now you might be wondering about the distinction between Dubai Mainland and the Free zone.
Depending on your business and its requirements, each option has its advantages, disadvantages, and investment potential.
In this article, we will explain the key difference between Dubai Mainland and the Free zone in detail.
Continue reading!
What is Mainland Business?
A mainland company is an onshore business that has registered with the respective emirate’s government department.
Department of Economic Development (DED) issues its commercial license.
Fortunately, you are not restricted to commercial activities. This is the primary perk of doing business in Dubai mainland.
For some business activities, you must have a local sponsor or a UAE citizen as a company partner.
What is a Free Zone Company?
The free zones are a great alternative to the mainland if you want complete ownership.
The UAE’s first free zone was established in the 1980s, and since then, it has expanded in dimension and scope.
Now, there are more than 40 multidisciplinary free zones in Dubai.
Each free zone is run and governed by a separate regulatory authority, which complies with its own rules and laws.
Key differences between a Free zone and a Mainland
What separates a free zone from a mainland?
There is a wide range of jurisdictions, each one is tailored to a specific type of business.
The main differences are listed below to assist you in selecting the one that is best for your business.
1. Ownership
Until now, international investors setting up businesses on the mainland are only allowed to hold a maximum of 49% of the company’s shares; the remaining 51% should be the share of the Emirati sponsor.
However, for a few businesses incorporated on the mainland, the UAE government currently permits 100% foreign ownership.
On the other hand, free zones do not have these limitations and do not require local sponsors because you have full ownership from day one.
2. Workspace
A mainland company’s office space must be at least 200 square feet.
If you have rented the appropriate space, the DED will issue your business a permit.
Companies in a free zone do not have to have a physical location because many free zones allow businesses to establish virtual workplaces.
3. Visas
There are no visa limitations for mainland businesses, but the number of visas awarded varies by workplace.
Therefore, if your business needs more visas, you will need to buy or rent a larger workspace.
Companies in a free zone can only apply for a certain number of visas, which is different from companies on the mainland.
Most of the time, the number of visas available is between 1-6 and depends on the free zone rules.
4. Business scope
A free zone company cannot conduct business outside the free zone without the assistance of a local agent, which is the key distinction between mainland and free zone businesses.
On the contrary, mainland companies can run a business anywhere in the UAE without restriction. How amazing it is!
5. Business Audit
At the end of every fiscal year, financial audits must be prepared by all mainland enterprises.
Not all free zones require businesses to conduct their yearly financial audits.
6. Approvals for business setup
For a mainland business formation, you will need government clearance from several government agencies.
These include the Ministry of Labor, Dubai Municipality, the Department of Economic Development, and many others.
In contrast, each free zone adheres to its own laws and rules for any new business establishment within its borders.
In addition, you can launch your business in a free zone without seeking approval from non-free zone government authorities or agencies.
It’s time to work with Bizstart!
You should now have a better idea of how a mainland company differs from a free zone company.
Which choice is best for you depends on what kind of business and activities you want to do. Everything comes down to what you want and what you need.
Whether you start your business on the mainland or in a free zone, Bizstart can help you set up your business efficiently.
Our qualified and experienced professionals will take care of all government work, making sure that everything goes smoothly.
Bizstart is one of the most trusted business setup agencies in the UAE. Most importantly, we have helped thousands of entrepreneurs set up their businesses successfully.
So what are you waiting for?
Take advantage of our free consultations today to find out what kind of UAE business formation will work best for you.
Best of luck!