Dubai has been attracting hundreds of thousands of entrepreneurs across the globe to do business here.
If you are one of them and want to start a business in Dubai, you should first choose the best business jurisdiction for you.
Typically, you have three options: a mainland, a free zone, or an offshore entity.
The best option will depend on your company’s business activity, trade partners, ownership structure, and other elements.
Each has advantages and disadvantages of its own.
This blog post will provide you with an in-depth comparison of the benefits and limitations of each business setup option, helping you to make the best decision.
Let’s dive right in!
Access to the local market and markets outside the UAE benefits mainland enterprises.
You need to obtain a license from the Department of Economic Development (DED) of the relevant emirate in order to register as a Mainland LLC firm.
In order to get your mainland business registered in Dubai, you should have an Emirati Sponsor who will hold 51% of the share.
On the other hand, you are allowed to have 49% of the total share.
Mainland businesses are required to have office premises, unlike free zones or offshore businesses.
Renting an office with a minimum square footage of 200 square feet is the DED’s minimum requirement.
Mainland businesses are not permitted to have virtual offices.
If you are running a mainland business in Dubai, you can do business all across the UAE. How amazing it is!
In addition, they are also eligible to do business in any free zone inside the emirates.
A mainland business is not subject to any visa restrictions.
The size of leased office space or a corporate facility determines how many resident visas are issued.
So, the more office space your company has, the more work visas your company may be able to get.
The following are some of the upfront fees that entrepreneurs might expect when establishing a mainland business:
- Approval for DED cost
- License fee
- Approval of trade name
- Office rent
- Attested copies of the Memorandum of Association (MOA)
- Contract Agreement
- UAE national sponsor fee
Free zone business
Free zone, also referred to as free trade zones, are business jurisdictions where companies do not have to pay taxes like Value-Added Tax (VAT), Income Tax, Corporate Tax, or Customs.
In Dubai’s free zone areas, the business owners own the whole business.
One of the best things about setting up your business in Dubai’s free zones is that you have full ownership of it. To start a business, you do not need to find a local sponsor.
Each free zone offers a variety of office space options, including virtual workstations, offices, and even flexi-desks.
You are not allowed to do business on the mainland as a free zone business owner. You must create a mainland firm with a local sponsor if the UAE is your intended market.
Depending on the size of the office space you rent, different free zones will give you a different number of visas.
Free zones in Dubai often allow 3-6 visas.
- The number of visas that your business can get via DMCC is based on the size of the chosen office.
- Serviced office: Depending on the size of the office, 4 to 5 visas.
- Flexi desk: three visas maximum.
- There is one visa for nine square meters of physical area.
In one of Dubai’s free zones, startup, and operating costs might differ. The four primary costs associated with setting up and running a company in Dubai are given below:
- Business registration fee
- Office fee
- License fee
- Share capital
Offshore businesses cannot conduct direct business operations in the UAE.
To enter the UAE market and permit business activities through such subsidiary companies, an offshore company can become a shareholder of any UAE mainland or free zone company.
An offshore company can own the whole business, but it can’t have a physical location in the UAE.
An offshore corporation cannot maintain a physical office in the UAE. Their headquarters must be located abroad.
Any free zone in the UAE as well as the mainland is open to business for an offshore company in Dubai.
Visas cannot be issued by offshore businesses. A resident visa may only be issued by mainland and free zone enterprises in Dubai, UAE.
Setting up an offshore business is often cheap.
The cheapest choice for forming an offshore business is in Dubai since no minimum capital deposits are required.
Set up your business with Bizstart!
We hope you have understood the key difference between these three business jurisdictions in the UAE: 1) Mainland, 2) Free zone, 3) Offshore
If you want to start a business in Dubai, you can hire our professional business consultants can help you in this regard.
Having years of experience helping foreign entrepreneurs establish their businesses in Dubai; they can assist you in setting up a business.
So what are you waiting for?
Consult our expert right now!