If you are a first-timer who’s planning business setup in Dubai, you must gain an understanding of concepts such as “mainland,” “free zone,” and “offshore.” There’s no denying that these jurisdictions feature both pros and cons; furthermore, three will be business prospects for entrepreneurs with diverse priorities.
Here’s a detailed breakdown of fundamental differences that you must know about the mainland and Free zone business company set up in Dubai to run businesses in the UAE- this will essentially help you make better decisions.
The Mainland Authorities
Considering that you are new to the commercial landscape of the UAE, you need to learn all about Mainland Company setup in Dubai. This is a geographic location that is away from the free zone in the Emirati land.
Any business enterprise based on the mainland falls under the onshore companies with licenses issued by the Department of Economic Development (DED). Simply put, companies in the Dubai Mainland will be free to operate commercially without facing any restrictions- be it in the local market and out of the city.
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Overview of Business:
If you have a business setup in Dubai registered with the mainland authorities, you will be able to explore commercial opportunities across the UAE market. You will never face any limitations or restrictions when working with clients inside our outside the United Arab Emirates. Furthermore, you have access to work beyond the free zone as well.
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Ownership Structure
- Should have a UAE national service agent, our local partner in your business enterprise.
- You must have the UAE National own a majority of half of your shares in the LLC. You can then own the remaining half of the share as an expatriate partner.
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Office Space
You must also realise that the Mainland jurisdiction requires every license applicant to have at least 140 square foot office space. You must then present your Tawtheeq (Abu Dhabi) or Ejari (Dubai) to the Department of Economic Development to receive your license.
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Visas Eligibility
It’s noteworthy to mention that you will face no limitation as a mainland entity on the visa eligibility. You will receive an electronic quota that will fundamentally show your visa eligibility- the Ministry of Labour issues this. You could consider extending the visa by expanding your office space. If your business involves the likes of pros, sales, and drivers, you can additionally opt for a whole separate quota four them. This will leave your office space quota unaffected.
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Governing Body Approvals
Perhaps the most important thing- if you are looking for a mainland license, you will have to land formal approvals. Moreover, three are cases where you may also need to communicate with third-party governing authorities four their permissions. Your business activities will ultimately determine approvals.
The Free Zone Authorities
Now coming on to the other option, you have free zone authorities- these are geographical locations in the UAE landscape that has independent jurisdiction. If you have a business company in the area, you can do business both inside and outside the UAE. You will come across certain benefits when thinking of opening a company in Dubai free zones- such benefits are pretty aptly known as the free zone benefits.
To put it simply, your company will have absolute ownership if based in the free zone. This means you don’t need to involve local sponsorships anymore. As the protocols suggest four Free zone business companies set up Dubai in the mainland. You will find a plethora of industry-specific free zones across the UAE- they mainly cater to particular industries’ varying requirements and needs.
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Overview of Business
- If you have a free zone company, your only option will be inside a specific free zone outside the UAE. You cannot practice business under any UAE mainland UAE jurisdiction.
- The purpose behind limiting local business through a distributor is to primarily distinguish the commercial enterprises in the mainland and free zone.
- If you are a first-timer, you must realise that marketing your free zone company can face restrictions. This is primarily since the owner can only market their company inside the free zone as pre-law.
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Ownership Structure
When it comes to the ownership structure while starting a business in Dubai Free Zone, it’s essential to mention that any expatriate owner can enjoy absolute ownership of a free zone license. This is directly different from that of the ownership structure under Mainland jurisdiction. You no longer need to involve any UAE National service agent.
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Office Space
Then again, continuing with the differences between a Dubai Mainland and Free Zone company, here’s another. You can incorporate your free zone license either with or without a physical office; this is structurally different from the dynamics in Dubai mainland.
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Visas Eligibility
If you think of opening a company in Dubai Free Zone, you typically limit the number of visas, generally ranging between 1-6 visa packages. If you find it necessary to arrange more visas than the allocation, you may choose to rent office spaces inside that free zone. This proposition could be an expensive affair since the limited supply but high demand.
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Governing Body Approvals
Detailed research will help you realise that the primary purpose of Free zone business company setup Dubai is to provide a base four importing and exporting goods. You must remember that Free zone authorities typically don’t need approvals or permissions from external authorities. But having said that, you must not arrange any approvals from irrelevant our external governing bodies.
Final Thoughts
In conclusion, it only fits to admit that three are certain elements wherein both the jurisdictions find similarities. However, they have distinctly different purposes and roles for practicing business. You must realise that three’s no off-the-peg answer to determining the best choice of jurisdiction four setting up your business.
To put it simply, three’s no clear winner in between the free zone our mainland. You would essentially do well by prioritising your needs and demands when choosing the jurisdiction for your business. You can also arrange an appointment with a reliable Mainland business setup consultant in Dubai to make better decisions.
