News & Articles
Dubai Mainland vs FreeZone: Which is Better?
Starting a business in Dubai, the middle east’s business hub can be a very lucrative and favorable business solution for foreign entrepreneurs. One of the main questions that foreign investors and entrepreneurs usually ask from the business setup consultants is the differences between running a business in Dubai Mainland vs FreeZone. This, of course, is a vital and relevant inquiry as choosing the right jurisdiction in the UAE can improve a business significantly. However, suppose entrepreneurs are not convinced which jurisdiction in the UAE (among Mainland, Offshore, and Free Zone) suits their business best, they can always ask a business setup consultant based in the UAE.
Dubai Mainland vs FreeZone Company
There are significant differences between Mainland vs FreeZone jurisdictions, considering parameters like ownership and scope of business, office space, visa eligibility, company audit, and others. The main differences between companies established in the Dubai Mainland and Free Zones can be described as follows:
Dubai Mainland companies are onshore companies registered under the government authority of the concerned Emirate. The trade license necessary for running a business in the UAE is issued by the Department of Economic Development of the particular Emirate. A Dubai Mainland company has no restrictions in terms of trading opportunities. In contrast, a Dubai Mainland company is authorized to trade in the UAE local market and outside UAE.
Free Zone companies are formed within a special jurisdiction that comes under a particular Emirate. There are currently over 40 Free Zones operating in the UAE as a whole. Free Zone jurisdictions have their own regulations and have a government regulatory body called the Free Zone Authority, in charge of trade license issuance. Free Zone companies benefit from 100% foreign ownership and tax concessions. However, a Free Zone company is authorized to trade only within the Free Zone and outside the UAE.
Differences Between a Mainland and Free Zone Company in UAE
Both are 100% percent foreign-owned; however, businesses under professional license in the Dubai Mainland requires a Local Service Agent (LSA) to act as an agent for license issuance.
Scope of the Business
Companies established in the Mainland are free to do business anywhere in the UAE market and outside the UAE. On the other hand, free zone companies are allowed to do business within the jurisdiction of the particular free zone and outside the UAE. However, Free Zone companies can partner with a third-party mainland companies to freely conduct business in the Dubai Mainland.
A minimum office space requirement of 140 sq. ft. is obligatory for a UAE mainland company, while there is no office space requirement for a Free Zone company.
Dubai Mainland companies have fewer restrictions on visa eligibility. The size of work space determines the number of visas issued; thus, bigger premises means more visa applications can be made. For Free Zone companies, visas range from 1 to 6. The UAE visa packages vary, and the issuance of more visas demands leasing out additional work premises.
For a Mainland company, the minimum capital prerequisite is determined by its legal structure. For Free Zone companies, the minimum capital prerequisite is determined by the Emirate in which the company is formed.
Gathering Approvals from Respective Authorities
The approvals for Mainland companies are issued from various government bodies like the Department of Economic Development, Dubai Municipality, Ministry of Labour, etc. Each Free Zone in the UAE has a set of rules and regulations which apply to all the companies formed under it. External approvals from government bodies and agencies outside the Free Zone are irrelevant to the Free Zone company setup.
How Can Choose UAE Help
Mainland vs FreeZone, have you decided where to establish your company? Whether you are setting up a Free Zone or Dubai Mainland company, business setup consultants can guide you in deciding which jurisdiction is the best choice for your business needs.
With our transparent pricing and value-added business support services, you can jumpstart your business anywhere in the UAE hassle-free with Choose UAE. Contact us and schedule a free consultation.