UAE offers a complete set of lucrative entrepreneurial benefits to entrepreneurs and investors to start their businesses. Mainly, there are two types of company formation in UAE i.e. Mainland and Free zone.
Businesses of any kind can be started in the Emirates, which allows all the expats to achieve their entrepreneurial dreams in the country. You can either set up a mainland corporation in the UAE for example a Limited Liability Company with 100% ownership, or you can go with a business under free zone administration as well.
One of the biggest confusion, which is better: Mainland companies or Free zone company formation?
If yes, then read through the following article to get more information on the topic!
Mainland company formation: All you need to know
A company or corporation that is registered on the mainland or inland, where there is no geographical limits. Therefore, the UAE mainland companies conduct their business locally and overseas as well.
The Department of Economic Development[DED] handles all the licensing and regulation compliance for the businesses. After taking the commercial and professional license, you can freely trade within or beyond UAE.
Here are some of the benefits of registering as a mainland company:
● Mainland companies now have 100% foreign ownership. However this is restricted to only a certain activity group.A local agent (UAE national) could also be appointed.
● Mainland companies can also work for government consignments. These consignments are released every year by the UAE government, which are lucrative and rewarding projects.
● Foreign businesses registered on the mainland do not have stress about the currency restrictions in the UAE, as they are not bound by them. The mainland formation eases the visa application process. You can even apply for multiple visas for you and your family.
Mainland formation – Who should choose?
You should choose the mainland formation if your business requirements match the following:
● Getting government consignments: The UAE government consignments are secure, long term and come along with skill development opportunities. If you are interested in working in the government sector in UAE, then you can choose mainland formation.
● Access to Dubai’s local marketplaces: If you are looking to sell your product/services to the domestic population of UAE, then you must choose mainland formation because it allows you uninterrupted access to Dubai’s local market.
● High business opportunities: Mainland formation allows you to choose from a set of authorised business activities in the location. Anyone can choose and pick your favourite from an official list, without asking for any extra approval from the authorities.
Free Zone formation: Everything You Need to Know
Free zone formation comes under a separate jurisdiction with its own legal compliance requirements. However, the rules and regulations change from one free zone to another, where anyone can choose among the list of 40 free zones.
Also, there are some specialised free zones such as Dubai International Financial Centre(DIFC) for financial enterprises and Dubai Media City for media.
It is a cost-effective framework that ensures a good working atmosphere, where multiple companies can grow together. As a result, the free zone companies have better chances to grow quickly.
Here are some of the benefits of registering under the Free zone:
● Free zone companies allow foreign/residents to own 100% of their business. But, foreigners would require the help of a local agent to form a company in the free zones. Local agents will help you get the paperwork and company formation done, but they will have no legal role in your business.
● No confidential information is disclosed because the free zones have their jurisdiction and are specifically designed for industries. Also, there are special laws implemented to support corporations for labour, business resources, etc.
● A free zone entrepreneur enjoys 100% of the profits. You can get an exemption of 100% on personal income tax and capital gains. Also, there is almost zero tax on import and export duties.
Free Zone Business – Who should choose?
You should choose the free zone formation if your business requirements match the following:
● Low bar for entry: While starting a free zone business, you do not have to worry about having large costs upfront. Compared to Dubai mainland businesses, the cost of setting up free zone companies is lower compared to Freezone companies.
● Specialised Infrastructure: Free zone businesses enjoy the benefits of having specialised infrastructure including warehouses, manufacturing plant setup, pre-built offices, data centres, transit infrastructure, robust IT infrastructures, and other options included.
Summing up
There are many reasons to setup your company in Mainland and Free zone. You can choose the one that matches your business requirements, as both offer attractive prospects. AMAJ can help you setup your business in mainland and free zones such as DMCC, IFZA, RAKEZ, ADGM among many others.
