When you are planning to set up a business in Dubai, the very first question that arises in your mind is determining the appropriate operating jurisdiction of the company, right?

Dubai being an ideal business hub, offers various accessible options to every entrepreneur. There are primarily two choices for business location, which are; Mainland Limited Liability Company and Free Zone Company.

Well, to choose the ideal business location depends upon the nature of your business.

For example:

If you are planning to open a trading company and want to trade within the UAE, go for a mainland limited liability company. If you’re going to own your business thoroughly, have control over its operations and take advantage of Dubai’s tax exemptions, go for free zone establishment.

This article will explain to you the fundamental and significant differences between the Mainland & freezone establishments in the UAE.

Let see the difference between Mainland & freezone establishments in the UAE.

Mainland Company:

In Dubai, Mainland Company is an onshore company which is licensed by the Department of Economic Development (DED). Mainland company is not geographically confined to carry out its business operations. It can work in local markets as well as outside the UAE without any stipulations.

1. Overview of Business:
A Mainland registered entity is authorized to carry out its business activities throughout the UAE market. It aids in working with anyone inside or outside the UAE. No business is restricted to just working within its freezone.

2. Ownership Structure
Mainland Company restrains the ownership of foreign investors to a maximum of 49%, and it entails a local sponsor with ownership of 51%. According to the research, the business activities that fall under a professional license, 100% of its shares are distributed to the exile partner. The UAE citizen is appointed as a National Service Agent.

3. Office Space
There is a merest demand of 200 sq. Ft. to be leased out periodically for every mainland company licence. Then only the Department of Economic Development (DED) will issue the license.

4. Visas Eligibility
There is no restriction on the visa eligibility for a mainland entity. An Electronic Quota is granted to every mainland company by the Ministry of Labor(MOL), which shows their visa eligibility. The possibilities can be raised by extending the dimension of your office space. Per 80 square foot of office space provides you the permission of 1 visa. If you have a staff who are not in the office, such as salesperson, pro’s and drivers, then you can apply for a different quota for those individuals which will not affect your office space quota.

5. Governing body approvals
A mainland license requires standard permissions for the permit.
For example, the Department of Economic Development(DED), Dubai Municipality (DM), Ministry of Labor (MOL), Ministry of interiors or Immigration (MOI).

But in some cases, some external government authorities approvals are demanded every business activities, i.e. KHDA (Knowledge and Human Development Authority) for all Education related licenses, DHA (Dubai Health Authority) for all medical-related licenses, FOOD Department of Municipality for all food-related licenses, Civil defence, Real Estate Regulation Authority etc.

Free Zone Company

A freezone is a determined and isolated land or setting, with an individual tax, customs and imports regime, that is distinct from a mainland area. The main benefit of maintaining a freezone company is that as a refugee, you can hold the entire business with 100% shares.

1. Overview of Business
A free zone company is not allowed to do business (manufacturing and selling) outside its free zone. It is restricted within the Free zones.

2. Ownership Structure
As mentioned earlier, a free zone company has no such ownership restriction. An expat can possess a complete 100% shares of the company. Neither a local partner nor a service agent is obliged to start a company

3. Office Space
Free zone licenses can be consolidated with or without a physical office. Free zone Authorities enables the licensees to use the conventional business centre desks for a minimum of 5 hrs/week. It gives the assurance to the current market novices to redeem on initial costs of registration. It allows you to use a Flexi office usage, but this restricts you on visa allocation usage.

4. Visas Eligibility
Usually, 2 visas are offered for every Free Zone license on the office packages. However, as there are many free zones, every one of them provides different office packages. Some of the free zones in the UAE allow 3 to 6 permissions on the original office package.
If any entrepreneur wants more visas, then a physical office/warehouse has to be leased out to avail of more visas.

5. Governing body approvals
Free zones have their own rules for the assistance of any company inside its jurisdiction, and they don’t demand approvals from authorities outside of the free zone.

For all new business people, it is always essential to seek advice from profound Business Consultants to determine the best trade/professional license and that license to be set up in the appropriate jurisdiction as per your nature of business. The conventional information from the experienced minds always assists the business needs in the long term.

EBS specializes in assisting you for company formation in the UAE. BE it an LLC, sole proprietorship, branch of a foreign company, a free zone enterprise or a holding company; we have extensive knowledge of the rules and regulations governing the approvals needed to run your commercial business in Dubai. We help you seamlessly transition your international trade to be conducted from the UAE and Dubai with maximum efficacy.

To know more about our services, visit: https://www.ebsae.com/

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