What are the differences between mainland and free zone United Arab Emirates companies?

It is important to understand the differences in the types of corporations that are allowed for non-resident investors in the United Arab Emirates (UAE), so that you get all of the benefits that are available. You can rely on the advice of our expert consultants at GBO to help you decide on the right path, and to take you step-by-step through the process of setting up your new venture.

Are you going to conduct business, trade or services inside the UAE, or internationally, or in a combination of both local and international business? This is the deciding factor on whether you are establishing a mainland business, or a free zone business.

International investors can now set up their companies in free trade zones. The most important feature of company setup in a UAE free zone is the opportunity for providing a range of company formation options. Free zones like IFZA in Dubai offer investors a great commercial infrastructure which makes starting a business a lot easier.

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1. Mainland companies in the United Arab Emirates

Any corporation registered as a mainland company in the UAE is not restricted in how it trades, being permitted to conduct business both internationally and locally. The Department of Economic Development of the UAE (DED) is the national authority that issues licences and regulates business.

What makes the mainland the right model for you?

The primary feature for foreign investors who are deciding on which type of company they need are:

• Ability to bid on UAE government contracts. There are great opportunities for foreign investors to bring skills and talent into the country and participate in the spending the United Arab Emirates has committed to invest its enormous revenue from oil and gas and build a thriving modern economy with a spending program to invest its enormous revenue from oil and gas while it lasts and build a thriving modern economy.
• Any mainland company can compete in the local market, regardless of whether it is for local or international trade.

What are the positive features of a mainland company in Dubai?

With a mainland company, you have freedom to conduct business both in Dubai and the rest of the UAE without restriction on with whom and where you can trade. A Dubai mainland company can conduct any form of revenue-generating business without legal restrictions.

A mainland company can bid on UAE government contracts such as construction and infrastructure, and can provide goods and services to the UAE government departments that are spending hundreds of billions of dollars each year to modernise the economy. Foreign-owned mainland companies have exactly the same rights to conduct business with UAE government offices as local companies.

Mainland companies based in Dubai can be 100% foreign owned. This contrasts with other Emirates, which require that a majority (minimum 51%) of the company shares are owned by a UAE citizen.

How to set up a mainland company in Dubai

Out of all of the seven Emirates that form the country of UAE, we regard Dubai as the preferred choice when you are setting up a new venture in the UAE. Choosing to set up your foreign-owned mainland company in Dubai will give you all of the right options for the revenue generation, mode of operation and will guarantee future success.

What is the process for mainland company registration in Dubai?

• Reserve a company name and trade name. The company name you are registering can be, but is not restricted to being, the same as the trade name you will use. You should make use of our experts at GBO to help you find the right company names and trade names.
• Although it is possible to choose from a few different options for the legal structure of your company, we suggest an LLC because it is the most beneficial legal structure.
• Prepare and submit all of the required documents to the Department of Economic Development (DED) in Dubai.

How to set up a mainland operation in Dubai

It may be necessary to rent or buy office, warehousing or storage space in Dubai. However, this is not a legal requirement. You can operate from remote locations and do not have to be physically based inside the country. If you rent physical space through a contract with a landlord, you must register it with the mandatory Ejari system.

Company owners, employees and any family members or domestic employees must apply for visas and require sponsors. The visa process in the UAE can be tricky – you should let out trained consultants here at GBO manage your visa needs.

2. United Arab Emirates free zone companies

Dubai’s free zone regulations allow wholly-owned limited liability companies (LLC) to provide goods and services to customers all around the world, other than directly to residents of the UAE or other mainland companies. There are different regulations that set how companies in each zone are allowed to conduct business. Some free zones are set up for general business, like the International Free Zone Authority (IFZA), which allows companies operating in any sector of the economy to conduct mixed business. There are also zones that have been set up to cater for specialised forms of business, for example the Dubai Healthcare City, focused on Healthcare, and the Dubai International Financial Centre, which is a financial hub for banking and finance.

Free zone companies have minimal accounting obligations and no requirement for annual reporting, along with full tax-exempt status. There is a low upfront cost for smaller companies compared to Dubai mainland companies. Some free zones offer specialised infrastructures like offices, warehouses, and storage facilities tailored to your company’s specific needs. Dubai also provides access to established multi-tiered data centres, sophisticated IT infrastructure, and access to transport.

What are the pros of setting up a free zone company in Dubai?

Free zones in Dubai allow for total foreign ownership. Shareholders can receive their dividends in any currency and country totally free of income tax. Free zone companies are not subject to import and export taxes or corporate tax on profits.

Process for registering a free zone company in Dubai

You must start the process with the registration of a new company in Dubai. With the help of GBO, you can go step-by-step through the process, including:

1. Selecting the right free zone
2. Obtaining any required visa registrations
3. Selecting the company and trade names are valid and capable of registration (and if not, we can help you find the best match)
4. We prepare all the necessary papers
5. As the company is registered we can help you apply for a bank account and can even appoint advisors who have good relationships with the banks to promote your business.

GBO supplies all services needed for setting up a new free zone company in Dubai. We can assist with the visa application processes, provide introductions to banks for company account opening, and prepare all the necessary legal documents all at the most competitive and reasonable cost.

You can rely on GBO for the best guidance and support in company formation in the  Dubai free zone of your choice.

Summary of the difference between mainland and free zone companies in the UAE