The Difference Between Mainland and Freezone Companies in the UAE
In just a number of years, Dubai has elevated its status to an international business hub. Enterprising individuals from across the globe dream about moving to the UAE to set up shop and run a successful business.
There are so many reasons why Dubai is considered a coveted destination for businesspeople. In addition to its low taxation, favorable corporate laws, and world-class infrastructure, the UAE offers diverse benefits in each jurisdiction for business setup.
Where to Setup a Business in the UAE
If you are interested in starting a business in the UAE, then the first decision will be to choose where in the Emirates to setup your company. Dubai offers two major business jurisdictions:
- Mainland Company Formation
- Freezone Company Formation
The jurisdiction that you select will determine the exact company registration process, license obtainment, and overall accessibilities and limitations.
Both mainland and freezones offer a plethora of unique benefits and features, so it is important to choose the best location based on your intended business activities and objectives. A business setup consulting agency can help you make the best decision.
Difference Between Mainland and Freezone Companies in UAE
In order to make an informed decision for your business, it is important to understand the differences between mainland and freezone company formation in Dubai. Here are the major characteristics and differences between each jurisdiction:
Mainland Company Formation
Mainland essentially refers to onshore companies. With a mainland business setup in Dubai, you will have the liberty to trade all over the UAE without restriction.
The only caveat in mainland company formation is that you must have a UAE national sponsor, who must own at least 55% of the total shares of your company.
If you are interested in starting a business on the mainland, you must register and obtain a trade license from the Department of Economic Development (DED), which is the governing body for all mainland activities.
The main features of mainland company formation are highlighted below:
- Autonomy to operate all over the UAE
- Access to international trading market
- Governed by Department of Economic Development (DED)
- UAE national sponsor is a must
- No minimum capital requirement
- Exempt from corporate tax
- Wide availability of business activities permitted
Freezone Company Formation
Freezones in Dubai are business zones where companies operating in them are exempt from all types of taxation such as Value Added Tax (VAT), Income Tax, Corporate Tax and Customs.
Each freezone is defined by its own geographical area, and businesses must confine their operations to that geographical area.
Business owners in the freezone areas in Dubai have 100% ownership of the business. Moreover, there are plenty of freezones that are dedicated to specialized business activities, such as media, freelancing, technology, etc.
Some popular freezones in Dubai are:
- Jebel Ali Free Zone
- Dubai Airport Free Zone
- Dubai Media City (DMC)
- Dubai Silicon Oasis
- Dubai HealthCare City
- International Humanitarian City.
- Dubai Maritime City
The main features of freezone business setup in Dubai are as follows:
- Obtain license from relevant freezone authority
- 100% ownership of business
- No national sponsor required
- No taxation
- Confined to geographical area of the freezone
Comparison Between Mainland and Freezone Companies in UAE
|UAE national sponsor mandatory||No need for national sponsor|
|Sponsor owns 51% shares||100% ownership of business|
|Free to trade all over UAE||Trade within the confines of freezone|
|Large number of business activities||Business activities depend on freezone|
|Governed by DED||Governed by relevant freezone authority|
How to Start a Business in Dubai?
Whether you are interested in mainland or freezone business setup in Dubai, Blue Crayon Consulting can help. We are experts in company formation and have the industry know-how to effectively guide you through the complete business setup procedures.