Read about the Difference between Mainland and Freezone companies
Are you a business owner planning to set up your company in UAE, but you are confused about what step to take first?
Well, let me tell you one thing, before setting up your company, you must have a clear definition of the question: what is the difference between mainland companies and Freezone companies in UAE?
It is the first thing to decide which type of jurisdiction you want to be a part of
The business owner should also know the rules & regulations, facts, and differences between mainland and Freezone companies.
The UAE offers many opportunities and is determined to maintain a durable, visionary, and business-friendly environment.
The UAE is a liberal country with having favorable tax environment, a sturdy regulatory framework, and many business growth opportunities; this makes many investors set up their businesses here.
What are the different types of company jurisdiction in UAE?
There are three types of company jurisdiction in the UAE they are:
- Mainland
- Free zone
- Offshore.
The business owners should understand these differences and decide which company fits perfectly to their business aspirations.
Difference between Mainland and Freezone companies
Differences between Mainland, Freezone and Offshore companies have evident contrasts concerning several criteria.
Read on to learn the differences between Mainland and Free zone companies.
UAE Mainland Company
The mainland company is the company located outside of a free zone area. The mainland companies are the onshore companies whose licenses are issued by the Department of Economic Development (DED) and registered by related government authorities of the concerned Emirates.
The companies in the jurisdiction can do business without restrictions & whatsoever in the local market and outside the UAE.
We can describe the mainland company as a restriction-less trading opportunity.
Also, the UAE government has now allowed 100% ownership of the businesses to foreign investors and canceled the earlier rule that had 49% ownership, and the local UAE national sponsor had 51%.
Now the foreign investor can enjoy complete ownership of his company, and giving the shares to a UAE local sponsor is no longer required.
How to open a Mainland Company in UAE
- Choose a business activity and name for your company.
- Obtain initial approval and a trade license from the Department of Economic Development (DED) in the emirate where you wish to establish your company.
- Arrange for an office space or commercial premises that meets the DED’s requirements.
- Obtain any necessary permits or certifications required for your specific business activity.
- Register for the mandatory social security scheme, Emirates Pension Scheme (EPS).
- Register with the Ministry of Human Resources and Emiratization (MOHRE) for obtaining a work permit for yourself and any other employees.
- Obtain any necessary certifications for your business activity.
It’s important to note that there may be additional steps required and that the requirements may vary depending on the emirate and type of business activity you choose. It’s recommended to seek professional help from local legal or consulting firms like RVG .
Free Zone Company
A Free zone company forms within a special jurisdiction under a particular Emirate. There are over 40 Free Zones operating in the UAE. Free zone jurisdictions have a government regulatory body with their own rules & regulation and are known as the Free Zone Authority. The authority issues trade licenses.
Free zone companies benefit from 100% foreign ownership and tax concessions. The companies in free zone jurisdiction are permitted to deal only within the free zone and outside the UAE.
Also Read about Free zones in UAE
How to Open a freezone Company in Dubai
To open a freezone company in Dubai, you must follow these steps:
- Choose a freezone: Dubai has multiple freezones, each with its own set of regulations and requirements. Select the one that best suits your business needs.
- Select a business activity: Each freezone has a list of approved business activities. Choose one that aligns with your business goals.
- Obtain a trade license: Once you have selected a freezone and business activity, apply for a trade license. This is a legal permit that allows you to operate your business within the freezone.
- Register your company: After obtaining a trade license, register your company with the freezone authority. This includes submitting the necessary documents and paying the relevant fees.
- Obtain a residence visa: If you plan to live and work in Dubai, you will need to obtain a residence visa. This can be done through the freezone authority or through the relevant government department.
- Rent office space: Most freezones require companies to have a physical office within the freezone. Rent or lease an office space from the freezone.
Each freezone has its own set of rules, regulations and fees, so it’s recommended to consult with the relevant authorities for detailed information.
