Mainland Vs Free Zone
FOODSTUFF TRADING
December 17, 2018
Technical Services Licence
January 28, 2019Mainland vs. Free zone Company Formation
Did you know that there are 3 different jurisdictions in UAE? Yes, Mainland, free zone and offshore.
When you’re going to form your company in UAE, you need to see which jurisdiction would be the most suitable for your company providing opportunities in returns and growth.
What is the difference between Mainland vs Free Zone?
A mainland jurisdiction is an on-shore company controlled/run/licensed by DED (Department of Economic Development), where you are allowed to do business locally and internationally.
Every free zone authority in UAE has their own set of regulations. They allow you to do business freely inside the free zone and when the business activity is carried out to a non-free zone area you will need a local distributor’s assistance.
Under what factors should you choose Mainland vs Free zone?
- Structure of the company
Mainland company structure
When you are an expat forming a company in UAE, your company will have a UAE national
involved. The UAE national will not have any rights, decision making, profit or loss in your company. As per DEDs laws, a UAE national will monitor the immigration and labor of your company. Commercial license structure – Expat 49% and UAE national 51% (Local / Corporate sponsor) Professional license structure – Expat 100% and UAE national 0% (Local / Corporate service agent)
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Industrial license structure - Expat 49% and UAE national 51% (Local / Corporate sponsor) What if you’re a GCC national? Do you require a UAE national on your license? No, when the company is owned by a GCC national, he/she can hold 100% shares of the company and will not need a UAE national as a sponsor or service agent in the company. Free zone company structure A free zone company doesn’t require a UAE national, it is 100% owned by an expat. Any nationality can open a company in a free zone after a security approval is done by the free zone.
Office spaceMainland office space
Mainland office space
It is mandatory to have a minimum of 200 square feet office to be licensed with DED Mainland. A tenancy contract will be issued by the land department (RERA) which has to be submitted to DED.
Visa Allocation
Mainland visa eligibilityMainland offers unlimited visas. DED doesn’t have any restrictions on visa allocations. They are offering you as many visas as you need. (Now you would understand why there should be a UAE national involved to monitor the immigration and labor of the company) but the approval for the visas you take depends on your office space. You need to have enough space to allocate these staffs to work in your office.
Free zone office space
There is no such requirement for office space in free zones. You can open a company with no office space and can operate the business. And if you require office space, the free zone authorities offer flexi-desk/shares desk/plug and go office within the free zone. You are not allowed to take an office space outside the free zone. Based on your staff/visa requirement the free zone will offer you a working space. Now, not all free zones offer you a desk facility, the space they offer differ from free zone to free zone.
Every free zone authority offers different visa eligibility. For instance, Ajman free zone offers 2 visas, Sharjah media city free zone (SHAMS) offers 6 visas, Ajman media city free zone (AMCFZ) offers 5 visas, Fujairah creative city (FCC) offers 15 visas. Based on your visa requirement you can choose which free zone would be suitable for you. You can start your business with zero visas and can go up to a limited amount of visas depending on the requirement. At this point, you will be able to decide if you have to choose the mainland or a free zone establishment. Now, what is your business activity? Is it a commercial/professional/ Industrial? Do you need an office space and multiple visas or you don’t need many visas and can operate without an office?
- Other factors
- What is the size of your company? - Are you planning on running your business as a one-man show then you can choose any free zone or if you want to hire a lot of staff and have big management you can start your company in Mainland UAE?
- Looking for a cost-effective solution? – We Worldwide Management Solutions will be able to give you cost-effective solutions for mainland or free zone. We tailor make our solutions as per your requirements. Want to know the estimated cost to form a company in Dubai? Book an appointment for a free consultation.
- Government authorities – depending on your business activity there can be external approvals. The standard government approvals for mainland are DED (Department of Economic Development), Dubai Municipality, and chamber of commerce. Free Zone authorities usually don’t need approvals from external authorities unless there are special activities which require external authorities’ approval. What to know what type of activities would need a special/external approval? Get in touch with us for more information.
1 Comment
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