The difference between mainland and free zone companies in UAE

 The most frequently asked question by entrepreneurs looking to start a business in mainland Dubai or the Dubai Free Zone is, "What's the difference?" In this blog, we will discuss some basic differences so that you can make informed decisions about what is best for your company.

1. What is the difference between Dubai Mainland and Dubai Free Zone companies?

Mainland Companies: In Dubai, the mainland company is also referred to as the Onshore Company. It is licensed by the Dubai Department of Economic Development (DED) and allows companies to operate in the local market as well as outside the UAE without restrictions.

Free Zone Companies: Companies established in the free zone of any emirate of UAE are known as free zone companies. They are tax-free and have other benefits.

2. What are the differences in ownership structure?

Mainland Business: Foreign investors can own only 49% of the company. To set up a business in Dubai Mainland requires a local sponsor, who must own 51 percent of the company.

It also refers to the type of license you are getting. If you have a commercial license, you own 49 percent of the company. If you have a professional license, you will own 100% of the company, with one UAE national serving as a Local Service Agent.

Free Zone Companies: If you set up a company in Dubai Free Zone, it belongs to you. You have complete control over your company's operations. It does not require a local investor.

3. What are the operational structure differences?

Mainland Businesses: If your company is based on the mainland of Dubai, you are permitted to conduct business anywhere in the UAE, including all free zones, as well as internationally. Commercial, professional, and industrial activities are all available. Banking and insurance are the only exceptions.

Free Zone Companies: If your business is established as a free zone company, you are only permitted to trade within the Dubai Free Zones or internationally. You are unable to access local markets. If you want to do so, you'll need to hire a local agent.

4. What are the differences in the workplace?

Mainland companies: The minimum requirement for mainland businesses is 200 square feet per year. If you want to rent more than that, you need to get a license from the DED (Department of Economic Development).

Free zone companies: Since they do not have actual offices, free zone companies do not have to worry about the workplace. They have Flexi desks, which allow them to use the Common Business Center desk for at least 5 hours per week. This service is also known as 'Plug in and Go'.

5. How is the visa service different?

Mainland Companies: One of the major advantages of the UAE mainland company is the unlimited visa availability. In addition, the Ministry of Labor issues e-quotas for mainland companies exhibiting visa eligibility. The more employees you have, the more space you can get. This excludes visas for outside vendors, PRO ad drivers, and messengers.

Free Zone Companies: In the smart office package, free zone licenses offer two types of visas. Some packages also allow for 3-6 visas. It is dependent on the emirate. If you require additional visas, you will need to rent a physical office space or a warehouse.

To choose the right type of jurisdiction for their business, new business owners and investors should seek advice from best business setup consultants in Dubai.