Table of contents
- Introduction
- Understanding mainland companies
- Key benefits
- Understanding free zone companies
- Key benefits
- What is the difference between both types of company setups?
- How can RadiantBiz assist you?
International business investors are considering the UAE as one of the best places to invest and start a business. The popularity of the country is always strengthening due to the many benefits and flexibility it offers across multiple industries. With its business-friendly policies, versatile tax structure, and attractive location the country has always been the number one choice for foreign entrepreneurs.
Now, being a business hub, the UAE offers jurisdiction choices for individuals who are looking for a successful business setup in Dubai freezone. Therefore, as a foreigner, you need to have a complete understanding of the various business jurisdictions in the UAE and everything works for them.
You can choose from mainland and free zone business setups, but how to choose the ideal location for your business? We will give you a complete guide on what is the difference between the two of them and what set of benefits they offer for different businesses.
Understanding mainland companies
A mainland company is also known as an onshore company in the UAE. When you decide to choose a business setup in Dubai mainland, you will have the complete authority to operate your business anywhere in the UAE as well as outside of the country. Moreover, the DED (Department of Economic Development) issues the mainland license for a new business. With mainland company formation you will get access to unlimited trading opportunities in the UAE.
So what are the major benefits of having a company formation on the Dubai mainland?
- Conduct business without restrictions
A business setup in Dubai Freezone allows you to conduct business without any restrictions in the UAE and outside the country. This could help you with a better expansion of your business in the future.
- Tax exemption
The UAE government has made it easier for businesses to have a flexible tax framework where they will not be required to pay income or corporate taxes.
- 100% ownership
The government has recently made amendments to the previous law where, while establishing a mainland company in Dubai, a foreigner was required to have a local sponsor with 51% shares of the company. But now, you can hold 100% ownership of the company (although, exceptions still prevail for some business activities)
- Office space at the best locations
When you opt for mainland company formation in Dubai , you get the best options for a desirable office set up in the premium locations of Dubai. In addition, you also get to open multiple company branches in the country to create a better local presence for your business.
- Visa criteria
Mainland companies do not have any restrictions on visas which means you can apply for several visas. It depends on the area of your workspace which counts as a major benefit of a mainland business in Dubai.
Understanding free zone companies
The development of the free zones in the UAE started way back in the 1980s with the aim of enhancing the economy of the country. At present, the UAE has over 45 free zones, and it is among the most lucrative options for foreign investors. A business setup in Dubai Freezone is characterised by its own set of rules and regulations that are defined by the governing authorities of the respective free zone. Free zones also allow you to hold 100% ownership of the company along with complete tax exemptions.
Well, then why should you consider having your business setup in Dubai free zones?
- 100% ownership of the company
Free zones in the UAE always had the advantage of 100% ownership of the company for foreign investors. Thus, you don’t need a local sponsor for your company formation.
- No physical office premises required
The most beneficial aspect of having a business setup in Dubai Freezone is that you don’t have to look out for office premises, this results in eliminating the need for office space and thus saves money.
- Easy license procedure
Free zones in the UAE are the quickest and most reasonable way to get a head start on your business formation. The rules and procedures are very simple and you can get the trade license from the designated authorities in no time.
- Exemption from import & export duties
Free zones offer a major benefit of complete exemption from the export and import duties that are levied on the general trading businesses.
- No limits on money transfer
Free zones in Dubai allow foreign investors to have unlimited access to money transfers and foreign currency exchanges.
Getting confused about what to choose between mainland and free zones in the UAE? Let us give you more clarity and state the differences, that will help you make a better decision for your business setup.
Mainland vs Free Zone – What is right for you?
- Scope of business
For a mainland business setup, the scope of business is unlimited and you can choose to expand your business anywhere in the country as well as outside the UAE. Whereas, with a free zone, you can only conduct business in that concerned free zone with a set of rules and regulations.
- Ownership of the company
With the introduction of the new law set by the government, now foreign investors can have 100% foreign ownership of the company in the case of business setup in Dubai freezone. Although, the rule might differ for some businesses from the list of over 2000 business types on the mainland.
- Visa criteria
Mainland business zones have no restrictions on the number of visas, it majorly depends on the area of your workspace. Whereas, for free zones, you have some restrictions on the number of visas.
- Office setup
Mainland companies are required to have an office space for their business activities. You need to lease or rent a minimum of 200 sq ft work area.
Whereas for business setup in Dubai freezone, it is not mandatory to have dedicated office space, you can choose a virtual office setup or even a Flexi desk as per your business requirements.
- Taxes
Mainland companies in Dubai are free of taxes but they might need to pay a VAT of 5% as per the nature of the business. Free zones are completely exempted from the tax regime.
- Cost of business setup
Talking of the business setup costs for mainland companies, these are usually on the higher side, whereas for a free zone business setup it is medium to higher side and the rest depends upon the free zone that you are choosing.
How can RadiantBiz assist you?
Are you still confused about the jurisdiction for your business setup in Dubai? Look no further, speak to the experts at RadiantBiz and get complete assistance from us. We have a team of professionals who can do all the work for you, you don’t need to go through all the hassles, we will take care of all the things such as acquiring a trade license from DED or concerned free zones, visa, office setup, and opening a bank account in Dubai. Speak to us today for a better understanding of which jurisdiction would work best for you.
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