Dubai, as one of the most prominent business hubs in the world, offers a wide range of opportunities for entrepreneurs and companies looking to establish a presence in the region. However, with several options available, it can be challenging to determine the right setup for your business.
Two popular options for company formation in Dubai are the mainland and the free zone. Each offers unique benefits and limitations, making it essential to consider several factors before choosing one over the other.
In this blog, we will explore the question of Dubai mainland vs. free zone: which is right for your business, and help you decide which is the right fit for your business. Whether you are starting a new venture or expanding an existing one, understanding the legal frameworks, business environment, costs, and requirements of each option will help you make a better decision and lead a successful business.
What Is a Free Zone Company in Dubai?
A free zone company in Dubai is a type of business entity that is established in certain designated areas of the city called free zones. These free zones are designed to promote foreign investment and encourage entrepreneurship by providing companies with a range of benefits and incentives.
To set up a free zone company in Dubai, businesses must first choose which free zone is most suitable for their needs and apply to the relevant authorities.
How to Attain Dubai Free Zone Licence?
Attaining a Dubai free zone license requires a certain level of expertise and knowledge to ensure that the process is streamlined and successful. The following steps will guide you on how to obtain a Dubai free zone license.
1. Choose a Free Zone
The first step in obtaining a free zone license in Dubai is to identify the free zone that suits your business requirements. Dubai has over 30 free zones that cater to various types of businesses, and each free zone has its requirements and benefits. Therefore, it’s crucial to research and select the one that aligns with your business goals.
- Ras Al Khaimah Economic Zone(RAKEZ)
- Sharjah Media City (SHAMS)
- International Free Zone Authority (IFZA)
2. Have a Business Plan
Once you have identified the free zone, the next step is to prepare a comprehensive business plan that outlines your business activities, objectives, and financial projections. The business plan will serve as a roadmap for your business and help you secure your free zone license.
3. Register the Company Formation
After completing your business plan, you need to register your company with the chosen free zone authority. The registration process typically involves submitting relevant documents such as passport copies, shareholder details, and the proposed business address.
4. Apply for a License
Once your company is registered, you can proceed with the license application process. The free zone authority will review your application and verify compliance with the free zone’s rules and regulations. This step involves a thorough inspection to ensure that the business meets all the requirements stipulated by the free zone authority.
5. Start Visa Processing
Finally, after your license is issued, you can proceed with the visa processing for yourself and your employees if necessary. The Dubai free zone visa process is typically streamlined, and the free zone authority usually facilitates the visa application process to reduce any potential delay.
What Is Mainland in UAE?
Mainland in the United Arab Emirates (UAE) refers to the area of the country that is governed by the federal laws and regulations established by the UAE government. This term is commonly used to differentiate the mainland from the free zones, which are designated areas in the country that offer foreign investors several economic incentives and tax benefits.
How to Attain Dubai Mainland Licence?
To attain a Dubai mainland license, several steps and requirements must be followed. Here are the general steps to obtaining a mainland license in Dubai:
1. Determine the Legal Structure of Your Business:
Dubai allows for several legal structures for businesses, such as sole proprietorships, limited liability companies (LLCs), branches of foreign companies, and more. Choose the structure that fits your business needs.
2. Choose a Business Activity
Next, you’ll need to select the business activity or trade name for your business, which will determine the specific type of license you’ll need to apply for. The DED website provides a comprehensive list of business activities and the corresponding license types.
3. Gather Required Documents
You’ll need to provide several documents to apply for your mainland license, including a copy of your passport, proof of address, trade name reservation certificate, and more. Make sure to check the specific document requirements for your chosen legal structure and business activity.
4. Apply for the License
Once you have all the required documents, submit your application for a mainland license to the DED. The application process will vary depending on the legal structure and business activity you have chosen.
5. Obtain Approvals
Depending on the nature of your business, you may need to obtain approvals from other government entities or regulatory bodies before your license can be issued.
6. Get Your License
After all approvals are obtained and fees are paid, your license will be issued and your business can commence operation on the Dubai mainland.
Difference Between Mainland, Free Zone and Offshore
When setting up a business, one of the key decisions to make is where to incorporate the company. Three common options are mainland, free zone, and offshore.
As discussed above, the mainland is the area that is subject to its laws and regulations. One of the advantages of incorporating on the mainland is that the company can conduct business throughout the country. This means that the company is not limited to a specific geographic area or industry. Additionally, mainland companies can have 100% foreign ownership, which is not possible for all company types in all countries.
Typically, free zones are set up with the aim of attracting foreign investment by offering tax incentives and streamlined bureaucratic processes. Companies that are incorporated in a free zone can enjoy a range of benefits, including 100% foreign ownership, no taxes, customs duty exemptions, and the ability to repatriate all capital and profits without restriction. However, it is worth noting that some free zones may have rules regarding the duration of a company’s stay in the zone, after which a duration reset may be required.
Offshore refers to a company that is incorporated in a country outside the country in which it operates. Typically, offshore companies are established in countries that offer favorable tax regimes and banking laws. While offshore company formation in Dubai is often associated with negative connotations, it can be a legitimate option for companies that want to take advantage of lower tax rates or establish a presence in a particular region.
One of the key advantages of incorporating offshore is the ability to benefit from favorable tax rates and regulations. Offshore companies can operate entirely tax-free, and assets and funds can be held offshore without tax implications in the country of origin. To illustrate, storage details of assets and funds can be managed effectively under favorable banking laws.
Mainland Company Setup Dubai Cost
When it comes to the cost of establishing a mainland company in Dubai, there are a few factors that should be considered. The cost can vary based on the type of company and the business activities it intends to pursue. Additionally, the cost will depend on the size of the business and the number of visas required for employees.
There are several fees associated with setting up a mainland company, including trade name registration fees, initial approval fees, license fees, and registration fees. These fees can be paid to the Department of Economic Development (DED) and the Dubai Chamber of Commerce and Industry (DCCI).
In addition to the fees and capital requirements, there are also costs associated with obtaining necessary licenses and permits. These may include approvals from the Ministry of Economy, the Dubai Municipality, the Department of Planning and Development, and other regulatory bodies.
Free Zone Company Setup Dubai Cost
The cost of setting up a Free Zone Company in Dubai varies depending on the chosen free zone authority, the type of business activity, and the number of visas required. Some of the most popular free zones in Dubai include Dubai Silicon Oasis, Dubai Media City, Dubai International Financial Centre (DIFC), and Dubai Multi Commodities Center (DMCC).
This fee covers company registration, licensing, and administrative costs. Companies must also submit mandatory documentation, such as a Memorandum of Association (MOA) and Articles of Association (AOA), which require additional fees.
Apart from the setup cost, Free Zone Companies in Dubai incur annual operational and maintenance fees. In addition to the fixed fees, companies must also factor in visa costs, office rent, and additional costs such as telephone and internet charges, which can add up to the total operational costs.
Answering Dubai mainland vs. free zone: which is right for your business, requires careful consideration and analysis of your business needs, priorities, and future goals. Dubai mainland offers advantages such as access to the larger UAE market, unlimited visa availability, and the ability to do business with government entities, while Dubai free zones offer advantages such as 100% foreign ownership, tax exemptions, and streamlined processes.
If you are planning to set up a business in Dubai, it is important to consider various aspects such as trademark and trademark class registration, which may differ depending on whether you choose the mainland or free zone. Each option may have its own regulations and requirements for registering a trademark and determining the appropriate trademark class for your business activities. Therefore, it is recommended that you research and consult with legal experts before making a decision on which setup to choose.
To set up your one-person business in Dubai, reach out to us for expert consultation and support. Our team of experienced professionals can assist you with every step of the setup process, from initial planning to final execution, ensuring that your business is set up for success. Don’t hesitate, and take the first step towards establishing your business in one of the world’s most dynamic and cosmopolitan cities today!