differences between Free Zone and Mainland companies in UAE

One of the most common questions from entrepreneurs looking to set up their businesses in one of the seven Emirates is: “should I open in a Free Zone or in the Mainland?”

With more than ten years of experience in the industry of business formation, our experts are giving you some explanations about the difference between Free Zone and Mainland.

2 structures !

  • A mainland company is an onshore company licensed by the DED, Department of Economic Development which is responsible for registration, licensing, commercial compliance and consumer protection of the company. A mainland company is allowed to do business in the local and international market without any restrictions. However, to set up your company in the mainland you need a local sponsor (a UAE national) holding 51% of the company shares and the foreign shareholders holds the remaining 49%. With regards to the local sponsor, he receives an annual a fee or a percentage of sales/profits.
  • Also called a free trade zone, Free Zones are geographically demarcated business zones in which companies may operate to benefit from a preferential tax, customs and import regime. But the biggest benefit of operating in a Free Zone is the ability to have 100% foreign ownership of the company. This means you do not need a local sponsor or partner to open your business in the country!

Do you know the differences between them?

$30 month
  • COST
$20 month
  • Business set up in UAE Free Zones offers 100% foreign ownership, you have the full control of your business
  • When you set up your business in a Free Zone, your activity is geographically demarcated. You can operate only within your Free Zone or abroad but you can’t operate with mainland companies.
  • You can enjoy a 100% ownership and control on your business when you set up in Free Zone. But the Free Zones are controlled by private entities that can change the rules applied to the Free Zone anytime.
  • Getting a license from a Free Zone is not as hectic as in mainland. You do everything through a simple window.
  • The price of the business license in Free Zone are cheaper than mainland
  • A company in Free Zone can be incorporated with or without physical office. New entrepreneurs have the possibility to use the common business center desks for the new entrants to save costs. They are called flexi desks or smart offices.
  • In general, every Free Zone offers 2 visas. But, some of them offer 3 to 6 visas on the same package.If the entrepreneur needs more visas then the rental of a physical office or a warehouse in the Free Zone is required to avail more visas.
$30 month
  • Business set up in mainland offers control on the business but you need a local sponsor or a local service agent retentive of 51% of the shares
  • When you set up your business in mainland, you don’t have any restrictions and you are free to trade inside and outside the UAE territory (Free Zones included)
  • Legal governmental bodies control the mainland and they act to protect your company.
  • A lot of procedures and administrative steps. It can be hectic and tiring.
  • The cost to set up a business in mainland is higher
  • For each company in mainland, there is a minimum requirement of 200 square foot office space needed. You need to present an Ejari (Dubai) or Tawtheeq (Abu Dhabi) to DED to have the license released
  • Every company receives an electronic quota by the MOL, Ministry of Labor which shows their visa eligibility. This quota can be increased by increasing the size of your office. The more the office will be big the more visas you will be able to have.

It is time to choose

We at FreeZoneMarket.ae escort entrepreneurs in their dream to set up their business in Dubai and the UAE. We help them make the RIGHT choice for their businesses, always serving their interests.

If you feel needing further clarification to understand the differences between Mainland and Free Zone companies simply talk/speak to us on: (+971) 58 514 2021 or email us at info@freezonemarket.ae

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