While setting up a business in the UAE you need to know the difference between Free Zone and Mainland. There are pros and cons in both the jurisdiction as well as business opportunities for the entrepreneurs. The priorities can be the type of business activity, business entity, etc. Hence to conduct business in the UAE, one must have complete knowledge of both the jurisdictions to make appropriate decisions.
Mainland UAE:
When it comes to business setup in Dubai, UAE Mainland is known to be one of the most developed business entities. There are three kinds of licenses to be issued for business setup in UAE Mainland, namely – Commercial, Professional, and Industrial license. However, Mainland companies provide more flexibility in contrast to the Free Zone companies in terms of employment, business location and promoting business, among other benefits.
Freezone UAE:
With the growing economy in UAE and infinite business opportunities, the Dubai government has introduced Dubai Free Zones. The free zone is often confused with offshore. It is important to understand that the UAE offshore company is a company that allows working offshore only, which is anywhere in the world except the UAE. Dubai free zones are zones designated by relevant authorities where companies can be 100% foreign-owned and they don’t require a 51% local partner. Companies in free zones are allowed to work in the UAE and run their operations in the free zones where the company is registered. The first free zone emerged in 1985. Today in Dubai alone there are more than 20 free zones and each of them was established to serve the needs of a particular industry.
Difference between Free Zone and Mainland:
| Free Zone | Mainland | |
|---|---|---|
| Ownership | A free zone company has no restrictions on ownership. The business owner can hold 100% shares of the company | The business owner planning to set up a company in the mainland can acquire only 49% of the company shares. Remaining 51% is acquired by a local sponsor. |
| Cost of company setup | The cost of a company set up in Free Zone is minimal | The cost of a company set up in the Mainland is high |
| Government authorities for company setup | Free Zone companies do not require any approval from the authorities. | Mainland companies need to take permission from DED, Dubai Municipality, and various other authorities. |
| Secrecy | Free Zone company details are available to the public on request | Mainland company details are available to the public on request |
| Capital requirement | A free zone company has a minimum capital requirement | The minimum capital requirement for a Mainland company varies according to the legal form of business |
| Audit | Free Zone company requires auditing | Mainland company must pre-audit at the end of every financial year |
Choose the right jurisdiction for your business with the help of MSZ Consultancy!
Now that you have accurate knowledge about the difference between Freezone and Mainland, start your company with the help of MSZ Consultancy. Our advisers will provide you assistance on every aspect of company formation.
