One of the most important decisions an entrepreneur can make when setting up a company in Dubai is choosing its location. Should you form your company in a Free Zone, or should you choose company formation in Dubai’s mainland? It’s crucial to choose the one that gives your business freedom and the flexibility it needs to succeed.
Despite the Free Zone business setup process being straightforward, many entrepreneurs choose instead to form a mainland Dubai company due to the variety of advantages they offer.
Mainland Vs Free Zones
A mainland company is a business that’s licensed through the Department of Economic Development (DED) for that particular Emirate. However, a Free Zone company is licensed through the relevant Free Zone authority and only allows for a business to serve a narrow geographical area. Choosing between these two business types can have huge implications for how you do business and how successful you’ll be in your chosen field. When determining which jurisdiction is right for you and your company, you’ll want to make your decision based on:
- Your Proposed business activity
- The location of your customer base
- The type of consumer you’ll serve
- Physical location
- The number of employees you’ll need
Unrestricted Business
A mainland company will have no restrictions on who you can trade with, or where you can conduct business in Dubai. If you desire to provide a service or trade directly with consumers, you'll most likely want to choose the mainland for company formation. This is because Free Zone companies are restricted to operations inside their particular jurisdiction and are not allowed to provide services beyond those limitations.
Additionally, a mainland company has no limits on the number of visas you may acquire. Visa quotas are typically based on your commercial office space, where the more office spaces you have, the more visas you'll qualify for.
Location Flexibility
Mainland companies can locate their business anywhere in mainland Dubai. You're also permitted to operate virtually with no physical office space. However, in a Free Zone, there are limited options for commercial spaces, and you will be restricted to locating your business within the chosen jurisdiction.
Wide Range of Activities
Another benefit of choosing Mainland business formation is it offers a wider range of business activities to choose from. Businesses forming in a Free Zone will be placed into a jurisdiction that handles that business activity.
Adaptability for the Future
It's become a common misconception that all Mainland companies require a local sponsorship partner that owns a majority stake in your business, and for this reason, many investors choose a Free Zone to form their business instead. But if you're forming a company with a professional-grade activity, it's possible to own your company outright as a Sole Establishment with a single shareholder, or as a Civil Company with multiple shareholders.
The Advantages of Forming a Company in Dubai’s Mainland
There are many reasons a prospective entrepreneur would choose business formation in mainland Dubai, including:
- No minimum capital requirements
- Full exemption from corporate taxes
- Flexibility to trade with other mainland companies
- More options for business activities compared to Free Zone companies
- 100% repatriation of profits
- No currency restrictions
- Availability of government work
Choose MSZ for all Your Business Setup Needs!
MSZ Consultancy is proud to help simplify your business formation in Dubai. Whether you're founding a company in Dubai's mainland, or one of the many Free Zones, our business consultants have the experience to help you navigate the ins and outs of business in the Emirates. It doesn’t matter whether you’re a new investor or part of an established company hoping to branch out into a different region, we have the tools and expertise to help your business succeed.
And business formation is just a fraction of the services we offer! If you need assistance with visa applications, PRO services, or choosing your businesses’ legal form, we’re here for you! Give us a call today at +971 50 487 2208 and let our team of knowledgeable business consultants help you maximize your business potential!
Frequently Asked Questions
Forming a business as a foreign investor can be a scary experience for the uninitiated. But we’re here to help! So, we’ve gathered up some of our most frequently asked questions!
1. Should I establish a business establishment in the mainland or a Free Zone?
A mainland company has no restrictions on who you may trade with, or where you’re allowed to trade in Dubai. You’re also eligible to offer services to governmental authorities and trade directly with consumers. Beyond flexibility, mainland companies are exempt from corporate taxes, have the benefit of 100% repatriation of profits, and have no minimum capital requirements.
Choosing the right business jurisdiction for you will depend heavily on your chosen business activity and where you want to do business.
2. How do I start a business in mainland Dubai?
Forming a business in Dubai’s mainland is a straightforward process. To obtain your license, you’ll need to:
- Choose your business activity
- Find your ideal location
- Determine your businesses’ legal structure
- Obtain a local sponsor (if necessary)
- Choose a trade name
- Gather appropriate documents and submit application
- Secure office spaces
- Apply for visas
3. What is a mainland license?
A business license in Dubai is a document that establishes your company as a legal entity. A mainland trade license in Dubai is dispensed to companies to maintain accountability and smooth proceedings of business activities.
4. What are Free Zone companies in the UAE?
A Free Zone company, or FZC, is a limited liability company governed by the rules and regulations of the Free Zone in which it has been established. Businesses operating in these Free Zones take advantage of a wide set of progressive incentives that has put Dubai on the map as one of the largest business hubs in the world.
