Free Zone Business Setup or Mainland Business Setup – Which one you should opt?

Are you an aspiring entrepreneur planning to set up your dream business in the UAE? While performing research, you may often come across these two terms, mainland business setup and free zone business setup. These are two different business jurisdictions with their advantages and disadvantages. You need to choose one depending on the nature of your business. This article will help you understand the major differences between a mainland company and a free zone company in the UAE.

Ownership Structure :

Foreign investors who wish to set up a business in the UAE mainland should mandatorily have a local partner or a national service agent. Out of 100% shares, 51% of shares must be held by the local partner and only 49% of shares will be allotted to the expat partner. However, for service businesses such as consultancy, an expat partner will receive 100 % ownership. A local sponsor will act like an agent but does not own any shares of the company. For a free zone business setup in the UAE, there is no such restriction. A foreign investor can get 100% ownership regardless of the type of activity, commercial or professional.

Scope of doing business in Dubai :

A mainland company is allowed to perform business activities throughout the UAE market as well as outside the UAE. A free zone registered company can do business only within the respective free zone and outside the UAE.

Office Space :

All mainland companies must have at least 200 sq. ft of physical office space. (can be even leased out on an annual basis). A free zone company does not require a physical workspace. It may or may not have offices depending on the nature of work. Nowadays, there are even flexi desk and virtual office facility for free zone companies.

Visa Facility :

Mainland companies do not have any limitations for the issuance of visas for their employees. Ministry of Labor issues an E-quota to each mainland company that shows their eligibility for visa acquisition. It can be enhanced further if more employees need to be recruited. The eligibility of visa majorly depends upon the office space and the nature of the business activity. The more space you have, the more visas you can apply for. However, outdoor sales staff, PRO’s and drivers are not eligible for this facility. For free zone companies, only two to three visas are offered under the smart office package. In case if you require more visas, you need to lease out a bigger office space.

Government Approvals :

A mainland company needs approvals from standard government authorities such as DED (Department of Economic Development), DM (Dubai Municipality), Ministry of Labor (MOL), Department of Naturalization and Residency affairs of Ministry of interiors or Immigration (MOI). Also for medical or food license requirements, approval is required from Dubai Health Authority and Food Department of Municipality respectively. Free zone companies generally do not require any government approvals unless there is a specific activity that requires approval.

When you seek advice from a trusted business setup consultant, your company formation becomes less tedious and fast. Corpin Consultants is one of the most sought-after company formation consultants in Dubai with a team of experienced professionals who will guide you in every step of the process. If you wish to set up your business in the mainland or free zones in the UAE, feel free to contact us at +971 55 843 2911 or info@corpinconsultants.com.