Comparing Costs: Free Zone vs Mainland Business Setup in UAE
When considering business setup in UAE, a pivotal choice you will encounter is whether to set it up in a free zone or on the mainland. Every option presents distinct benefits, especially regarding ownership structure, regulatory obligations, and—crucially—expenses. Grasping the financial implications can profoundly impact your business’s initial phases and its enduring success.
This blog will explore the financial aspects of business setup in UAE Free Zone compared to the mainland, examining licensing fees, office rental costs, visa quotas, and renewal charges. By the conclusion, you will gain a more defined understanding of which setup aligns perfectly with your budget, business objectives, and growth strategies in the vibrant UAE market.
Free Zone Company: What Is It?
For those who value complete ownership, free zones present a fantastic option compared to the mainland. The inaugural free zone in the UAE was established in the 1980s, and since that time, they have expanded significantly in both size and scope. At present, the nation boasts more than 46 free zones. Every free zone operates under the guidance of its unique regulatory authority, adhering to its specific set of laws and regulations.
Mainland Company: What Is It?
A mainland company is an onshore entity officially registered with the appropriate government authority of the respective emirate. The Emirate’s Department of Economic Development (DED) issues its trade license. A vital characteristic of a mainland company is the absence of limitations on its business operations. For certain business activities, having a local sponsor or a UAE national partner in your company is essential.
What Sets Mainland Apart From Free Zone?
What distinguishes mainland from free zone? The jurisdictions exhibit significant diversity, with each uniquely catering to a specific corporate framework. Here are the essential distinctions to guide you in choosing the perfect option for your needs.
Ownership
Until recently, foreign investors looking to business setup in UAE mainland faced a restriction of owning no more than 49%, with the remaining 51% required to be held by an Emirati sponsor. The UAE government has now opened the door to 100% foreign ownership for select business activities registered on the mainland. In free zones, you face no restrictions or requirements for local sponsors, allowing you to enjoy full ownership right from the start.
Business Scope
Business setup in UAE Free Zone and mainland companies differ primarily in one key aspect: a free zone company is restricted from conducting business outside its designated area without the assistance of a local agent. Mainland companies with the necessary permissions can operate freely throughout the UAE, unaffected by this restriction.
Workspace
A mainland company is required to maintain a physical office space of at least 200 square feet. Once you have secured the necessary space, the DED will provide a license for your business. Free zone companies are not required to maintain a physical location, as numerous free zones permit the establishment of virtual workplaces.
Visas
Business setup in UAE mainland face no visa restrictions; however, the issuance of visas is contingent upon the workspace area. If your company needs more visas, the first step is to secure or lease a larger workspace. In contrast to companies based on the mainland, those operating in free zones face limitations on the number of visas they are permitted to apply for. The availability of visas generally hinges on the regulations of the free zone, with a range spanning from 1 to 6.
Get Your Approvals For Free Zone Business Setup
Obtaining government clearance from multiple agencies is essential for establishing a mainland company. Included are the Department of Economic Development, the Municipality of Dubai, the Ministry of Labor, and others. Each free zone operates under its own unique set of laws and regulations for new businesses that are set up within its boundaries. Additionally, business setup in UAE Free Zone does not require approval from government authorities or agencies in non-free zones.
Company Audit
All mainland companies are required to conduct a financial audit at the conclusion of each fiscal year. Not every free zone mandates that companies undergo annual financial audits. Year-end audits are required exclusively for free zone companies such as FZE and FZCO.
Benefits Of A Mainland Company
Here are several benefits of establishing a mainland company:
- Unrestricted freedom to operate your business across the UAE
- Complete elimination of corporate and personal tax obligations
- Full repatriation of profits and capital is permitted
- Explore opportunities to bid on and engage with UAE government contracts
- Unlimited visa availability
- They have the flexibility to establish their office in any location within the registered emirate and can create multiple company branches, solidifying their presence in the local market.
- Unlimited entry to worldwide markets
Benefits Of A Free Zone Company
Here are several advantages of setting up a business in a free zone:
- Complete ownership with no requirement for a UAE sponsor
- Fast and straightforward business setup
- Complete repatriation of capital and profits
- Complete waiver of import and export duties
- The information regarding shareholders is kept confidential from the public eye.
- A straightforward approach to recruitment
- Business advice and networking support are offered by free zones.
Working with ExpressPRO
We trust that you now have a clearer insight into the distinctions and benefits of a mainland versus a free zone company. The right option for you depends on the type of business and activities you plan to engage in. Your needs and goals are what truly matter.
No matter if you are launching your venture on the mainland or in a free zone, one thing is clear: ExpressPRO is here to assist you in establishing your business. Our skilled and knowledgeable free zone business setup consultants in UAE will manage all government-related tasks, guaranteeing a seamless setup.
With a legacy dating back to 2010, we stand as the UAE’s premier business setup consultant, having guided over thousands of entrepreneurs in launching their ventures with confidence and success.
We excel in providing tailored solutions for your business startup, offering swift, reliable, and seamless support backed by our extensive expertise.
Helping you establish your business in Dubai is just the beginning. Our offerings encompass a diverse array of services, such as tax preparation, legal counsel, and human resources management.
There’s even more to gain. As a client of ExpressPRO, you gain access to EP Connect, our innovative networking tool, which opens the door to a vibrant community of like-minded entrepreneurs. This opportunity enables you to engage, connect, and cultivate meaningful relationships within the broader business community of the region.
Seize the opportunity for a complimentary consultation today and receive impartial guidance on establishing your business in the UAE, ensuring you discover the perfect solution tailored to your requirements.
