What is more suitable for your business? Free zone or Mainland
“When you need to innovate, you need collaboration.” – Marissa Mayer
Mainland Business means a company incorporated and licensed by Department of Economic Development respective emirate, allowed to do business in the local market as well as international market without any restrictions.
Free zone Business means company incorporated and licensed by designated Jurisdiction of respective emirate, allowed to do business inside Free zone and outside UAE. Companies having commercial license and trading of physical goods cannot do business within local limit of UAE and if they wish to do than they have to pay 5 % duty on local market invoices.
What is more suitable for your business? Free zone or Mainland:
1). Scope of Business: Mainland companies can do business freely in local markets without any restrictions from the government whereas Free zone companies can do business inside respective Free zone and outside UAE. Restrictions are applied to Commercial Licenses only and not the Professional Licenses.
2). Ownership: UAE National has to mandatory hold 51% share in Local Business. In Mainland company expat can only hold 49% of share capital whereas in Free zone company expat is can own 100% ownership.
3). Office Space: In Mainland company there is requirement to lease minimum of 200 Sq Ft. Also there is options like Estidama/Sustainability Contract which is like a virtual office. You get a Lease Agreement for the company which enables you to get up to 4 employment visas. Whereas there is no minimum requirement as such in Free zone company.
4). Visa Facility: Mainland Company doesn’t have limitation of Visa facility where as Free zone offer 2 visas on a smart office packages.
5). Approvals from Government: In Mainland company approval from government is depend upon Business Activity for example food department for food related activity and Free zone companies are preferred for import and export License and usually they don’t require external approval.
6). Time Frame to Setup Business: For Mainland, the time frame for its setup depends upon finding the right local partner as sponsor and for free zone companies it depends upon choosing the right free zone for business operations. Usually it takes between 3 to 6 weeks for both mainland and free zone setups.
These were some of the major differences between both of these forms of company setups in UAE. Now you can decide which platform is better to choose for your business. If you are looking for more information or need to establish your own company in UAE, feel free to ask us. We are a team of experienced professionals eager to guide you in all phases of setting up your business enterprise whether it is mainland or free zone.
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