Difference between mainland and freezone in Dubai, UAE

Dubai offers a plethora of investment opportunities for investors around the world. UAE has seen a strong economic growth in the past decades and still continue the same even after the threatening pandemic. Dubai is a commercial hub for people with different interests. When it comes to business setup in Dubai, you have to select the most appropriate location that attracts your prospects.

Being a global hub, UAE provides a stable and business-friendly environment. Here, you can setup your business either in a free zone or in the mainland. Freezone and mainland business setup have its own set of advantages and disadvantages. Both the jurisdictions appeal different types of investors. Moreover, the selection entirely depends on your business activity.

Now, what’s the difference between freezone and mainland business setup? It’s a common inquiry by entrepreneurs who plan to start a business in the UAE. Being an investor, you must have a clear understanding on the different types of business jurisdictions in UAE. If you cannot figure out the best suitable jurisdiction, consult Flybiz business setup consultants for quick advice and company setup.

Freezone Company setup Vs UAE mainland business setup

UAE has three main business jurisdictions mainland, free zone and offshore. Each jurisdiction is different with its own criteria and advantages. Here, we discuss about the major differences between Freezone Company and Mainland Company.

Mainland company setup in Dubai, UAE

Any company located on the mainland is an inland company which has no legal geographical limits. Moreover, such business setup allows you to do business both locally and internationally. If you collect the professional or commercial license, you can trade within or beyond UAE. The DED or Department of Economic development takes care of licensing and other regulations.

Is mainland a right choice for your business?

Based on your business activities, you should get a clear idea of the optimal business location. Before finalizing, check out a few points,
  • Government contracts

If you’re an investor in the UAE mainland, you get access to government-based projects that are safe and long-lasting. If you prefer government sector, then mainland is your business space.

  • Dubai local market place

Do you have target audience in mainland? Do you travel to other Emirates? What’s your customer base in domestic? Answering these questions will help you determine whether you have to consider local market or other option. Mainland companies provide unrestricted access to local market.

  • More opportunities

Mainland provides a range of business opportunities, where you can pick the best and suitable business activity.

Freezone company setup in Dubai

Freezone company is governed by a separate jurisdiction having its own rules and regulations. Moreover, it varies from one freezone to other and you can choose from 40+ freezones in UAE. The Emirates have specialized freezones such as DIFC for financial enterprises, DMC for media and similarly other freezones. It’s a cost-effective business setup option where you get a healthy working atmosphere.

Is freezone a right choice for your business?

Examine the following elements before you finalize freezone as your business setup option,

  • Low setup costs

Freezones allow small firms or start-ups to setup their business at low upfront cost. When compared to the mainland business setup, freezone provides a flexible business setup cost.

  • Amazing infrastructure

While starting your business in the freezone, you can avail pre-built offices, warehouses, and other facilities tailored to your business needs. Additionally, you get robust infrastructure and multi-tiered data centers.

Benefits of setting your business in Freezone and mainland, UAE

Benefits of mainland business setup

  • Investors are free from corporate taxes. They don’t need to pay a minimum capital amount. However, you have to pay a basic 5% VAT which is considered as lowest in the world.
  • Mainland companies allow you to take up government consignments because you have the opportunity to work with government sectors.
  • Mainland doesn’t have any currency restrictions. Additionally, they easily streamline the visa application process. Investors can apply for visas to ensure safe stay of their families in UAE.
  • Get access to Dubai’s popular local market and empower your business with tremendous growth.

Benefits of freezone business setup

  • Freezone company setup allows complete ownership of your business. Business setup consultants guide you throughout the process assisting in paperwork and other formalities.
  • Since freezones have their own jurisdiction, your sensitive information is not revealed to general public. The separate laws allow additional corporate support in terms of labor, resources, and more.
  • Get 100% repatriation of profits and total exemption from income tax. Freezone has a negligible taxation on export and import duties.

Summarizing the differences between Mainland and freezone company formation

Attribute

Mainland

Free zone

Business ownership

100% foreign ownership earlier it was 49% ownership for the owner and remaining share to Emirati sponsor

Foreign investor get 100% ownership, you don’t need a local sponsor

Office space

140 Sq ft obligatory physical office space

No physical office space required, even virtual offices are allowed

Visa eligibility

The area of workspace determines the number of visas. 

They have some restrictions and it vary according to different freezones

Company Audit

Mandatory financial audit

Varies according to different freezones

Capital prerequisite

Minimum capital is determined by its legal structure

Minimum capital is determined by the Emirati in which the company formed.

Scope of business

Diverse business opportunities

Freezone caters specific industries but marginally low compared to mainland.

 

Taxation

You no need to pay any tax instead you’re liable to pay 5% VAT

Free from complete taxes

Start with Flybiz business setup company, Dubai

Hopefully, you got a better understanding about the differences between mainland and freezone. Finding the right business setup location depends on the type of business and activities you wish to pursue.

Whether you’re willing to start business in mainland or freezone, Flybiz helps you setup business at ease. Being professionals in business setup, we handle all government-related processes ensuring smooth setup.