A COMPREHENSIVE GUIDE TO FREE ZONES AND MAINLAND UAE
EVERYTHING YOU NEED TO KNOW TO UNDERSTAND WHERE TO ESTABLISH YOUR COMPANY
As one of the most lucrative and dynamic business hubs in the world, the UAE is an ideal place for foreign investors to embark on an entrepreneurial journey. However, one of the common challenges faced by any business looking to enter the UAE market is to determine whether they should establish their company in a free zone or the mainland.
Depending on the specific needs of your company, such as location, timeline, nature of business, budget, and staffing, we’re here to help you choose between forming a company in one of the many free zones or in mainland Dubai and the other six Emirates. To help you understand your options, the experts at Creation Business Consultants have put together this helpful guide to shed some light on which area would be most beneficial to the success of your company.
A mainland company structure provides attractive options for foreign investors to set up their company or to expand to the UAE. Licensed by the Department of Economic Development (DED), a mainland company is permitted to conduct business in the local market, as well as outside the UAE and internationally without any operating restrictions. A global hub, mainland Dubai offers opportunities for business investors to enter not only the greater GCC but also the global market.
MAINLAND RESTRICTIONS & STIPULATIONS
An amendment to the Commercial Companies Law (CCL), which stipulated companies operating in mainland UAE require a local partner who maintained a minimum of 51% of the company, now allows 100% foreign ownership of UAE mainland companies, effective 1 June 2021.
The amended CCL repeals the required minimum UAE ownership percentage (51%) in UAE mainland companies. Accordingly, mainland UAE companies (existing and new) are allowed to be 100% foreign-owned, effective 1 June 2021, subject to obtaining specific approval from the relevant authorities in each emirate.
Depending on your specific business needs, and where you decide to open your business (wholly owned subsidiary, branch office or a representative office), Creation Business Consultants can help your companyobtain their mainland license while simultaneously providing a trusted, safe corporate sponsor to hold the required 51% shares in trust for your company or to act as the local service agent. By leveraging our trustedcorporate nominee sponsorship model, foreign owners seeking to expand into mainland Dubai can maintain ownership and full control of their business.
ADVANTAGES TO UAE MAINLAND BUSINESS
100% foreign ownership
No hiring restrictions
Unrestricted access to global market
100% repatriation of capital and profits
0% corporate and 0% personal taxes
Potential to contract work with the UAE governments
100% control of your company
Freedom to trade throughout UAE without any restrictions
UAE Residence Visa
According to the Department of Economic Development, each mainland company must lease a business facility. The minimum office space requirement set by DED is to lease a minimum of a 200 sq ft office. Depending on your business type this may be a warehouse, shop, outlet store, food truck, retail unit, office or a combination of many leasing types. Each year you must renew your trade license. Part of this requires you to renew your office or business facility and provide a tenancy contract (Ejari) copy to complete this process.
There is no limitation on the number of residence visas issued to a mainland business. Eligibility for residence visas depends on employee designation, as well as the size of leased office space or business facility. The number of visas issued for each company is determined in correlation with the sq.ft of office space. Therefore, the more office space your company has, the greater the number of residence visas your company may qualify for.
The UAE has over 50 free zones. Each free zone is governed by their own rules and regulations. Free zones provide attractive options for foreign investors to set up their company in the UAE. Main benefits include 100% foreign ownership, zero percent corporate tax, zero percent personal tax, no hiring restrictions, 100% exemption from import and export duties, access to international markets, and more. In particular, Dubai has over 29 free zones, each with distinct advantages.
Understanding and selecting the right free zone suitable to your business needs can prove challenging. Many free zones are very industry specific and they offer specialised business activities in the same field. For example, Dubai Healthcare City is suited for companies in the health sector, whereas Dubai Techno Park is home to information technology (IT) companies. On the other hand, many free zones cater to a broader range of business markets (such as general trading, services, and consulting, etc.). At Creation Business Consultants, our experts will take an in-depth look at your company to ascertain the free zone best suited to meet your current and future goals.
Each UAE free zone has specific business activities that can be performed both within the free zone jurisdiction and internationally. Companies operating within a free zone are only permitted to conduct business within their specific free zone and are not permitted to operate in mainland UAE. When it comes time to select your free zone, it’s important you choose the free zone that meets the specific needs of your business operations, customers and staffing requirements.
Free zones do not require a UAE national partner/service agent to obtain a business license. The biggest benefit is a free zone company is 100% foreign owned.
Like mainland companies, free zones also require a company to lease an office type or business facility. Depending on your needs, some free zones offer facility rentals for ready to operate offices, retail shops, or warehouses. Certain business activities can determine the type of business facility rental. For example, some free zones require businesses in general trading to lease a warehouse. Whereas, a management consultancy company may enable you to lease the minimum office facility rental, such as a co-working space or a flexi-desk. Free zones are ideal for companies who do not require a great deal of office space and for those companies in the startup phase who need to keep their operating costs to a minimum.
Unlike mainland companies, whose visas are determined by office space and employees, visa requirements differ from each free zone. Therefore, it’s essential for any business operating in a free zone to consider and plan for the present, near future and long term before selecting their free zone. For example, the visa quota depends on the office facility type, and this quota will vary with each free zone. Some free zones only have a “flexi desk” or “smart desk” option which allows for two or three visas (which is ideal for startup companies). Whereas, other free zones have larger office spaces or warehouses which allows for more visas for future employees as your company grows.
ADVANTAGES TO SETTING UP YOUR BUSINESS IN A FREE ZONE
100% foreign ownership without the aid of UAE sponsor
No hiring restrictions
Ability to open and operate a UAE corporate bank account
100% repatriation of capital and profits
No personal or corporate taxes
Access to global markets
100% exemption from import and export duties
No trade barriers or quotas
UAE Residence Visa
CREATION BUSINESS CONSULTANTS
At Creation Business Consultants, our team of professional business consultants are equipped with the knowledge, expertise, and experience to help you set up your company in the UAE. By taking an in-depth approach to your business, we will guide you on your path to setting up your company in the UAE.
From navigating the various local laws and regulations associated with setting up and expanding your company to the UAE, to helping you open your corporate bank account and obtaining residence visas, our team can have your company setup in as little as 24 hours. Additionally, our corporate nominee sponsorship minimises any risk associated with expanding or setting up your business to the UAE by making sure you maintain control of your company.