Difference between Starting a Business with Free Zones and Mainland

When starting a business in the United Arab Emirates (UAE), you must decide whether to operate in a Free Zone or on the Mainland. Every choice offers advantages and disadvantages, based on criteria such as ownership, business operations, taxation, and operational dimension. Here are the main differences:

Ownership: Free Zones allow for 100% foreign ownership, while mainland operations previously required a local Emirati partner. However, current laws have allowed for full foreign ownership in a variety of industries.
Business Operations: Free Zones may have restrictions on business operations, while mainland businesses can operate both within the UAE and internationally without restrictions on trading in the UAE market.
Office Space and Location: Free Zones provide flexible workplace alternatives, while mainland operations require a physical office space of a certain size as defined by local licensing officials.
Taxation and Customs: Free Zones often provide temporary discounts from import/export duties, business tax, and personal income tax, while mainland operations are subject to ordinary UAE taxation policies.
Legal Environment: Free Zones are governed by their own regulatory authority, while mainland operations are regulated by the Emirate’
Repatriation of Profits: Profits and money can usually be returned in full in free zones, while mainland operations may be subject to various regulations and procedures.
Business Setup Costs: Free Zones frequently have lower establishment costs due to numerous incentives and streamlined procedures, while mainland operations may have higher initial development costs.
Recruitment & Visas: Free Zones provide expedited visa processes and make it easy to hire foreign employees, while mainland operations also provide visa services but with potentially more complicated processes due to additional regulatory restrictions.

The choice between Free Zone and the Mainland is determined by the business’s specific objectives and goals, such as target market, ownership preferences, cost concerns, and regulatory environment. Each solution has unique benefits and may be suitable for many different kinds of business formats and industries.

FAQ

Have a question?

In general, a trade license is good for 12 months and must be renewed every year. As a result, government and registration costs will apply on an annual basis.

Yes, a signed office lease agreement is required to complete your trade license application. This is applicable to both free zone and mainland companies. Most free zones, however, allow for a minimal office facility rental, such as a virtual office or flexi desk, and this is included in the license and government costs that we will propose.

Once the company is established, we can apply for visas for the following individuals

Shareholders (Investor/Partner Visa)
Shareholder family (spouse and dependent visa)
General Manager (employment visas)
Employee (visas)
Employee family (spouse and dependent visa)

Upon engagement with Creation, we will provide a comprehensive list of the prerequisites for your UAE company setup. Documentation will differ depending on the company’s structure, such as a completely owned subsidiary or branch. Documentation will also differ depending on the company’s holdings, such as whether it is owned by an individual or a corporation. The shareholders’ minimum criteria include a copy of their passport and verification of their residential address.

Creation will create, legally translate, attest to, and notarize your new UAE business incorporation documents, such as the Memorandum and Articles of Association, so that your company can be up and running as soon as feasible.

The UAE has around 50 free zones, each with its own norms and regulations. Depending on the free zone selected, a corporation can be established in a matter of hours or weeks. The average timeframe for setting up a North Emirates firm is three days. The establishment time for companies in Dubai and Abu Dhabi free zones ranges between 2 and 6 weeks.

Mainland company structures differ. Some business activities allow us to finish the setup as an instant license, and we can have the firm registered in one day. However, some corporate activity may necessitate approvals from other government agencies and bodies. The timeline for mainland enterprises ranges from one to four weeks.