A comparison between Free zone license and Mainland license in the UAE
Do you have an amazing startup idea you want to pursue in Dubai? In that case, this blog might be very useful for you. Like every other country, Dubai requires entrepreneurs to follow certain disciplines for owning and running a business. Among these, company structure is of much significance. If you are an aspiring entrepreneur who wants to start a successful business in the UAE, you should be aware of the different kinds of company structures. Read on to learn about the freezone and mainland company structures, two major business structures in Dubai.
What Is a Freezone Company?
A Freezone company in the UAE implies one that is formed under a particular emirate. This kind of company follows the terms of a specific free zone jurisdiction. The government body that monitors the activities of such a company is called a free zone authority. There are over forty free zones in the United Arab Emirates.
What Is a Mainland Company?
A mainland company in the UAE implies one that is located onshore and can function anywhere in the United Arab Emirates. The government body of the particular emirate at which the company is located monitors such a company. A mainland company gets its license from the Department of economic development of the emirate.
Comparison Between Freezone and Mainland Company Licenses in the UAE
Naturally, your choice of company structure depends upon the purpose of your business and the scope to which you aim to build the business.
Freedom and Ownership
A mainland company can trade anywhere inside and outside the UAE. In contrast, a free zone company is allowed to trade only within the specific free zone and outside UAE. One of the best features of the Freezone structure is that you can enjoy complete foreign ownership and concessions in taxes. Since the investor has complete ownership of the firm in a freezone company, there is no need for a local agent or sponsor. Although a mainland company has 100% ownership of the firm, it requires a local partner for certain activities.
Company Audit and Capital Prerequisite
Regarding company audit, the rules vary from zone to zone in the case of freezone companies. While some zones exempt audit preparations, some others mandate an annual audit. Whereas a mainland company is required to submit a financial audit report annually. The authority of the freezone determines the capital prerequisite of a freezone company. Whereas the capital prerequisite, in a mainland company’s case, is estimated by the legal body of the company itself.
Visa Essentials And Eligibility
Freezone companies are generally allowed limited visa essentials. The terms here change with zones, though in general, between 1 to 6 visas are allowed. The factor that determines visa eligibility is the office space size. In the case of mainland companies, they can acquire as many visas as they need. Of course, this too depends on the size of the office premises.
Office Premises
Another key point is that freezones can operate with or without office premises. However, it is necessary for a mainland company to have an office premise of at least 140 square feet area. It is also necessary to seek permissions from various departments, such as the Department of Economic Development and the Ministry of Labor, for the smooth functioning of the company.
Conclusion
Each of these company structures has distinctive mechanisms. Before you choose a certain structure, you need to first understand these points in detail and decide which type caters to your business idea. If you need guidance in this regard, you can always seek assistance from Consultycs, an expert business setup consultancy firm in Dubai. Consultycs provides expert insight to investors, entrepreneurs and business owners for the smooth running of their enterprise. You can pick from different services such as company formation, business structuring, accounting and audit assistance and VAT advisory at Consultycs.
