Differences between free zone and mainland set up
If you are planning to commence trade in the Mainland Company, you will be required to have a United Arab Emirates National in every mainland licenses. It might be a local sponsor or a local service agent. In case a commercial license is opted for, the foreign investor who set up a company in mainland United Arab Emirates can obtain up to 49% share of the company and the rest 51% of the company’s shares lay with UAE National.
But in term of a professional license, 100% shares can be acquired by foreign investor but still needs services of local service agent. Responsibilities of the local service agent include signing all the government applications and apart from that has no stake involved. The foreign investor is the solely responsible for all operations related the business with no interference from the local service agent unless agreed upon.
In comparison with Mainland Company, foreign investors savour complete ownership of the business. Presence of United Arab Emirates National in the license is not mandatory. This is by far the best benefit of free zone Company in Dubai.
Scope of business:
Companies that are entrenched in mainland United Arab Emirates faces no limits related to scope of business. Business can operate anywhere in Dubai, i.e. in free zones and even outside Dubai. They can take up commercial, professional and even industrial activities apart from banking and insurance.
Compared to mainland set up, a free zone company can only operate within the area designated to free zone. If they wish to conduct business in local market then they will require local distributor or an agent for assistance. The free zones are based mostly near sea ports and airports. So the most favored business for these set ups are import and export related services.
The minimum requirement for annual leased out area is 200 sqft for a mainland company. Once you have obtained the company with the required area then a license will be issued to your mainland company by Department of Economic Development.
While a free zone company does not necessarily require physical office space. Depending upon the activity and nature of business, the business might not have physical office. One benefit that a free zone company can opt for is a flexi desks service which by the way is cost effective and with the help of this license business can take advantage from the common centre desks for minimum 5 hours availed by any common business, hence saving initial cost of registration by new ventures.
There is no no visa limitation for a mainland license. An electronic portion is circulated by the Ministry of Labour to each mainland company. It shows their ability for visas acquisition and if the company needs more staff then it can also enhanced. Visa eligibility depends on the office space, that being said if you have more office space then you can apply for multiple visas for your company. Driver and sales staff for outdoor assignments are not eligible for visa facility.
Each free zone license are offered 2 visas on the package of smart office and varies as different free zones in UAE permits 3-6 visas on this package. If you require more visas then requirement to lease out a physical office or a warehouse can get a number of visas.
Approval from government authorities
Mainland Company’s license requires standard government approvals to obtain a license i.e. DED, Labour Ministry, and Department of Naturalization and Residency affairs of Ministry of interiors or immigration.
Also some other approvals are needed from external government authorities for conducting particular business activities such as Knowledge and Human Development Authority for education related licenses, Dubai Health Authority for medical licenses, Food Department of Municipality for all food license and many others.
However, most of free zone companies are related mainly to imports and re-exports. In this case these companies are not required to external authority’s approval for issuing of license. They might require approval of external authorities only if they choose to acquire any special services.
So, businesses are required to make a choice between Mainland set up and Free zone set up. The answer simply put completely depends upon the kind of activities and nature of business you want to opt for. So, if you want to conduct business within the UAE then you must opt for mainland set up and if you want complete ownership of your business and control of operations of the business then free zone set up should be your first preference.