UAE Dubai Mainland or Free Zone: Which is Right for Your New Business?
The UAE offers a variety of advantages (such as tax exemptions) to expatriates looking to start a new business in Dubai. In addition to these benefits, there is a range of company types and structures to choose from, depending on the circumstances and goals of the business.
This is where much of the confusion arises before setting up a business in the UAE, especially when it comes to deciding on the jurisdiction. You might read different publications or online guides about UAE Mainland and Free Zones, or hear different stories from friends and acquaintances who have set up businesses in Dubai, which can confuse you further or even lead you down the wrong path.
To clarify, let's break down the two main options:
Understanding UAE Mainland Company Setup
Mainland companies (also known as onshore companies) are registered with the Department of Economic Development (DED) in each of the UAE's emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah, and Ras Al Khaimah). A mainland license allows a business to trade directly with the local UAE market without restrictions.
Here are some key notes to keep in mind about mainland company types:
- Sole Establishment on the UAE Mainland - An enterprise owned by a single individual, not a company, which provides 100% ownership to a sole investor but comes with unlimited liability.
- Limited Liability Company (LLC) on the UAE Mainland - An adaptable business type that combines elements of a partnership and a corporate structure, offering limited liability to its owners. This is the most common structure for foreign investors.
- Branch of a Foreign Company on the UAE Mainland – Can engage in professional activities in addition to some specified commercial and industrial activities. It is considered a legal extension of its parent company.
- Representative Office on the UAE Mainland – This is not a commercial structure on its own but a business entity that can promote and market its foreign parent company's services. It cannot conduct trade. It requires a Local Service Agent (LSA) who can be a UAE national or a company owned by at least one UAE national.
- Civil Company on the UAE Mainland – This is a business partnership for professionals such as doctors, lawyers, engineers, and accountants, allowing them to offer their expert services.
Understanding UAE Free Zone Company Setup
Investors looking to set up a business in the UAE can register their company in one of the 40+ free zones and enjoy benefits such as tax exemptions, remote registration processes, and 100% foreign ownership.
Major Free Zones in the UAE and Their Specializations
- Dubai Multi Commodities Centre (DMCC) - Commodity Trading and Exchanges
- Jebel Ali Free Zone (JAFZA) – Trading, General Trading, Service, Logistics, and Industrial
- Dubai International Financial Centre (DIFC) - Banking, Financial Services, and Legal
- Dubai World Central (DWC) – Aviation, Logistics, Light Industry, and Ancillary Services
- Dubai Knowledge Park (DKP) – Human Resources Management, Training, and Personal Development
- Dubai Internet City (DIC) – Internet and Communications Technology
- Dubai Media City (DMC) – Media-related activities
- Dubai Silicon Oasis (DSO) - Information Technology, Telecom, Electronics, and Engineering
- Dubai Healthcare City (DHCC) - Healthcare, Medical Education and Research, Pharmaceuticals, and Medical Equipment
- Ras Al Khaimah (RAK) – Trading, General Trading, Service, Industrial, and Educational
- Fujairah Creative City (FCC) – Media, Consulting, Communications, Design, and Technology
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