Business Setup in Dubai

The main difference between Employment visa in Mainland & Free Zone

In spite of its comparatively small dimension, the UAE has transformed from a confined trading station into one of the most admired and busiest business destinations in the world. Thanks to the diverse, booming industries, large travel, and transportation connectivity, steady political system, smooth capital flow, low taxation policy, business-friendly environment, and moderate trade limitations, UAE has become the first choice for investment.

Now with the rising business opportunities, many foreign investors are looking to start their own business in the country.

If you want to enter into the business community in the UAE, then your choice of location for your business setup is one of the most crucial decisions to make.

There are Mainland and Free Zone areas available to set up a business, both offer outstanding benefits, our PMC Solutions DMCC team helps you determine what best for you based on the scope of a business, eligibility of visa, ownership, and workplace.

What is Mainland Company?

Mainland Company refers to an onshore company which can conduct their trade activities in the UAE’s local and outside market with no restrictions. Department of Economic Development (DED) is a regulatory authority that approves the registration, issues the license, and responsible for business compliance in Dubai.

According to the company formation rules, you must include the UAE national or local sponsor within your business to establish a Mainland Company in Dubai. Often, the local sponsor will hold 51% of the share in the company, and the remaining 49% share will be held by foreign shareholders.

What is a Free Zone Company?

A company formed in separate business jurisdiction in Dubai (known as free zones) that has its own set of rules and regulations is called free Zone Company. A free zone company is allowed to do business within the free zone or outside the UAE.

A free zone is referred to be an isolated property or setting with its own tax system, traditions, and import and export rule. The free zone offers 100% business ownership to the foreign investors and there is no need to allocate any of its shares to others, which is mandatory in Mainland Company.

What are the main differences between Mainland and Free Zone Company?

Mainland Company can work anywhere in the UAE, whereas free zone company required the help of a local agent or distributor to work in the non-free zones.

An employment visa issued for a Mainland Company is valid for two years whereas free zones visas are valid for three years.

Now, let’s discuss some more variation between mainland and free zones in detail:

Structure of Ownership:

In Mainland Company foreign investors can only hold 49% of shares, the rest of the 51% shares will be rewarded to a local sponsor, whereas Free Zone Company offers 100% business ownership to foreign investors without any restrictions in business operations.

Structure of Operation:

Mainland Company has the freedom to conduct any business activities (except banking and insurance) in free zones, non-free zones, or outside UAE. While Free Zone Company can only operate inside the free zone or outside UAE, in order to operate in non-free zones, the company needs a local distributor or agent support.

Workplace Requirements:

The workplace requirement for the Mainland Company setup is 200 sq. ft. space leased out for a year, whereas, free zone companies may or may not have substantial offices, based on their work needs.

Visas Requirements:

Mainland Company has no restrictions to issue visas for employees, whereas free zone entities, two visas are offered under the smart office package. In order to get more visas, the free zone company must rent out the physical workplace.

Administration Authorities Approval:

Mainland Company must get approval from various government departments of Dubai i.e. DED, MOL, DM, and MOI. Free Zone Company does not need approval from outside authorities, except the company is not conducting some special activity that needs approval.

What did we find on the whole discussion? 

For 100% business control and ownership, opt free zone and for conducting business in the entire jurisdiction of UAE without restrictions, opt Mainland.

For more information to set up your own business in Dubai, feel free to contact the PMC Solutions DMCC team. We have experienced professionals to help you out in all stages of setting up your venture whether you choose the mainland or free zone.

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