With its favourable tax regime and business-friendly infrastructure, the UAE is one of the best places in the world to set up a business. It provides rich opportunities for entrepreneurs and international investors across diverse industries and nationalities.
When setting up a business, you can set up your company on the mainland or in one of the UAE free zones. There are significant differences between the two, and this article spells out the most important differences, covering the following topics:
A mainland company is an onshore business registered with a UAE government body and with a trade licence issued by the Department of Economic Development (DED). There are no restrictions on the commercial activities undertaken by a mainland company, but some areas of business need a UAE national service agent or require a UAE national to be a partner in the company.
If you set up your company in one of the UAE’s free trade zones, you keep 100% ownership, making them an excellent choice for many business owners and entrepreneurs. Free zones have existed in the UAE since the 1980s and have since become magnets for businesses from across the globe.
There are currently 45 free zones in the UAE. Each zone has a local regulatory authority, each with subtly different laws and regulations. The scope of these zones is enormous – Umm Al Quwain FTZ, for example, has more than 8000 registered companies across 20 million square feet of land with investors from 150 different nationalities.
Depending on your business needs, mainland and free trade zones both offer ideal investment opportunities. The jurisdictions involved have distinct structures and regulations, and understanding the key differences is crucial when deciding which one is right for your particular business enterprise.
Let’s focus on some of the key differentiators.
Ownership: Free zones allow you complete ownership of your UAE-based business, without the need for UAE Partner. The UAE government also allows 100% foreign ownership for certain mainland-registered business activities, but other types own a maximum of 49%, with 51% going to the company’s UAE National Partner.
Business opportunities: Free zone companies can only do business outside the free zone through a local agent. In contrast, mainland companies are allowed to operate anywhere in the UAE.
Business premises: All mainland companies require a minimum of 200 square feet of physical office space. Free zones such as UAQFTZ do not require companies to have offices, and you can use a virtual or remote workplace instead.
Visa requirements: There are no visa restrictions for mainland companies, but the number of visas you can apply for depends on the workspace area the company occupies. So, if your company requires additional visas, it must acquire or rent more office space. In contrast, free zone companies have no such restrictions, although the maximum number of visas depends on the local free zone regulations.
Business setup approval: Mainland businesses require clearance from various government agencies. In contrast, free zones have their own laws and regulations. You do not need permission from other government authorities or agencies to launch a business in one of the free trade zones.
Company audit: Mainland companies are required to prepare audits at the end of each financial year. This is not the case in the majority of free zones.
There are just five steps to follow when applying for a business licence, whether mainland or free zone:
Step 1 : Get your company name approved and specify your business. You will be applying as a single partner, multiple partner or branch.
Step 2 : Submit all required documents.
Step 3 : Sign the original incorporation documents and submit them.
Step 4 : Once the documentation has been approved, submit your payment of the specified fees.
Step 5 : Wait for your licence – the process should only take no more than a couple of days.
The Umm Al Quwain Free Trade Zone adds its own distinct benefits to the general advantages of operating a business in the UAE. Companies here enjoy favourable tax laws, low costs and excellent infrastructure. The zone is also in a great location for trade, import and export, being just 30 minutes from Dubai and with special concessions at UAQ’s sea port.
Here is an at-a-glance list of the benefits of applying for and using your general trading licence in the UAQ Free Trade Zone:
If you establish your company here, you’ll be joining other businesses in the UAQ Free Trade Zone at a time of growth and new initiatives. The zone is currently in a second phase of development that promises even greater rewards for entrepreneurs in the future.