Planning to invest and run a business in the UAE that will have you questioning what the mainland vs freezone vs offshore companies in UAE difference? Along with a foolproof plan for your startup, a better understanding of these terms is equally important.
The three primary business jurisdictions in the United Arab Emirates are the Mainland, Free Zone, and Offshore. Investors can select the necessary business jurisdictions based on their needs. Each of the three business jurisdictions in the United Arab Emirates is unique from the other and offers benefits to investors.
Let’s discuss each business jurisdiction to get your concept clear.
What is a Mainland Company in the UAE?
A mainland company is an onshore company that can work within the premises of a country as well as outside. It is legally registered under the government regulations of the specific emirate state. The Department of Economic Development (DED) of the government issues the license for the mainland company to run seamlessly.
This company provides a wider angle of business permission. You can cover areas both nationally and internationally.
What is a Free Zone Company in UAE?
A free zone is a company that runs over a special jurisdiction. As the name suggests, no restrictions are imposed on it. It has its own founded regulations and a government body, the Free Zone Authority.
Moreover, more than 40 free zones are currently available in the UAE, which enables you to establish a business under an assigned jurisdiction.
What is an Offshore Company in the UAE?
The offshore company is known to be legal business entities that work outside the scope of the UAE. Until the company is outside the United Arab Emirates, an expat can own all of its shares. This offshore business cannot be physically present in the United Arab Emirates and can never be transformed into an onshore company.
This is great when it comes to global funding and ensures smoothness in the business. Moreover, three basic jurisdictions are presenting offshore company formation.
- RAKICC: Ras Al Khaimah International Corporate Centre (RAKICC) is a successful offshore business jurisdiction in UAE operating and ensuring the maximum registration yearly. It works with the complete alignment with the rules and legislature of countries outside the UAE to ensure the setting up of International Business Companies.
- Ajman: In the UAE, Ajman Offshore is the most affordable offshore business jurisdiction. The businesses are allowed to operate outside of the United Arab Emirates and can buy real estate in the Ajman emirate.
- Jafza: It is the only offshore company authorized by law to possess real estate in Dubai.
Mainland vs Freezone vs Offshore Companies in UAE: What’s the difference?
Let’s now discuss the main distinctions between UAE Mainland, freezone, and offshore.
|
Differences |
Mainland | Freezone | Offshore |
|
Owner’s ship |
if the non-resident person starts a business in the UAE, he is eligible for 49% of company shares. On the contrary, the remaining 51% can be attained by the local national. | There are no such limitations for a free-zone corporation. A foreign national may own 100% of the company’s shares. To launch a business, you don’t require a service agent or a local partner. |
if you are living outside the UAE and choosing the offshore company, only then you can enjoy 100% ownership of your business. This one does not run within the same country. |
| Business Liberty | A company that has its incorporation on the UAE mainland can conduct business anywhere in the country. This indicates that doing business both inside and outside of the UAE is permitted for the company. | Certain limitations apply to businesses incorporated in any of the free zones in the UAE. Companies operating in free zones are permitted to conduct business both inside and outside of the UAE. |
They can conduct business wherever in the world. However, their ability to conduct business within the UAE is restricted. |
|
Visas |
Depending on the size of the workplace, a resident visa is granted. | A residence visa is provided to the concerned person depending on how big the office is as well as the work premises. |
As there is no physical office setup within the country, therefore no residency visa will be offered. |
|
Visa Duration |
They are offered a 2-year validity for investors and employees. |
Their visa stays valid for 2 years for investors and employees |
Not allowed to give UAE residence visas. |
| Cost Required | High | Medium |
Low |
Benefits of Mainland Company Formation in UAE:
The following are some points to think about regarding mainland company formation in UAE.
- Greater business scope: They can carry out domestic and international transactions in the United Arab Emirates.
- Government contracts: Businesses based on the mainland can submit bids and be awarded government contracts.
- Branches: Branches can be opened anywhere in the United Arab Emirates.
- Sponsorship of visas: They can sponsor workers’ visas.
- Foreign ownership: Many commercial and industrial enterprises are now permitted to have 100% foreign ownership under recent rules, however, other critical industries still need a local sponsor.
- Company structure: An LLC, which needs at least two stockholders, is the most popular type of structure.
- Licenses: Depending on the nature of their operation, mainland enterprises must obtain a trade license from the DED. Various sorts of licenses are available.
- Physical office: Having one is not necessarily required, although
Benefits of Free Zone Company Formation in UAE:
Due to the many advantages that establishing a freezone company formation in UAE offers appeals to foreign investors. These are a handful of the principal benefits:
- Tax Exemptions: Companies that operate in free zones typically receive significant tax benefits, including a long-term exemption from corporation and income taxes (often 15 years, renewable upon request).
- Customs Duty Waivers: These save expenses and simplify import and export processes by exempting certain items from duties when they enter and exit the free zone.
- 100% Foreign Ownership: Unlike mainland companies, free zone companies allow 100% foreign ownership, which usually eliminates the need for a local sponsor.
- Whole Repatriation of Earned Profits and Capital: Businesses are permitted to freely give back all of their capital and earned profits to
- Global Connectivity: Dubai offers you the opportunity to meet people and form relationships with people all over the world. This has a global business community to its credit.
Benefits of Offshore Company Formation in UAE:
The offshore company setup in UAE has all of its key advantages that you can opt for if it aligns with your business goals.
- Corporate Secrecy: Anonymity while conducting business in Dubai and other Emirates is an advantage of registering an offshore company in the United Arab Emirates.
- Defense of Assets: The ability to preserve your hard-earned assets is the main and most popular advantage of using an offshore corporation. By incorporating an offshore business with the appropriate corporate structure, you may fortify your assets against unwarranted claims.
- No taxes: Most entrepreneurs who are looking to incorporate an overseas business firm consider it a dream come true to have no corporate tax obligations and no restrictions on capital repatriation.
Other than the aforementioned factor, you can also find below beneficial to you:
- Financial privacy with 100% foreign ownership and tax exemption.
- Financial services and assistance are available in several currencies.
- Benefits to operations and a quicker integration process.
- The investor does not need to be present in person for the registered agent to fulfill all of the processes.
Conclusion:
It all depends on what works best for your company; there is no “better” mainland, offshore, or free zone configuration. As a result, to do business in the United Arab Emirates, you need to be well-informed about these jurisdictions to make wise decisions.
We briefly discuss the main and important point for mainland vs freezone vs offshore companies and you can just find your best fit for your company
We at The UAE Gate can assist you if you want more information about these jurisdictions or are prepared to start a business in the United Arab Emirates.
