Difference Between Free Zone and Mainland Company in UAE

Posted by Business Incorporation Zone on December 9th, 2022

Do you want to start a business in the United Arab Emirates but aren't sure what kind to incorporate? There are several obstacles to overcome, as well as opportunities. The United Arab Emirates is steadfastly devoted to upholding a secure, pro-active, and business-friendly environment.

A mainland firm is an inland business that is permitted to operate in the regional market. With regard to commercial and professional licenses, these kinds of businesses are free to conduct their business operations. A local sponsor or UAE national is necessary for a business to start a business in Dubai.

A UAE national owns 51% of the company, while a foreign shareholder owns 49% of it. In this case, the foreign investor has complete control over the company, and the local sponsor is not involved in running it on a daily basis.

Benefits of Mainland Company:

• Corporate tax exemptions are provided to mainland companies in Dubai.

• A 0% minimum capital requirement is needed to establish a mainland corporation.

• Mainland corporations have a lot more potential for diversification than free zone business structures. For conducting business, it offers a variety of possibilities.

• There is no restriction on the using of cash for mainland business in Dubai.

• Full repatriation of money and profits are permissible.

Each Emirate has a designated autonomous authority region known as a "Free Zone." The Free Zone Authority (FZA), a regulatory agency that oversees the operation of free zones, sets its own rules for how they must run.

For investors wishing to establish their business in the area, free zones offer a variety of appealing packages and advantages, including 100% foreign ownership and an atmosphere free from income taxes.

Any business registered within one of the UAE's 40+ free zones is referred to as a free zone firm. A Free Zone corporation cannot conduct business on the mainland since it is only permitted to conduct business inside the Free Zone and outside the United Arab Emirates.

Benefits of Freezone Company:

Complete Ownership:  The UAE allows foreign investors to own 100% of the companies they establish in the freezone company setup. Due to this, business owners can retain their earnings and even remit their profits back to their native country.

Tax: This is the most intriguing justification for why individuals start businesses in free zones. Free zone business structure provides 0% personal and company tax, as well as a current 5% VAT exemption.

Complete Support & Assistance: The establishment of a free zone is favoured since it offers assistance both during and after the establishment of the company. They frequently aid with the opening of bank current accounts, offer guidance, and support with visa applications.

Your company's performance in the UAE will be greatly influenced by its location. If you don't pick the right one right away, you'll have to pay extra money for things like relocation.

It is therefore advisable to work with Business Incorporation Zone, and everything will be handled for you by our legal professionals. We address all parts of forming a business, such as permits, paperwork, banking, etc.