Why Choose Mainland Over Freezone in the UAE

Overview

The United Arab Emirates offers two main business setup options: Free Zones and the Mainland.

Free Zones: These are designated areas within the UAE that operate outside of the local laws and regulations of the respective Emirate. They offer foreign ownership of 100%, tax exemptions, and streamlined procedures.

Mainland: To set up a business in the mainland, one needs a local sponsor – either an Emirati national or a locally established company with at least 51% stake. This allows the businesses to carry out their business throughout the UAE and directly address the local market.

What is a Mainland Company in the UAE?

A Mainland Company in the UAE is a company that is legally registered with the Ministry of Economy and operated by the DED. In order to establish a mainland company, you need to have a national sponsor from the UAE. Mainland companies are flexible companies because they can do business both within and outside the UAE. Ownership structures depend on the specific business type.

In trading businesses, ownership tends to favor the national UAE holders for 51%, while foreign investors own 49% ownership. A difference exists with service businesses where 100% foreign investor ownership is possible.

Advantages of Opening a Mainland Company in the UAE

Below are some of the reasons why you should can opt for a Mainland Company:

1. Tax-free setting:
   Mainland companies in Dubai are not levied with corporate tax.
2. Minimum capital is not required: 
   An initial investment of minimum capital is not required in opening a mainland company.
3. Varied business possibilities:
   Mainland companies allow one to conduct any business activity under the company more freely than that of Free Zone companies, which can only be restricted to their assigned zone.
4. Broader market access:
   Mainland companies can operate anywhere within the UAE, allowing them to reach a wider customer base and establish multiple branches.
5. Government contracts:
   Mainland companies are eligible to bid on and execute government contracts, unlike most Free Zone companies.
6. Currency flexibility:
   There are no restrictions on the currencies used in mainland business transactions.
7. Full repatriation of profits:
   Companies can repatriate their profits and capital freely.
8. Simplified registration:
   The registration process for mainland companies is generally straightforward.
9. No mandatory yearly audits:
   While audits may be recommended, they are not always mandatory.
10. No visa restrictions:
    Mainland companies can sponsor an unlimited number of visas.

Why Mainland Over Freezone?

Although Free Zones have benefits like tax exemption and 100% foreign ownership, mainland over freezone company formation might be a strategic choice for business entities looking to achieve the following:

1. Strong market penetration and brand recognition in the UAE.
2. Access to the local market and government contracts.
3. Greater credibility and trust among local consumers and businesses.
4. Wider scope of business activities.
5. Greater contribution to the economic growth of the UAE.
Finally, the choice is best decided according to business objectives, industry, and long-term growth strategy. Consideration of all these factors is a prerequisite before finalizing the choice.

About Arnifi

Arnifi is a digital-first Corporate service provider helping companies enter the Middle East region, starting with the UAE and Saudi Arabia markets. Founded and backed by professionals from Amazon, Souq, and other large companies operating in KSA – the team understands what it takes to succeed as a startup in both UAE and Saudi Arabian markets, apart from going through the setup process multiple times. Arnifi will provide a truly digital experience for the entry and scale-up of companies in both the UAE and Saudi Arabia. Discover tailored solutions and strategic partnerships that propel your business forward. Check out at – www.Arnifi.com for more details.

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Also Read: Choosing Your UAE Company: Mainland vs. Freezone