Mainland, Free zones, and Offshore companies all have evident differences regarding several criteria’s. Mainland and Free Zone jurisdictions differ in many ways, including ownership and scope of business, office space, visa eligibility, audits, and other factors.
UAE Mainland Company : A mainland company is a legally registered onshore company under the government authority of the concerned Emirate. Trade licenses are issued by the Department of Economic Development of the Emirate in question. Companies on the UAE mainland are characterized primarily by their freedom to trade. Investors who invest in mainland companies in the UAE have the option of trading within the UAE and beyond.
UAE Free Zone companies are entities incorporated within a special jurisdiction of an Emirate. UAE currently has over 40 free zones in its entirety. Regulatory bodies for free zones are called Free zone Authorities. These jurisdictions have their own regulations . Trade licenses are granted by the Free Zone Authority. The advantages of an UAE free zone include foreign ownership at 100% and tax benefits. A free zone company may only conduct business within the free zone and outside the United Arab Emirates.
Given below is a detailed comparison between Free Zone and Mainland companies.
Interested in learning more about a mainland or Free zone company in UAE and their detailed business setup cost? Feel free to contact our team of business advisors and consultants.
UAE Mainland Company versus UAE Free Zone Company
| Free Zone Company | Mainland Company | |
|---|---|---|
| Ownership | 100% Full Ownership. No local sponsorship required. | Local sponsorship required. 51% shares are held by the UAE National & 49% shares by the business owner. Professional license holders own 100 % shares and requires appointment of a local service agent. |
| Business Scope | Business can be conducted within the same free zone or outside the UAE. Typically, it is for entrepreneurs to set up a base in the UAE for their imports and exports and to optimize their taxes. | Business can be conducted in the local market, in any free zone, as well as outside the Emirates. This applies to all commercial and professional licenses. |
| Visa Eligibility | Every free zone license offers 2 visas. For more visas, additional office spaces are required to be leased. Visas are normally issued in quantities ranging from one to six. | Companies in Mainland have no restrictions on employee visas. Number of visas issued is dependent on the office space. |
| Business Setup Approvals | Every free zone has its own rules and regulations that apply to all the companies formed there. A free zone company does not require approval from government bodies or agencies outside the free zone. | Companies from the mainland are required to seek permission from various government agencies including Dubai Municipality, Ministry of Labor, Department of Economic Development, etc. |
| Capital Requirement | Capital requirements governing free zone companies depend on which Emirate the company is incorporated in. | Capital requirements for UAE mainland companies are determined by their legal structure. |
| Company Audit | The process of preparing a financial audit for a free zone company varies with the jurisdiction of the Free zone. Certain jurisdictions are exempt from audit preparation. A year-end audit is required by certain Free zone entities, such as FZEs and FZCOs. | Financial audits are required for companies on the UAE mainland. |