If you are aiming for a new business set up in Dubai, one of the most essential aspects of it is to decide the operating jurisdiction of your organization. In this case, Dubai offers multiple options in terms of location to the entrepreneurs, which can primarily be categorized into Free Zone Company or Mainland Limited Liability Company.
According to the eminent company incorporation consultant Mainland-based organizations are onshore companies licensed by the Department of Economic Development (DED). Mainland company is not geographically restricted to carry out its business operations. It can work within the local market and also venture outside UAE without any constraints.
Free Zone Company is formed in a specific business jurisdiction known as a free zone in Dubai. It comes with its own set of rules and regulations. It’s allowed to perform its business activities within the free zone or outside UAE. There are plenty of free zones in Dubai. The reason why foreign investors opt for a free zone company establishment is to receive ownership benefits, leverage the world class infrastructure, safeguard their assets and enjoy tax exemptions.
Presented below are the differences between free zone and mainland limited liability companies.
For establishing a company in the mainland, the minimum requirement for space is 200 sq. ft. to be leased out annually. Then, company will receive a license from DED. On the contrary, a free zone company may or may not have a physical workplace, depending on their requirement. There is a special facility for entrepreneurs in free zone areas which is known as “plug in and go” through which licensees are at liberty to utilize business centre desks for at least 5 hours per week.
Mainland Company limits the ownership of foreign investor to 49%, and it looks for a local sponsor with ownership of 51%. The local sponsor must be a UAE national. The free zone establishment offers complete business ownership to foreign investors. Entrepreneurs have 100% control and ownership of their business processes.
Mainland companies have no restrictions in case of the issuance of visas for employees. The Ministry of Labor issues a specific quota system for mainland companies which highlight its visa eligibility. More workspace would mean more staff so more visas you can obtain. However, for free zone licenses, there are two visas provided for smart office package. If you want to obtain more visas, then you will have to lease out a physical office space for that purpose.
Ultimately the location would depend on the nature of your business and the kind of operations you would be carrying out.