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Difference between Free Zones & Mainland

What is the difference between Free Zones and Mainland?

UAE is a major business hub of the Middle East with a robust trade ecosystem and infrastructure facilities for business establishments to easily scale up in the region.

The strong e-governance policies, government support, and favorable business environment is driving a large number of companies to choose UAE for company setup.

The three main business jurisdictions in UAE are the Free Zone, Mainland, and the Offshore. Of which the Free Zones and Mainland are onshore business jurisdiction that contributes to promoting trade and business in the region.

Whereas the Offshore jurisdiction is not based on onshore business governance and provides the required business infrastructure to predominantly drive international trade operations.

What is a Free Zone?

Free Zone is a designated area within a country where free trade and commerce are permitted with benefits to attract foreign investors. A Free Zone is governed by specific rules and regulations formulated for licensing and incorporation of companies.

Each Free Zone Authority has regulations and procedures limited to the physical location where the Free Zone is established. The companies registered in a specific Free Zone can enjoy various privileges as specified by the respective Free Zone.

Free Zone Privileges for the Investors

In a nutshell, a Free Zone Company is eligible for the following privileges:

  • Free Zone Company can rent an Office Premise in the Free Zone
  • Investor, Director, Employee Visa is valid for 3 years
  • Business can trade within and Outside of UAE
  • Registration with the Chamber of Commerce
  • The company can obtain the import-export code
  • Tax Residency Certificate can be obtained so that investors get the benefit of DTAA (Double Taxation Avoidance Agreement)
  • Certificate of Origin can be obtained for manufacturing companies
  • 100% Foreign Ownership and 100% repatriation of profits

Additional Business Benefits for a Free Zone Company

Free Zones are the most expatriate friendly business jurisdiction in UAE offering all the business infrastructure support to the investors. Free Zones in the UAE enables foreign investors to:

  • Easily register the company by choosing the right business activity from a wide range of business activities
  • Free Zone Establishment/ Free Zone Company is the most common company structure in the Free Zones. (Depending on the number of Shareholders the company structure varied, for a single shareholder company the structure followed is FZE, and for more than 2 to up to 50 FZC is the suffix in the trade license)
  • Minimal documentation and approvals required for setting up the company
  • Easily apply for UAE Residence Visa, sponsor family, and settle in UAE
  • Proximity to the Airports and Seaports, in house Customs Clearance, etc., speeds up the trade operations
  • Free Zones offer a robust business networking platform as there are a lot of similar types of companies in the Free Zone
  • Free Zones offer competitive company setup package to easily set up a company for first-time entrepreneurs without spending too much on Company Setup cost.

UAE Free Zones offers umpteen business benefits for entrepreneurs to establish their company in UAE and easily start operating the business in the region without any hassles.

Experienced Business Consultants like Aurion will assist you with the Company Registration process for seamless execution of the steps and ensure a comfortable company set up in the region.

What is a Mainland Company in UAE?

Mainland Company in UAE is a business jurisdiction with certain company structures – LLC, Sole Proprietorship, Civil Work Company, Public Stock Companies, etc. The Limited Liability Company is the most common company structure in the Mainland.

Almost 90% of the companies registered in the mainland of UAE are Limited Liability Companies followed by that it is sole establishments and Civil Work Companies (Professional License Companies).

What is a Limited Liability (LLC) Company in UAE?

Limited Liability Company (LLC) in UAE is the most common company type in the mainland of UAE. As per the Companies Law in UAE, LLC Companies must have a shareholding pattern of 51% share to be owned by the UAE National Sponsor and the rest 49% by the foreign owner.

As per the latest amendments in the Companies Law, the UAE government has sanctioned 100% foreign ownership for a list of permitted activities under certain criteria subject to approval by the authorities on a case-to-case basis.

The Department of Economic Development (DED) of the respective Emirates in UAE is the governing body for issuing the LLC Company License to the investors.

The Dubai Economy has initiated a virtual license (instant trade license in 30 minutes) to speed up the company registration and promote trade in the region.

Business Benefits for the Investors – LLC Company in UAE

The LLC Company offers a set of benefits for investors like the following:

  • Open an office or branch anywhere in UAE under the LLC Company Trade License
  • Hire more employees depending on the Office Space taken
  • Expand business in the local market easily
  • Reduced Maintenance and Office Rent Expenses as a lot of low-cost business Centres are available across UAE
  • Easily trade in the local UAE market and rest of the GCC region through delivery networks, distribution networks, and logistics service providers
  • Easily locate a trusted Local Sponsor for forming the Limited Liability Company and liaising with the Government and Administrative tasks – Visa & Emirates ID Processing, Bank Account Opening, obtaining clearances, and more

Hence, Limited Liability Company is a favorable option for foreign investors who wish to expand more into the local UAE market. Using LLC Company the investors can sell in the UAE markets extensively. Expert Business Consultants will assist you in setting up an LLC Company in the UAE the right way.

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Contact: Aurion Business Consultants