Company Formation in UAE Mainland and Free Zone
The United Arab Emirates (UAE) has emerged as a global business hub, attracting entrepreneurs and investors from around the world. This is largely due to its strategic location, state-of-the-art infrastructure, and business-friendly policies. When considering setting up a business in the UAE, one can choose between the mainland and the free zones, each offering distinct advantages and requirements.
Mainland Company Formation
A mainland company in the UAE is an onshore entity licensed by the Department of Economic Development (DED) of the respective emirate. Mainland companies are allowed to operate within the local markets as well as outside the UAE without any restrictions.
Ownership and Legal Structure
Mainland companies traditionally required a local sponsor or partner who holds at least 51% of the shares. However, recent reforms have allowed 100% foreign ownership in certain business activities. These companies can be set up as Limited Liability Companies (LLC), Sole Establishments, Civil Companies, and Branch Offices of foreign companies.
Advantages
Market Access:
Mainland companies have the freedom to trade directly with the local market and enter into contracts with government entities.
Location Flexibility:
Businesses can operate from any part of the UAE without geographic restrictions.
Diverse Business Activities:
Mainland companies can engage in a wide range of commercial activities.
Visa Eligibility:
Mainland companies benefit from fewer visa restrictions and can apply for an unlimited number of visas, subject to office space requirements.
Free Zone Company Formation
Free zones are special economic zones established to attract foreign investment by offering tax incentives and simplified business regulations. There are over 40 free zones in the UAE, each catering to specific industries such as technology, media, finance, healthcare, and logistics.
Ownership and Legal Structure
Free zone companies are allowed 100% foreign ownership with no requirement for a local sponsor or partner. They can be established as Free Zone Establishments (FZE), Free Zone Companies (FZC), or branches of foreign companies. Each free zone has its own regulatory authority and specific regulations.
Advantages
Tax Benefits:
Free zone companies enjoy complete exemption from corporate and personal income taxes, as well as import and export duties.
Full Ownership:
Foreign investors can own 100% of the company without the need for a local partner.
Repatriation of Profits:
Companies can repatriate 100% of their profits and capital.
Simplified Setup:
The company formation process in free zones is generally quicker, with fewer bureaucratic hurdles.
Industry Clusters: Entrepreneurs benefit from being part of industry-specific clusters, fostering collaboration and innovation.
