Mainland vs. Free Zone: Which is Better for New Business Setup in Dubai?
It is a crucial decision for new business setups in Dubai. To choose between the mainland or a free zone. Particularly for entrepreneurs in Dubai. Both options offer distinct advantages and disadvantages.
This article discusses what will be the best decision for you. It primarily depends on your business needs and the factors involved that influence your decision. So, without skipping any part get started and explore the key differences to help you make an informed choice.
Ownership and Control
In this part of the blog, we share which is the best in terms of ownership and control. That is a free zone or mainland in Dubai.
Mainland
In the mainland, you can have 100% ownership of your company. The local sponsor is required for certain business activities.
Free Zone
In the free zone. you can own 100% of your company without a local sponsor. However, some free zones may have specific ownership rules.
Business Scope and Activities
The business scope and activities of the Free Zone and the mainland have been discussed here.
Mainland
Businesses operating on the mainland can engage in several commercial activities. This includes trading, manufacturing, services, and contracting. There might be restrictions on certain activities. It requires specific licenses or approvals.
Free Zone
Free zones offer a more flexible business environment. It allows companies to engage in a range of activities without local sponsorship. These include:
- Trading
- Manufacturing
- Logistics
- IT, and
- Financial services, among others.
Each free zone has its regulations and permitted activities.
Office Space and Location
The office space and location play a crucial part. Let’s discuss what will be the best for you, the mainland or freezone
Mainland
In Dubai, businesses on the mainland can operate from any commercial area. Office space options range from shared offices to commercial buildings. It offers flexibility in terms of location and size.
Free Zone
Typically, businesses in free zones are located within the designated free zone area. Office spaces are often available within the free zone complex. It provides a centralized business environment. Some free zones also offer virtual office options.
Taxation and Customs
Taxation and customs have the utmost importance. Here, we share what’s proven to be the best decision between the free zone or mainland
Mainland
Businesses operating on the mainland are subject to several taxes. The list involves corporate tax, VAT), and other applicable taxes. Within the mainland, customs duties and import/export regulations apply to goods traded.
Free Zone
It is one of the primary advantages of free zones is the tax-exempt environment. Generally, companies operating within free zones are exempt from corporate tax and import/export duties. Specific rules may apply to certain activities and goods.
Business Setup Cost in Dubai
The business setup cost in Dubai is different in both mainland or free zone. Let’s explore which will be the best
Mainland
The cost of setting up a mainland company in Dubai varies. It depends on the type of license, location, and office space. Generally, the cost includes:
- License fees
- Office rental
- Visa costs, and
- Professional fees.
For a basic setup, you can expect to invest anywhere between AED 15,000 to AED 35,000 or more.
Free Zone
The Free zone setup costs vary. It may depend on the specific free zone and the type of license. The cost typically includes
- License fees
- Office space rental, and
- Visa costs.
Expect to invest between AED 10,000 to AED 50,000 or more for a basic setup.
Regulatory Environment
The regulatory environment has its importance in both areas, that is mainland or free zone:
Mainland
Mainland businesses are subject to strict regulations and compliance requirements. It requires obtaining multiple licenses and permits. The labor laws and regulations may apply. This is subject to corporate tax and VAT.
Free Zone
Free Zone generally has a more relaxed regulatory environment. It requires fewer licenses and permits. However, specific regulations within the free zone apply. The free zone has a tax-exempt environment, but certain fees may apply.
Employment and Visa Policies
Here, you will learn the employment and visa policies for the mainland and free zone.
Mainland
In the mainland, strict labor laws and regulations apply. This includes minimum wage, overtime, and gratuity. For visa policies, work permits for foreign employees involve specific requirements.
Free Zone
In the free zone, flexible labour laws and visa policies are involved. This allows for easier hiring and employment of foreign workers. However, visa and permit processes are often streamlined within the free zone.
How to Setup Business in Dubai?
Setting up a business in Dubai involves several key steps. The steps have been discussed here in detail:
- Choose Your Business Location:
Mainland Offers full ownership but requires local sponsorship for certain activities. A free Zone provides 100% foreign ownership and tax benefits. However, it has restrictions on mainland operations.
- Select a Business Activity:
This is the second most important step to determine the nature of your business. Also, you need to obtain the necessary licenses. You must consider the regulations and requirements for your chosen business activity.
- Choose a Business Structure:
Decide on the legal structure for your business. This includes LLC, sole proprietorship, partnership, etc. Must consider factors like ownership, liability, and tax implications.
- Register Your Business:
At this point, complete the necessary paperwork. Then submit it to the relevant authorities. The authorities such as the Department of Economic Development for mainland or free zone authority. Then obtain a trade license.
- Obtain Necessary Permits and Approvals:
You may need additional approvals from government departments. It depends on your business activity.
- Set Up Your Office Space:
Based on your business needs, rent or purchase office space. Consider shared office spaces or virtual offices as options.
- Hire Employees:
Recruit and hire employees based on your business requirements. Must comply with UAE labor laws and visa regulations.
- Open a Corporate Bank Account:
At this stage, you may need to establish a bank account for your business to manage finances.
- Obtain Necessary Licenses and Permits:
Lastly, acquire any additional licenses or permits required for your business operations.
How Connect Zone Can Help You Set Up Your Business in Dubai?
For a seamless new business setup in Dubai, Connect Zone is your trusted partner! We offer services to guide you through the entire process. From company formation to visa processing, we cater to all!
We provide expert advice on the optimal business structure and location. While handling all paperwork and legal formalities for business incorporation. Our team assists in obtaining necessary licenses and permits. Not only this, we offer flexible office space options to suit your business needs.
We are famous for efficiently managing visa and permit applications for you and your team. Additionally, we do offer additional services. This includes:
- Assisting in opening a corporate bank account.
- Providing post-setup support and guidance for your business.
We ensure a smooth new business setup in Dubai with our in-depth knowledge of a dedicated team!
Contact us today to start your business journey in Dubai!
