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When considering setting up a business in the United Arab Emirates (UAE), entrepreneurs and investors are often faced with the decision of whether or not to set up their business enterprise in a Freezone or on the Mainland. Both alternatives have their particular benefits, dangers, and investment possibilities, catering to different sorts of investors and commercial enterprise activities. In this text, we can delve into the important thing differences between Freezone and Mainland agencies inside the UAE, helping you’re making an knowledgeable decision in your enterprise mission.

Mainland Companies

A Mainland agency, also referred to as an onshore organisation, is officially registered with the Ministry of Economy and overseen with the aid of the Department of Economic Development (DED). To set up a Mainland employer, a UAE resident sponsor is required, despite the fact that current modifications allow for a hundred% overseas ownership in positive sectors. Mainland groups have the power to perform nationwide, together with within Free Zones, and are situation to annual audits. They can exchange freely with each local and global clients however need to have a physical office location registered with the Ejari and acquire approval from critical authorities.

Freezone Companies

A Freezone enterprise, on the other hand, is fashioned inside a unique jurisdiction that comes underneath a particular emirate. There are over 40 Freezone areas within the UAE, each with its own guidelines and a government regulatory frame referred to as the Freezone Authority. Freezone companies provide 100% foreign possession and tax concessions, making them an appealing alternative for international commercial enterprise proprietors. They are legal to change best within the Freezone and outdoor the UAE however can not behavior business at the Mainland with out a nearby agent. Freezone agencies have the gain of much less regulation and control from the authority, letting them exchange freely and generate enormous returns.

Key Differences between Mainland and Freezone

Aspect Mainland Company Freezone Company
Ownership 100% foreign ownership allowed 100% foreign ownership allowed
Trading Can trade with both local and international clients Can trade only within the Freezone and outside the UAE
Office Space Must have a physical office location registered with the Ejari Can operate with a virtual or physical office space
Visa Eligibility No restrictions on the number of visas allowed Restrictions on the number of visas, typically limited to 6-7
Audit Requirements Mandatory financial audit Certain Freezones may not require a financial audit
Approvals Needs external approvals from various UAE authorities Only needs approval from the Freezone regulating body
Cost The cost of setting up a Mainland business in the UAE depends on the type of company and service offered, with a minimum cost of AED 20,000-25,000 The cost of setting up a Freezone business varies by Freezone, with additional costs such as minimum share capital


The Differences in Taxation Between Mainland and Free Zone Companies

The differences in taxation between Mainland and Free Zone companies in the UAE are significant. Here are the key points regarding taxation variations:

Mainland Companies:

  • Subject to a 9% corporate tax on profits exceeding a threshold (AED 375,000) and no income tax.
  • Required to pay customs duty.
  • Generally subject to a 5% VAT rate.
  • Must comply with annual audits.
  • Ownership regulations may require a local partner with at least 51% ownership, although 100% foreign ownership is allowed in specific sectors.

Free Zone Companies:

  • Exempt from corporate or personal income tax.
  • Exempt from customs duty.
  • Generally subject to a 5% VAT rate, with some zones offering a 0% VAT advantage.
  • Visa eligibility may be limited compared to Mainland companies.
  • Annual audit requirements may vary depending on the Free Zone.
  • Allow 100% foreign ownership.

These differences in taxation between Mainland and Free Zone companies play a crucial role in the decision-making process for investors and entrepreneurs looking to establish their businesses in the UAE.


In conclusion, the selection among establishing a commercial enterprise in a Freezone or at the Mainland in the UAE depends at the unique sports and commercial enterprise goals of the investor. While Mainland groups offer flexibility in trading with each local and international customers, Freezone companies offer the benefits of 100% foreign possession and tax concessions. Understanding the variations between these alternatives is critical for making an informed selection that aligns with your commercial enterprise desires. If you are thinking about setup a enterprise in the UAE, it’s miles endorsed to visit our professionals can guide you thru the technique and help you’re making the first-rate selection on your company.

Frequently Asked Questions

What is a mainland company?

A mainland company operates under the jurisdiction of the UAE Commercial Law, allowing it to conduct business nationwide, including within local markets and outside designated free zones.

What is a free zone company?

A free zone company in Dubai is established within specified areas where businesses benefit from tax exemptions, 100% foreign ownership, and other exclusive advantages.

What is the cost of starting a mainland company in Dubai?

The startup cost for a mainland company in Dubai varies depending on the business activity and setup requirements, typically ranging from AED 20,000 to AED 40,000.

What is the cost of starting a free zone company in the UAE?

The cost of establishing a free zone company in the UAE varies depending on the chosen free zone and business type, with fees ranging from AED 10,000 to AED 50,000 or higher.

How do I set up my company in Dubai?

To establish a company in the UAE, you need to decide between mainland and free zone options, determine your business activity, obtain the necessary licenses, choose a business location, and complete the documentation process with the relevant UAE authorities.

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