How to Choose Between Mainland and Free Zone for Your Business in Dubai

Dubai is one of the most attractive destinations for entrepreneurs and investors, offering a variety of options for setting up a business. The most common choices are setting up your business in the mainland or a free zone. Each has its own advantages and requirements. Understanding these options is key to making the best decision for your business. Here’s a detailed guide on how to choose between the mainland and free zone in Dubai.

1. Ownership Structure

• Mainland: In Dubai mainland, you are required to partner with a UAE national, who will hold a 51% share of the company in most cases. However, recent changes in law allow 100% foreign ownership in certain sectors.
• Free Zone: In a free zone, you can have 100% foreign ownership, without the need for a local sponsor or partner.

2. Business Scope

• Mainland: Mainland companies are permitted to operate freely within the UAE and engage in a wide range of business activities, including government contracts and services.
• Free Zone: Free zone companies are generally limited to operating within the free zone area and cannot conduct business directly with the UAE mainland market unless they appoint a mainland distributor.

3. Office Space Requirements

• Mainland: You must lease a physical office space in Dubai, with a minimum requirement of 200 square feet.
• Free Zone: Most free zones offer flexible options, including virtual offices, which are ideal for startups or businesses with minimal local operations.

4. Cost and Fees

• Mainland: Setting up a mainland company often involves higher setup and licensing fees, alongside additional costs for office space and local sponsorship.
• Free Zone: Free zones tend to offer more affordable options, with lower setup costs, tax exemptions, and a range of business packages designed to suit different needs.

5. Visa Eligibility

• Mainland: The number of visas you can sponsor is based on the size of your office and the nature of your business. Mainland companies typically have more flexibility in this regard.
• Free Zone: Free zones offer a limited number of visas based on the business package you choose. However, this can be an efficient choice for small businesses.

6. Taxation and Incentives

• Mainland: Mainland companies must comply with VAT regulations and corporate taxes as per UAE laws.
• Free Zone: Free zone companies enjoy tax benefits, including exemption from corporate tax, VAT, and import/export duties, making them an attractive option for foreign investors.

Conclusion:

Choosing between mainland and free zone depends on your business goals, budget, and long-term strategy. For companies aiming to operate across the UAE, the mainland is the ideal choice. On the other hand, if you prefer full ownership, tax benefits, and are comfortable limiting your operations to the free zone area, a free zone setup may be better suited to your needs.