The United Arab Emirates has become one of the most attractive regions of the world when it comes to business opportunities. It attracts entrepreneurs, startups, and multinational corporations from around the globe. Factors like tax benefits and ease of doing business make UAE a lucrative option for a business setup.
However, business setup services in the UAE come down to the area. Choosing the location that is strategically right for your business is crucial. There are two options you can choose from – mainland and free zone. Opting for either one of them can play a critical role in the outcome of your business.
In this article, we will analyze both of these areas along with their pros and cons for a business setup. As a result, you will make an informed decision about your business venture.
Free Zone Business Setup in UAE
The UAE has multiple free zones located in various regions. These free zones have their own regulatory authority along with certain benefits that come along with them. Free zones in UAE allow entrepreneurs to start a company without much hassle.
The economic free zones of this region offer many distinct advantages. Let’s take a look at some of the benefits these zones have to offer.
Advantages of Business Setup in UAE Free Zones
Complete Ownership – If you set up a business in a free zone, you will have the complete ownership of your business without any government involvement. In addition, you don’t have to have a local sponsor to set up a company in the UAE.
Tax Benefits – This is one of the most lucrative benefits that attracts everyone in this part of the world. Investors can repatriate hundred percent of their capital and profits. The government will not take a dime from you in terms of taxes.
Ease of Business Registration – Authorities in these economic free zones have streamlined the process of business registration. You will not have to wait for the bureaucratic approvals or other government consents.
Sector Specific Benefits – Many of these zones cater to the specific needs of certain sectors. They offer specific benefits for industries like tech and media along with healthcare. They offer their support in terms of infrastructure and economic benefits.
Even though free zones offer a great alternative to the mainland, there are certain limitations you have to face as well. For example, you have restrictions when it comes to market access. If you want to trade with the mainland, you have to have a local distributor.
Similarly, having the physical office space is also a must! As a result, your operational cost can go up in that regard. Lastly, there are limited business activities you can perform in business zones.
Now, let’s discuss the mainland business setup option for better comparison.
Mainland Business Setup in UAE
A mainland company in UAE will have the license from the Department of Economic Development or DED. This will allow you to have a business across the UAE without having a physical location of your business. Secondly, you will have your operations in the mainland UAE with an exposure to a variety of clientele.
There are many great benefits of having a company in the mainland. Here are some of them:
Key Advantages of Mainland Business Registration
Market Accessibility – Unlike free zone bodies, if your business is located in the mainland, you can directly do business with the local clients. This also includes government entities. As a result, you will have a better market accessibility for your business.
Better Business Opportunities – Having a mainland company means having better business prospects. This strategic location enables you to engage in a wide range of commercial activities. As a result, you can tap into the sales, manufacturing, and services industry.
No Minimal Capital Bar – This is a great benefit for startups and entrepreneurs. Starting a business can be quite a bit of a challenge in terms of capital. Without having to put aside a certain amount, it offers flexibility to business owners.
Helps with Business Credibility – If your organization has a mainland license, you will have better credibility as a business. Not to mention the benefit of easy business expansion across both UAE and internationally.
Just like benefits, there are certain challenges you have to face with having a business in the mainland. First and foremost, there are certain corporate tax implications. There is also a higher setup and operational cost with office rent and licensing fees. Lastly, in some cases, you will require to have a local partner from the UAE.
A Big Question: Mainland or Free Zone?
In order to determine the best business setup services in UAE, considering the following factors will help you make up your mind.
| Criteria | Economic Free Zone Setup | Mainland Business Setup |
| Ownership | Complete Foreign Ownership | Some sectors require local partnership |
| Market Access | Limited International Access | Operate anywhere in the UAE and internationally |
| Corporate Taxes | Usually Tax Free | Subject to corporate tax |
| Business Scope | Industry Specific Activities | Ease of Business Activities |
| Govt. Contracts | Do not fall in the eligibility criteria | Eligible for govt. contracts |
| Startup Cost | Low startup cost | High startup cost |
In Conclusion!
Deciding between a UAE free zone business setup and a mainland business entity comes down to your business model, along with target market and operational costs. Even though free zones offer tax exemption and lower operational cost, there are certain limitations you will face. On the other hand, the mainland offers a wide range of expansion options both locally and internationally with unrestricted market access.
Choosing either one of them entirely depends on the nature of your business. If you are looking for business setup services in the UAE, there are a lot of online platforms that can help you kick start your entrepreneurial journey today!
