BUSINESS SETUP IN DUBAI,
UNITED ARAB EMIRATES

Differences between Free Zone, Mainland and Offshore Company Formation in Dubai

1. Restrictions in Ownership

The major difference between the process of the mainland, free zone, and offshore company formation in Dubai is related to the ownership structure. While the free zone and offshore company formation Dubai offers 100% ownership in the company for the investors, the process of mainland company formation has a shareholding requirement. The mainland company requires a local sponsor who holds a 51% share in the company. It is mandatory that the local sponsor should be a UAE national. The mainland companies under the professional license can have 100% ownership, provided they appoint a Local Service Agent (LSA).

Also read: Businesses in Dubai Mainland Exploring Opportunities For 100% Ownership

2. Flexibility in Business Activities

In terms of conducting a business activity, the mainland company formation offers more flexibility to the investors. The process of mainland business setup in Dubai allows the entrepreneurs to conduct business anywhere in the UAE. The mainland companies are allowed to conduct business in commercial, professional, and industrial activities. On the other hand, the process of free zone business setup in Dubai is restrictive in terms of the business activities as the investors are allowed to trade within the free zone or internationally. The offshore business structure doesn’t allow investors to conduct any business activity within the UAE.

3. WorkSpace Requirements  

For successful mainland company incorporation in Dubai, the companies need to have a physical address. This is a mandatory requirement and the DED will issue the trade license only if the company meets this obligation.

For the free zones, there are no stringent office space requirements to start a business in Dubai. The companies can either have a physical office in the free zone or can operate without one depending on the nature of the business activity and work requirement. The free zones also offer the Flexi desk system for the companies where they can use common business centre desks. The Flexi desk is a great benefit to the new startup entrepreneurs, which allows them to save initial costs of company formation.

Also read: Pros & Cons of Setting up a Business With Flexi Desk Facility in UAE Free Zones

4. Number of Visas

There is no restriction on the visas that the investors can obtain on a mainland trade license in Dubai. An E-quota will be issued by the Ministry of Labour for the mainland company that shows the visa eligibility. If the company requires more staff, the visa eligibility can be increased, but it depends on the office space. The company can get more visas if they have more office space. For the free zone licenses, two visas are offered for the smart office package, and if more visas are needed the investors need to lease out a physical space. The UAE has a systematic procedure for visa processing and efficient business setup services in Dubai need to be consulted to make the process quicker.

5. Approval from Government Authorities

To obtain a mainland trade license in Dubai, the companies need to secure approvals from various authorities depending on the business activities. Such government authorities include

• DED
• Dubai Municipality
• Ministry of Labour
• Department for Naturalization Residency affairs of Ministry of interiors or Immigration (MOI)

For specific business activities, approvals need to be obtained from the concerned authorities. For instance, approval from the Dubai health authority (DHA) is required to set up a business related to medical activities. Apart from this, there are certain activities that are categorized as special activities that need approval from the Legal

• Banking
• Transportation
• Insurance
• Tourism
• Engineering
• Oil & Gas

On the other hand, the free zone company formation in Dubai is much easier compared to the mainland as usually the approvals from external authorities are not required.

How Registering a Company in Dubai Gives Great Benefits to Foreign Investors?

New entrepreneurs from across the world desire to start their first business in Dubai and the big companies consider the emirate as the perfect destination to expand their global presence by setting up a branch here. Factors such as a proactive government, modern infrastructure, existence of free zones, favourable tax regimes etc. have proven to be the top reasons why the foreigners are favouring Dubai to register a company. Dubai is a land of ever-growing opportunities and businesses ranging from trading and manufacturing to e-commerce and fintech are reaping profits in Dubai. The following are the top factors that prompt foreign investors to register a company in Dubai, UAE.

1. Dubai is a Gateway to International Markets

Dubai’s strategic location gives immense trade benefits to the investors as they get access to global markets such as Africa and other Middle East countries. The emirate is ideally located between the East and the West, which is a strong reason why the investors eye on the process of business setup in Dubai. The strategic location of Dubai makes it the perfect place for setting up businesses like imports, exports, tourism and logistics.

2. Strong Support from a Proactive Leadership

Dubai is blessed with strong and able leadership that is hell-bent on providing support to the investors in all possible ways. The government has designed special strategies focused on various sectors such as Dubai Industrial Strategy 2030, Dubai Health Strategy 2021, Dubai Plan 2021 etc. The stable political environment in Dubai is a great benefit for foreign investors and the regulations are business-friendly.

3. Outstanding Connectivity to Global Markets

Robust infrastructure is an absolute necessity for attracting foreign investments and thereby bolsters the economy. Dubai’s focus on economic diversification has strengthened on the back of sophisticated infrastructure facilities including an international airport, seaports and superlative transportation facilities.

4. Expat Friendly Visa System

The UAE’s expat-friendly visa system has proven to be a boon for foreign investors who desire to set up a business in Dubai. It is easier for a foreign investor to obtain a resident visa after starting a business in Dubai. The UAE residency visa provides the investors with the right to lease out a property, buy a vehicle, and travel within and outside the country. The investors will also be able to sponsor their dependents easily after obtaining a residence visa. The best business setup consultants in Dubai provide the businessmen with expert assistance to obtain the visa quickly without delays.

5. General List of Documents Required for the Process of Business Setup in Dubai

• Initial approval form duly signed by all the partners
• Trade Names
• Passport copies of all the shareholders
• MOA duly attested
• Tenancy Contract of office Minimum office space required 500 Sq.feet. (for mainland companies)
• Details of the Shareholdings
• Address & Contact nos. for preparing MOA
• NOC from the current Visa sponsor if the foreign shareholders/Manager is UAE resident

Why Choose Jitendra Business Consultants for Company Formation in Dubai?

A reputed business setup consultancy firm like Jitendra Business Consultants (JBC) saves the investors from making a wrong choice by providing reliable company formation solutions. JBC has years of experience in assisting businesses from a variety of industries in successfully executing the process of forming a company in Dubai, UAE. JBC’s core strength is a team of highly qualified business setup consultants who are well-versed in all the local laws and regulations. This commendable knowledge of UAE regulations enables JBC to prepare every document properly and obtain necessary approvals from the government departments and ministries on behalf of the investors.