What is the Difference between Mainland, Free zone, and Offshore Companies in UAE?
UAE economy is expected to grow by 2.5% in 2021 with major industry sectors gearing up 100% production capacity and the tourism and real estate markets on track.
Foreign direct investment in UAE is expected to rise as the business-friendly policies and growing business ecosystem constantly supports business growth in the region.
Mainland, Free Zone, Offshore – Three Business Jurisdictions
In UAE, there are three main business jurisdictions – The Mainland, Free Zone, and Offshore.
Based on business requirements the investors can choose the required business jurisdictions. The three business jurisdictions of UAE are distinct and come with their advantages and business benefits for the investors.
Mainland Company in UAE
Mainland companies in UAE are mostly registered as Limited Liability Companies. The next common company type in the Mainland of UAE is the professional license category or Civil Company. There are other Public and Private Joint-Stock companies in Mainland that are Semi-Government companies.
The Department of Economic Development in Dubai is the Licensing Authority for registering a Limited liability or Civil Work Company. Global Investors can choose the various business license types and activities available to start a company in UAE.
Also, almost 122 business sectors are on the positive list that allows 100% ex-pat ownership with no minimum share capital requirements. The foreign ex-pat can register a company in the mainland without the requirement of a local sponsor.
There are many advantages for the investors for setting up a company in the mainland of UAE. It is a perfect choice for large-scale commercial and industrial units as well as retail businesses. Service License or Professional License is also one of the major business license categories in the Mainland.
100% Expat Ownership for Mainland Companies
The recent cabinet decision enables 100% ownership for expatriates and eliminates the need for local sponsors or local service agents. Most of the business activities in the mainland are obtained by foreign investors with 100% ownership.
Business Activities in the field of consulting, commercial, industrial, eCommerce, etc., can be opted by foreign investors to obtain the trade license. The process of mainland company formation is hassle-free and quick.
Investors can choose from a wide range of business activities and business license types at affordable trade license costs from the mainland of UAE.
Mainland Company Formation – Key Highlights
Depending on the business activity and company type, the mainland company registration requires certain pre-approvals and will enable the company to trade in the whole of UAE, GCC, and beyond.
- Mainland companies have total flexibility in carrying out a wide range of business activities including industrial, commercial, and professional sectors.
- Investors can take office spaces, retails shops, and showrooms in UAE and conduct business in the UAE and the rest of GCC regions seamlessly.
- Obtaining a UAE Residence Visa, sponsoring employees, and opening a corporate bank account in UAE is easier using a mainland license as the company has a physical address in UAE.
Pre-Approvals for Strategic Industries
The mainland company formation is relatively easier when compared to offshore companies. Depending on the business activity chosen, the offshore company will require a pre-approval to get the business license.
Whereas, for mainland companies unless healthcare, manufacturing, and other strategic business activities, the company registration process is instant and the company license can be issued within hours.
Professional License from UAE Mainland – Steps to Follow for Starting a Civil Work Company
Using the professional license category, a Civil Work Company can be registered through the DED, Dubai. Civil Work Company enables the professional to quote for Government orders and tenders.
Following are the steps involved in Opening a Civil Work Company in Dubai. Civil work Companies help professionals to set up their business ventures in the mainland of Dubai.
AURION will assist in setting up a Civil Company in UAE, our team of expert Mainland Company Formation Consultants will guide you through the complete process and handle all the related activities to ensure you get the Civil Work Company License at the lowest cost. Our team will assist in:
- Choosing a tradename for the Civil Company and getting the pre-approvals
- Filling up the Application form and submitting the shareholder details to the DED
- Preparing the Tenancy Agreement for the office space
- Preparing the Agreement for the Local Service Agent and Appointing an LSA for the Civil Company
- Making the required fee payment for obtaining the Professional License
- Obtaining and Delivering the Professional License to the investor
- Applying for the investor visa and coordinating the opening of the bank account for the company.
In a nutshell, the Professional License from UAE mainland is one among the preferred business license categories by foreign investors who are looking to venture into services business and expand their business network in UAE
Free Zone Company Setup
Free Zone companies enjoy 100% foreign ownership, tax-free status, no customs duty for import-export. Also, there is a VAT exemption for designation free zone and investors get access to world-class business infrastructure and amenities.
Free Zones offers a cost-effective business setup and need not have a local partner or agent. It has fully furnished office space readymade warehouses and light manufacturing units readily available for investors to take.
The shareholders, directors, and employees of a free zone company are eligible for obtaining a UAE residence visa.
Free Zone Business Benefits
Free Zones enable investors to experience a hassle-free business setup and peace of mind. The business license fee is paid upfront for a year, also the rental expense of the office space is paid to the Free Zone as a whole yearly.
It gives relief for the rest of the year and the investor can focus on their core business activity more. Also, the Free Zones offer a perfect business ecosystem for investors to easily scale up their business. It also enables the business to get access to world-class amenities and facilities.
Most of the Free Zones are VAT Exempted and consist of an in-house residence visa processing center. It is a perfect choice for trading companies as the customs clearance process is far easier and the proximity to airports and seaports make the transfer of goods and services easy,
What are Offshore Companies?
Offshore Companies are registered with the offshore jurisdictions of a business center. There are there offshore jurisdictions in UAE that are RAKICC, Ajman, and Jafza. Offshore companies do not fall under the legal and business regime of UAE mainland or Free Zone Authority.
Offshore companies also fall outside the scope of VAT (Value-Added-Tax) in UAE as these companies are deemed to be outside of UAE and does not have a onshore/resident status. The companies can neither open office spaces in the UAE nor can apply for UAE Residence Visa for the employees. It is an ideal option for investors to conduct international trading.
Ras Al Khaimah International Corporate Center –RAKICC
RAKICC is one of the most popular offshore business centers in the UAE. The key highlights of RAKICC Offshore are:
- 100% foreign ownership and confidentiality of the owner ( No public documentation, No audit reports for renewals, No share capital requirements)
- Robust Offshore infrastructure with easy company formation process,
- Ability to buy and own properties in UAE with the virtual license obtained.
- Operate the business from being at anywhere in the world
It is a perfect choice for companies looking at an international market expansion. The tax-free status of Offshore company makes it a favorite choice among foreign investors.
To know more, read : Offshore Company Formation in RAKICC
Jebel Ali Free Zone Authority (JAFZA) Offshore
JAFZA Offshore is governed by the Jebel Ali Free Zone Authority. The Offshore companies listed with JAFZA will have direct access to one of the world’s largest shipping ports to easily facilitate global trade.
JAFZA Offshore – Key Highlights
The exemption of taxation, absence of personal and corporate tax, no import-export duties currency restrictions, etc.; make investors choose JAFZA for setting up their offshore company. There are many business benefits for a JAFZA offshore Company such as no minimum capital requirement, the appointment of directors and secretaries are mandatory, annual reporting requirements, etc.
Offshore Companies in JAFZA can purchase real estate in Dubai upon receiving pre-approval from the developer and free zone authorities. Similarly, offshore companies can be owners of mainland and free zone companies by investing in company shares.
Ajman Offshore
Ajman is another choice and when it comes to offshore company setup. With a relatively low price, it offers a perfect choice for the investor. Ajman Offshore is the cheapest offshore business jurisdiction in UAE. The companies can conduct operations outside of UAE and have the ability to purchase a property in the emirate of Ajman.
There must be a shareholder and director to register the offshore company, the presence of the company is mandatory. There is no minimum requirement for the share capital in Ajman Offshore.
Read more about Free Zones vs. Offshore Companies in UAE and Which is the best Emirate in UAE for Company Formation. To know more about Company Formation in UAE, talk to our expert team right away!
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