Dubai Mainland:
- Business Activities: Mainland companies have the flexibility to engage in a wide range of business activities. The DED classifies activities into three categories: Commercial, Professional, and Industrial.
- Local Sponsorship: In the mainland, a local sponsor (UAE national or a company wholly owned by UAE nationals) is required for certain business structures. The sponsor typically holds 51% of the shares in the company, but profit and operational terms can be mutually agreed upon and formalized in a legal agreement.
- Geographical Flexibility: Mainland companies have the freedom to conduct business anywhere in the UAE and can bid for government contracts.
- Office Space: Businesses in the mainland often require physical office space with specific size requirements, depending on the business activity.
- Licenses: The licensing process in the mainland is overseen by the DED, and the requirements may vary based on the type of activity.
Free Zone:
- Business Activities: Free zones are designed to attract specific types of business activities. Each free zone has its own set of permitted activities, and they are often industry-specific.
- Ownership: One of the key advantages of free zones is that foreign investors can have 100% ownership of their companies without the need for a local sponsor.
- Geographical Limitations: Companies established in a free zone are generally restricted to operating within that free zone or internationally. If they want to do business in the UAE mainland, they typically need a local distributor or agent.
- Taxation: Free zone companies often benefit from tax exemptions and customs duty privileges.
- Office Space: Free zones offer various office space options, including flexi-desks and virtual offices, making it more accessible for startups and small businesses.
In summary, the choice between mainland and free zone depends on the nature of your business, the level of ownership control you desire, and your target market. Mainland setups offer more flexibility in terms of business activities and geographic reach, while free zones provide favorable conditions for specific industries and full ownership rights for foreign investors.
