Decoding UAE Business: Mainland vs Free Zone vs Offshore Companies – What Sets Them Apart?
The UAE economy is projected to experience a healthy growth of 2.5% in 2021, as major industry sectors ramp up production to full capacity. Additionally, the tourism and real estate markets are on a positive trajectory. This upward trend is expected to attract increased foreign direct investment, thanks to the region’s business-friendly policies and thriving business ecosystem that consistently fosters growth.
Mainland, Free Zone, Offshore in UAE
The United Arab Emirates (UAE) offers three primary business jurisdictions: the Mainland, Free Zone, and Offshore. Investors have the freedom to select the jurisdiction that aligns with their unique business requirements. Each of these jurisdictions in the UAE possesses distinct advantages and business benefits, catering to the diverse needs of investors.
Mainland Company in UAE
Limited Liability Companies (LLCs) are the most common type of companies registered in the Mainland of the UAE. Another prevalent category is the professional license or Civil Company. In addition, there are Semi-Government companies, including Public and Private Joint-Stock companies.
To register a Limited Liability or Civil Work Company, the Department of Economic Development in Dubai serves as the Licensing Authority. Global Investors have the flexibility to choose from various business license types and activities to establish a company in the UAE.
Furthermore, there is a positive list comprising 122 business sectors that allow 100% ownership by expatriates, without any minimum share capital requirements. This means that foreign expatriates can register a company in the mainland without the need for a local sponsor.
Establishing a company in the mainland of the UAE presents investors with a multitude of advantages. It proves to be an excellent option for expansive commercial and industrial units, as well as retail businesses. Moreover, the Mainland encompasses the Service License or Professional License category, adding to its prominence in the realm of business licenses.
Unlock Your Global Potential: Mainland Companies with 100% Expat Ownership!
The recent cabinet decision has opened up new opportunities for expatriates by allowing them to have 100% ownership without the need for local sponsors or service agents. This means that foreign investors can now fully own their businesses in the mainland, covering various sectors such as consulting, commerce, industry, and eCommerce. The process of forming a mainland company is now hassle-free and efficient. Investors have a wide range of business activities to choose from, and the trade license costs are affordable. This change presents a significant advantage for those looking to establish their presence in the UAE mainland.
Highlights of Mainland Company Formation
Depending on the nature of the business and the type of company, registering a mainland company entails obtaining specific pre-approvals. This registration allows the company to engage in trade not only within the UAE but also across the GCC and beyond.
- Mainland companies have the utmost flexibility to engage in diverse business activities across industrial, commercial, and professional sectors. This unrestricted adaptability allows them to navigate various industries with ease, maximizing their potential for success.
- Investors have the opportunity to acquire office spaces, retail shops, and showrooms in the UAE, enabling seamless business operations not only within the UAE but also across the rest of the GCC regions.
- Acquiring a UAE Residence Visa, sponsoring employees, and opening a corporate bank account in the UAE becomes more convenient with a mainland license. This is because the company possesses a physical address within the UAE, streamlining the process.
Pre-Approvals for Key Industries
Setting up a mainland company is generally simpler than establishing an offshore company. While offshore companies often necessitate pre-approval for business licenses, mainland companies (excluding healthcare, manufacturing, and select strategic activities) can be registered instantly. Within a matter of hours, a company license can be issued.
Steps to Follow for Starting a Civil Work Company in UAE Mainland: Obtaining a Professional License
To register a Civil Work Company in Dubai, professionals can utilize the professional license category provided by the DED. This enables them to quote for government orders and tenders, opening up new business opportunities. Below are the steps involved in establishing a Civil Work Company in the mainland of Dubai, facilitating entrepreneurs in setting up their ventures effectively.
PRO Consultancy offers comprehensive assistance in establishing a Civil Company in the UAE. Our team of expert Mainland Company Formation Consultants will guide you through the entire process, handling all related activities and ensuring you obtain the Civil Work Company License at the most competitive cost. With our dedicated support, you can rest assured that your company setup will be seamless and hassle-free.
- Selecting a trade name for the Civil Company and obtaining pre-approvals
- Completing the application form and providing shareholder details to the Department of Economic Development (DED)
- Drafting the tenancy agreement for the office space
- Creating the agreement for the Local Service Agent (LSA) and appointing an LSA for the Civil Company
- Making the necessary fee payment to acquire the Professional License
- Receiving and delivering the Professional License to the investor
- Applying for the investor visa and coordinating the company’s bank account opening.
The Professional License from UAE mainland is highly sought after by foreign investors aiming to enter the services industry and expand their business network in the UAE. It is a preferred business license category that offers excellent opportunities for growth and success.
UAE Free Zone Company Setup
Companies in Free Zones enjoy enticing benefits, including 100% foreign ownership, tax-free status, and exemption from customs duty for import-export activities. Additionally, designated Free Zones offer VAT exemption, access to top-notch business infrastructure and amenities, and a hassle-free business setup without the need for a local partner or agent. Investors can readily find fully furnished office spaces, warehouses, and light manufacturing units to meet their requirements.
Moreover, shareholders, directors, and employees of Free Zone companies are eligible for obtaining a UAE residence visa, further enhancing the attractiveness of this business opportunity.
Benefits of Free Zone Businesses
Free Zones provide investors with a hassle-free business setup and peace of mind. With a one-time payment of the business license fee and yearly rental expense for office space, entrepreneurs can enjoy relief for the entire year. This allows investors to focus on their core business activities. Free Zones also offer a conducive business ecosystem, facilitating easy scalability. Access to world-class amenities and facilities further enhances the business experience. Most Free Zones are VAT exempt and offer in-house residence visa processing centers. These zones are an ideal choice for trading companies, as the customs clearance process is streamlined, and proximity to airports and seaports ensures smooth transfer of goods and services.
What are Offshore Companies?
Offshore companies are registered in offshore jurisdictions within a business center. In the UAE, there are three offshore jurisdictions: RAKICC, Ajman, and Jafza. These companies operate outside the legal and business regulations of the UAE mainland and Free Zone Authority.
Furthermore, offshore companies are exempt from VAT (Value-Added Tax) in the UAE since they are considered to be outside the country and do not possess onshore/resident status. They are unable to establish office spaces or apply for UAE Residence Visas for their employees. Nonetheless, this setup offers investors an excellent opportunity for conducting international trade.
Ras Al Khaimah International Corporate Center – RAKICC
RAKICC stands as a prominent offshore business hub in the UAE, coveted for its exceptional offerings. Let’s explore the key highlights of RAKICC Offshore:
- Enjoy the benefits of 100% foreign ownership and owner confidentiality with no public documentation, audit reports for renewals, or share capital requirements.
- Establish a resilient offshore infrastructure featuring a streamlined company formation process.
- With the virtual license obtained, individuals gain the ability to purchase and possess properties in the UAE. Unlock the opportunity to own real estate in this thriving region.
- Operate the business from being at anywhere in the world
Expanding into international markets? Look no further! Offshore companies, with their tax-free status, are the ultimate choice for foreign investors. Gain favor among investors and make your mark.
To know more, read : Offshore Company Formation in RAKICC
Jebel Ali Free Zone Authority (JAFZA) Offshore
JAFZA Offshore operates under the governance of the Jebel Ali Free Zone Authority. Companies listed with JAFZA Offshore enjoy seamless global trade facilitation, thanks to direct access to one of the world’s largest shipping ports.
Important Features of JAFZA Offshore
Investors choose JAFZA for their offshore company due to a range of advantages, including tax exemption, no personal or corporate tax, absence of import-export duties, and freedom from currency restrictions. Additionally, there are various business benefits for a JAFZA offshore company, such as no minimum capital requirement and mandatory appointment of directors and secretaries, along with annual reporting requirements. Offshore companies in JAFZA also have the opportunity to purchase real estate in Dubai with pre-approval from developers and free zone authorities. Furthermore, these offshore companies can become owners of mainland and free zone companies by investing in company shares.
Ajman Offshore
Ajman is a compelling option for offshore company setup. With its affordable price, it offers an ideal choice for investors. Ajman Offshore, the most cost-effective offshore business jurisdiction in the UAE, allows companies to operate outside of the country and even acquire property within the emirate. Registering the offshore company requires a shareholder and director, with the physical presence of the company being mandatory. Notably, there is no minimum share capital requirement in Ajman Offshore.
To know more about Company Formation in UAE, talk to our expert team right away!