Mainland Company is an inland company which is able to conduct its business activities in the local market in United Arab Emirates and outside the UAE. Mainland companies have the freedom to carry its business in case of commercial and professional licenses.
Mainland Company formation in Dubai needs a local sponsor or a UAE national and the general shareholding arrangement of Dubai Mainland Company is that, UAE national Sponsor holds a 51% share in the company and the Foreign Shareholder (s) holds a 49% share in the company.
The mainland company provides flexible legal contracts between foreign investors and local sponsor, where annual fees or proportion of sales / profits are paid to the local sponsor. The foreign investor holds 100% control of the company and local partner has no involvement in the day to day operations of the business. For mainland business setup the Department of Economic Development (DED) is responsible for registration, licensing, commercial compliance and consumer protection of the company in Dubai.
Advantages of Setting up Mainland Business in Dubai
- Mainland Company in Dubai is exempted from corporate tax.
- There is no minimum capital requirement for the formation of Mainland Company.
- Mainland companies can trade with other mainland companies in Dubai or UAE. They have the flexibility to do their business in any part of UAE or beyond. This feature sets them apart from free zones companies because they are restricted to operate their business in their respective free zone.
- Mainland companies also have more options for business activities unlike free zone businesses e.g. Companies in Dubai Media City must work in the media or closely related industries. However there is no such limitation for mainland business and it can open up to wider UAE economy with much scope of diversity.
- Mainland businesses can choose their office location anywhere in Dubai. This feature allows them not only to trade with local market but can also open up multiple branches of the company thus enabling them to build a strong presence in UAE.
- Mainland companies are allowed to take on governmental work unlike free zone companies which are prohibited from undertaking government contracts and are only allowed to carry out private commercial work.
- There is no limitation on the number of visas on mainland license. However the eligibility to obtain visas depends upon office space. More office space, more number of visas you may get.
- There is no currency restriction for mainland business in Dubai.
- 100% repatriation of capital and profits are admissible.
- Registration process for mainland companies is simple and hassle free. Also there is no yearly audit requirement.
Free Zone Company:
Free Zone Company is an independent business entity with its own unique set of rules and regulations. Each free zone is allowed to operate its activities inside the free zone or outside UAE. The fundamental difference between mainland and free zone is that Free Zone Company cannot conduct its operation in non-free zone without the support of a local agent whereas a mainland company freely operates its business activities anywhere in UAE. There are numerous free zones in Dubai. The main reason foreign investors choose a free zone venture is to get full ownership advantages, apart from using the world-class infrastructure, ensuring their wealth, and enjoying tax exemptions.
Main advantages of free zone company:
- Full foreign ownership
- Sleeping partner or local sponsor not needed for business setup
- Ownership of local bank account
- Protection of activities
- International business commitment
- No corporate duty for a long time and renewable for an extra 50 years
- Simple enrollment methods, permits for work and Visas
- Wrap up your business on your own responsibility.
- 100% tax exemption on personal or corporate income or gains
- 100% ownership for investors regardless of their nationality and domicile
- 100% repatriation of capital and profits
- Exclusion from all import and export duties
- Exemption from corporate tax for 15 years, with an additional renewal option for 15 years
- No capital deposit required