One important difference between mainland and Free zone companies is the nature of their licenses. Mainland company formation in Dubai requires routine government clearances for activities like manufacturing and importing. The Knowledge and Human Development Authority and Dubai Health Authority must also approve licenses for medical and educational activities. Food-related businesses must also have a permit from the Municipality. By contrast, most free zone enterprises deal with re-exports and imports and don’t require external permission. However, they are required to pay certain fees to enjoy all of the benefits of a Free zone corporation.
1: One of the most common questions about establishing a company in the UAE is “what is the difference between a free zone and a mainland?” The answer depends on the type of business you’re running and the nature of your customers’ needs. Mainland companies have a limited liability company, and foreign companies can set up a branch or representative office to conduct business in the UAE. However, if you want to have full control of your business, free zones are the better option.
2: Whether a business should have a non-physical presence-in-UAE (NPE) on the UAE mainland or in a free zone depends on the nature of its business and its intended customer base. Mainland companies, however, are restricted by the laws and regulations of the UAE Commercial Agencies. A freezone allows foreign companies to do business in the UAE by setting up a limited liability company (LLC) or branch office.
3: The most obvious difference between operating in a free zone and the mainland is the lack of external approvals. While a free zone requires no external approvals for commercial activities, a mainland company will still need to get specific government approvals for activities such as trading in medical equipment, distributing goods, and so on. The process for establishing a business in a free zone depends on how quickly you can locate a local partner and select a free zone. Typically, this process takes between three to six weeks.
4: The UAE has long welcomed foreign investments, but the recent changes to the FDI law have left some concerns unanswered. For one, foreign companies are no longer restricted to owning 100% of their company’s shares. This is a significant change, as foreign companies have historically been restricted from owning more than 50% of their businesses in mainland countries. However, these new rules have created new opportunities for mainland companies to benefit from 100% expatriate ownership.
