Company Formation: Mainland vs. Free Zone vs. Offshore

Company Formation: Mainland vs. Free Zone vs. Offshore Are you planning to start a new business in Dubai? If yes, you must be familiar with the concepts of the mainland, free zone, and offshore company formation. There are so many things in each jurisdiction that you should consider before choosing a place and business activity. To ensure that you make no mistake, you should look for one of the best business consultant companies in Dubai. All three kinds of jurisdiction come with their unique benefits and immense business opportunities.

In this blog, you will learn about the basic things related to each jurisdiction.

Mainland A mainland company in the UAE is also sometimes referred to as an onshore company. The license for mainland business is granted by the Department of Economic Development (DED) of the respective emirate.        

Ownership: In the mainland, an expat businessman can acquire only 49% of the company shares and the remaining (51%) must be acquired by the local sponsor.

Office Space: It is mandatory to have a minimum of 200 sq. ft. physical office for doing business in the mainland.

Business Activity: A company has the freedom to do business anywhere in the UAE including free zones.

Audit: All mainland businesses must maintain all financial documents and be auditready at the end of every year.

Visas: Business owners can get a residency visa based on the size of the office or work premise.

Capital Requirement: There is a minimum capital requirement that varies according to the legal form of business.

Govt. Authorities: Businesses need to take permission from authorities like DED, MIL, MOI, etc.

Cost: The cost of setting up a business in the mainland is higher than in other jurisdictions.

Free Zones

In the UAE, there are more than 40 free zones where a company has the benefits of tax exemption and full ownership.    

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Ownership: As mentioned above, an expat businessman enjoys full ownership in a free zone. There is no need for a local sponsor or service agent to start a business.

Office Space: There is no rule to own physical office space. Businesses are allowed to run without having an office. They also have the freedom of having a virtual office.

Business Activity: Unlike the mainland, businesses are not allowed to do business outside the free zone.

Audit: Not every free zone (FZ) company needs auditing. However, there are some entities, such as free zone companies (FZCO) and Free Zone Establishments (FZE) that require a mandatory audit for accounts.

Visas: A residence visa is granted based on the size of the office or work premises.

Capital Requirement: Based on the emirate, there may be a minimum capital requirement.

Govt. Authorities: Free zones have their own rules and regulations and don’t require companies to get approval from outside of the respective free zone.

Cost: The cost of a company setup in the free zone is medium.

Privacy: The details of free zone businesses are available to the general public upon request.

Offshore An offshore company is the one that is established in another jurisdiction and has its parent corporation in another country. However, it is not a branch as no physical office is required.         

Ownership: Full ownership is allowed until and unless it is located outside the UAE. Office Space: Businesses cannot have a physical office in the UAE but can have it outside the country.

Business Activity: Companies are allowed to do business outside the UAE but restricted from doing business in the UAE. Audit: Companies need not be ready for audit; however they can be if they want to be financially updated.

Visas: No residency visa is issued.

Capital Requirement: There are no minimal requirements for capital.

Govt. Authorities: RAK and JAFZA facilitate offshore formation and authorities of these free zones look after the required approval.

Cost: The cost of offshore company formation is quite low.

Privacy: The details of an offshore company, such as the identities of owners, directors, and shareholders, are not disclosed.

You can easily see that there are so many things needed to consider for company formation.

Thus, it is highly recommended to contact a recognized business consultant company in Dubai before taking any step.

Contact Details Address: Level 20, 48 Burj Gate, PO Box 36615, Dubai, UAE Phone: +971 55 571 6614 E-mail: team@socialiteconsultancyservices.com Web: http://www.socialiteconsultancyservices.com/