The United Arab Emirates (UAE) stands as one of the most attractive destinations for business setup, particularly in its mainland regions. Boasting a robust economy, strategic location, and favorable business policies, the UAE mainland offers unparalleled opportunities for entrepreneurs and businesses alike. Whether you’re looking to tap into the local market or leverage the UAE’s global connectivity, setting up a business in the mainland can be a transformative decision.
Benefits of Mainland Business Setup in UAE
Strategic Location
Situated at the crossroads of Europe, Asia, and Africa, the UAE offers access to a market of over 2 billion people.
Full Access to the Local Market
Unlike free zones, a mainland business can trade directly within the UAE market without restrictions.
No Currency Restrictions
The UAE’s liberal financial policies mean there are no currency restrictions, facilitating smoother financial operations.
Tax Benefits
The UAE offers a favorable tax environment, including no personal or corporate income taxes in many cases.
Ease of Expansion
Mainland businesses have greater flexibility to open branches and expand within the UAE.
Diverse Economy
With thriving sectors like tourism, real estate, trade, logistics, and manufacturing, the UAE mainland offers a diversified economic landscape.
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Required Documents
- Passport copies of the shareholders
- Photos of the shareholders
- No Objection Certificate (NOC) from the current sponsor (if applicable)
- Emirates ID copies (if applicable)
- Valid visa Copy
- Three proposed Trade name
- Tenancy contract (Ejari)
- List of Activities
- Mobile Number and Mail Id
Legal form of the Company
In the UAE mainland, there are several types of business entities that you can register. The choice of entity depends on the nature of the business, the number of shareholders, and the business activities. Here are the main types of companies you can register in the UAE mainland
Limited Liability Company (LLC)
- Most common type of business entity.
- Requires a minimum of two and a maximum of 50 shareholders.
- Foreign investors can own up to 100% of the business in specific activities.
Sole Proprietorship
- Owned and operated by a single individual.
- Full control and ownership by the owner.
- The owner is personally liable for all business activities.
Branch of a Foreign Company
- Allows a foreign company to establish a presence in the UAE.
- 100% owned by the parent company.
- Can conduct business activities similar to the parent company.
Representative Office
- A branch of a foreign company that is limited to promoting and marketing the parent company’s products and services.
- Cannot conduct commercial activities or generate revenue in the UAE.
Public Joint Stock Company (PJSC)
- Requires a minimum of ten shareholders.
- Can offer shares to the public.
- Minimum capital requirement is AED 10 million.
Private Joint Stock Company (PrJSC)
- Requires a minimum of three shareholders.
- Cannot offer shares to the public.
- Minimum capital requirement is AED 2 million.
Joint Venture
- An agreement between a foreign company and a local partner.
- Typically used for specific projects or ventures.
- Does not require a separate legal entity.
Types of Licenses
In the UAE mainland, businesses must obtain the appropriate license to operate legally. The type of license required depends on the nature of the business activities. Here are the main types of licenses available for mainland companies in the UAE:
Commercial License
- Purpose: For businesses engaged in trading activities.
- Examples: General trading, import/export, retail, real estate, logistics, etc.
Professional License
- Purpose: For businesses providing professional services.
- Examples: Consultancy services, legal firms, accounting, medical services, educational services, IT services, etc.
Industrial License
- Purpose: For businesses involved in manufacturing or industrial activities.
- Examples: Factories, production units, processing plants, and any business that transforms raw materials into finished products.
Tourism License
- Purpose: For businesses operating in the tourism sector.
- Examples: Travel agencies, tour operators, hotel management, cruise services, and other related services.
Agricultural License
- Purpose: For businesses engaged in agricultural activities.
- Examples: Farming, fishing, animal husbandry, and other related agricultural services.
Specialized Licenses
In addition to the general licenses mentioned above, there are specialized licenses tailored to specific industries and activities:
E-commerce License
- Purpose: For businesses that operate online stores and digital marketplaces.
- Examples: Online retail, digital services, and other internet-based businesses.
Difference Between Mainland & Freezone Business
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Mainland Business
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Freezone Business
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Definition
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Mainland businesses are licensed by the Department of Economic Development (DED) of the respective emirate (e.g., Dubai, Abu Dhabi).
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Freezone businesses are established within designated areas called Freezones, which are governed by their own regulatory authorities.
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Ownership
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Traditionally, foreign investors could only own up to 49 percent of a mainland business, with the remaining 51Percent owned by a UAE national sponsor. However, recent regulations (as of 2021) allow 100percent foreign ownership in many sectors.
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Freezone businesses offer 100 percent foreign ownership, with no need for a local sponsor or partner.
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Business Activities
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Mainland businesses can engage in a wide range of activities without significant restrictions and can operate anywhere in the UAE, including engaging with government contracts.
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Freezone businesses can only operate within the Freezone boundaries and can-do business internationally. Direct trade with the UAE mainland is restricted and requires the use of a local distributor or agent.
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Office Space
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Mainland businesses must have a physical office space within the emirate where they are registered. Virtual offices or shared workspaces are generally not permitted for licensing purposes.
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Freezones provide various office solutions, including flexi-desks, shared offices, and dedicated offices. The type of office space required depends on the Freezone’s regulations and the number of visas needed.
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Visa Eligibility
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Mainland companies can obtain an unlimited number of visas, provided the office space is adequate to accommodate the number of employees.
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Freezone companies are limited by the number of visas they can obtain, which depends on the size of the office space and the Freezone’s regulations.
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Audit Requirements
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Mainland businesses are required to submit annual audited financial statements to the authorities.
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Freezone companies may have different audit requirements depending on the Freezone’s rules. Some Freezones mandate annual audits, while others have more flexible requirements.
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Taxation
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Mainland businesses are subject to UAE corporate tax laws, which as of 2023, include a corporate tax rate of 9 percent for profits exceeding AED 375,000.
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Freezone businesses enjoy tax exemptions, including corporate tax and import/export duties. However, they may be subject to UAE corporate tax if they conduct business with mainland entities.
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Choosing between a mainland and a Freezone business depends on the specific needs and goals of the business, including the desired level of ownership, the target market (local vs. international), and the flexibility required in office arrangements.