Why You Should Consider Starting A Free Zone Company Than A Mainland Company In Dubai?
Dubai is emerging as one of the most lucrative business landscapes globally. Impressive tax policies, tax-free zones (there is NO income-tax) and 100% land ownership for the foreigner business owners – Dubai offers many attractions for the businessmen.
Dubai Business Zones – What you should know?
However, before you make a plan of starting your business in Dubai, there are a few things that you must know about. One of such things is the availability of two business zones in Dubai, namely – Free Zone and Mainland Zone. A business license in Dubai is mandatory to conduct a business in Dubai. For opening a business in the mainland zone, you must have a Dubai Mainland License which comes with its own set of documentary requirements. Dubai Mainland is an economic zone in the country that falls under the jurisdiction of DED or the Department of Economic Development. While you can have complete control over your business in mainland Dubai, you don’t have ownership rights and you need a local sponsor.
The Free Zone in Dubai is a special economic zone that offers regional benefits to local and foreign businessmen. The free zone is under the management of free zone authorities (non-governmental) and independent government bodies. So, you can have 100% ownership rights if you have your business in the Free Zone. This zone was established for the development and proliferation of businesses in Dubai and comes with freedom for business development. However, there is one restriction imposed on the businesses established in this zone – they are allowed to do business in the Free Zone only or outside Dubai. There are some limits on the area a business establishment can cover.
After an introduction, let us move on to explore more about doing business in Free Zone or Mainland Dubai.
Further, let us find out what makes Free Zone a better option as compared to the mainland.
Why Choose Free Zone for Starting a Business in Dubai?
Free Zone offers more Flexibility
Free Zone offers more flexibility for business establishment, development, and operation. You can open a business that caters to the other businesses operating in the area (B2B) in a profitable manner. This comes with the benefit of comparatively lesser competition as compared to the mainland; because the Mainland Zone is already a highly competitive business area.
Fast Incorporation and fewer Formalities
Business Setup in Dubai Free Zone comes with fewer and less stringent legal regulations, when compared to the Mainland Zone. From incorporation to operation – the ease of doing business is certainly more.
Visa Acquisition norms are favourable in the Free Zone
In the Mainland, your office or warehouse (rented) must be aligned with the number of visas you require. As per the current guidelines, you have to rent a space or 100 square feet to 200 square feet per visa. This is the case for the Limited Liability Company (LLC) formation. You can find the details about the other types on the official websites.
However, the Free Zones don’t come with any of such restrictions, and the only limitation that you have to conform to is, the number of visas your company can obtain (ranges from 2 to 6).
Free Zones don’t require big investments for business establishment
In the mainland company formation, the cost of licenses is AED 100,000 which is a sizable amount. This cost also varies as per the size and nature of the business. Hence, it is quite a costly affair to establish a business here.
The free zones, on the other hand, offer multiple possible combinations for setting a new business. Some of such options are single-shareholder companies, multiple-shareholder companies (Free Zone Establishment or FZE), branch office, or Free Zone Company (FZC) where you can have up to fifty shareholders. So, you can plan your business as per the investment you have. The cost of a Free Zone license is just AED 13500 which is certainly lesser as compared to the one mainland.
Further, you have multiple choices for your business, such as commercial, freelancing, consultancy, and service licenses, etc.
Better Support System
Right from licensing, to financing and from consulting to specialized business services – the Free Zones have a high-grade support system which might not be the case for the mainland. As the Free Zone is currently not as saturated, and open to a myriad of businesses or all types and all scales, it is easier to find all kinds of business support.
Privacy is respected
As the Free Zones have no open books about the business owners, business details, and other confidential information, they have better privacy as compared to the mainland businesses. In fact, shareholder information is not available to the public. So, all in all, you can operate without being vulnerable to the public eye. However, you must not confuse it with legal operations. You have to follow the rules, but you can certainly enjoy better discretion and privacy in the Free Zone.
You can work, earn, and invest without having to pay the income taxes. You can own your business completely and enjoy your privacy as well. There are impeccable business support facilities. So, you can outsource your legal and finance work if you deem fit. So, all in all, the Free Zones in Dubai offer a more favourable and lucrative business ecosystem than the mainland.
For more expert opinions and guidance, you can reach out to us in the comments section and we will make sure to respond with the best information and help. Thanks for reading!