Mainland Company Formation in UAE
What is Mainland in UAE?
In business essence, a mainland or onshore is defined as the total geographical area of land as defined by the UAE’s Department of Economic Development (Abu Dhabi or Dubai DED) that legally allows private companies and their representatives to operate commercially.
A Mainland Company formation is incorporated based on a mandatory ownership structure with either a 49 % foreign ( i.e. you as the expat business partner) & 51% local sponsor (a UAE national) shareholder model or a 100 % foreign expat shareholder model with a UAE national appointed as the Local Service Agent. Mainland Company formation is also often referred to as onshore company formation.
A freezone entity, on the other hand, is an economic area where the trade of goods and services at typically a preferential tax and customs rate is permitted. The idea to launch free zones in the UAE was to attract and increase foreign companies to establish their presence in UAE leveraging on benefits such as 100 % foreign ownership. Currently, more than 45 free zones are operating in the UAE with Dubai taking the majority.
Overview of Benefits of a mainland company formation in UAE
By now, you would have a clear understanding of why entrepreneurs choose the UAE to start or expand their business. However, if you are still thinking of how setting up your business in the UAE with a mainland business licence can benefit you, you may not want to overlook the opportunities you can avail. The benefit include;
• No Corporate Tax
• 100 % Repatriation of capital and profits
• Ability to trade locally and capture the UAE market
• Ability to operate from any part of the UAE
• No visa limits with a hassle-free process
• Flexibility to choose an office location
• Easy legal procedure
• No currency restriction in Dubai Mainland Company
Many entrepreneurs want a mainland business set up to offer services to the local UAE based market as well as to leverage from obtaining government and semi-government projects.
What are the Types of Licences available for Mainland Company Formation in the UAE?
There is typically 4 type of business licences available for a mainland company formation in the UAE. You can choose:
It allows you to provide services such as management consulting. As a business owner, you will have 100 % shares of the company with a UAE national appointed as the Local Service Agent.
Commercial Business Licence
If your business is commercially trading in goods, commodities or retail sales. As an expat business partner, you will own 49% of shares while the UAE national shareholder, also referred to as the “local sponsor” will own 51% of shares.
Enables you to carry out large scale production and manufacturing processes. This licence also permits the packaging of products for sale. However, there are plenty of approvals from various authorities and institutions such as banks required. The ownership structure is the same as the one needed for a commercial business licence, i.e. 49 % Foreign-Owned and 51 % shares to UAE national.
Foreign Branch / Representative Office
Falls under mainland company formation in the UAE and is set up to build your presence in the Middle East and UAE Market.
What is the Difference between Mainland Company formation and a Freezone in UAE?
To explain the difference visually, below is a table of comparison Mainland Company Formation vs Freezone
Mainland and Free zone Company Formation Comparison Chart
|Mainland Company||Freezone Company|
|Scope of Business||Allowed to do unrestricted business inside and outside of UAE||Allowed to do business only within the designated freezone or outside UAE. Often established by import and re-export businesses. Can only deliver service in UAE through a mainland distribution agent|
|Ownership||1. 49% Shares to Expat Partner & 51% Shares to UAE National or
2. 100 % to expat partner in professional licence and UAE National appointed as Local Service Agent
|100 % Foreign ownership|
|Office Requirement||Min.of 200 sqft/licence on an Annual tenancy contract basis (Ejari) issued by the Land Department.||Physical office is not mandatory. Can use Flexi or smart desk provided by Freezone business centres.|
|Visa||No limits on visas and granted to mainland company based on available office space through an E-quota system by the Ministry of Labour.||Depending on the freezone and package availed visas can range from 2-6 visas. To avail more visas, office space is required.|
|Type of Approvals required||Relevant DED (Department of Economic Development), Dubai Municipality (DM), Ministry of Labor (MOL) Dept. of Naturalization and Residency Affairs, Immigration.
Some business activities require additional approvals such as Dubai Health Authority, Knowledge and Human Development Authority, Food Dept., Civil Defense, Real Estate Regulation authority.
|No approvals required other than in special business activities. Please consult our experts.|
The Process of Mainland Company Formation
At Business Expert, we guide you through each step of your business journey. Although the process is quite detailed, below is an 8 Step Process highlighting the essential incorporation procedure for your mainland company formation in the UAE.