Dubai is one of the fastest growing business hubs in the world. From its strategic location to its flexible business regulations, it’s a great place to start a company! But if you’re looking to put business roots in Dubai, you need to know which setup to choose. So today, we’re gonna take a look at the mainland vs Free Zone debate. Which is the better business setup for you? Well, we’re gonna answer that and more right now! Now, let’s dive right into it all, shall we?
What Is a Mainland Company?
Okay so, a mainland company in Dubai has its license from the Department of Economy and Tourism, aka the DET. This means that your company can operate restriction-free in the UAE and internationally. In addition to that, a mainland company can actually take on governmental contracts and projects. So when we talk mainland vs Free Zone, this is one of the biggest differences.
Now, the downside (depending on how you see it) is that your business setup might cost more than Free Zone companies. And naturally, you should have physical offices in Dubai. Moreover, if your business operates in sectors like oil and gas, finance, security, and telecommunications, you need a local UAE sponsor (Emirati sponsors). Other sectors are free to be 100% foreign owned since 2021.
What Is a Free Zone Company?
In Dubai, there are over 40 Free Zones that cater to a vast range of industries. Regardless of the industry though, Free Zone companies can have 100% foreign ownership without the need of a local sponsor. In addition to that, companies in Free Zones don’t have to pay corporate taxes. Well, that’s until 2029, when there will be a 9% tax on businesses that make more than AED 375,000 in profit. Now, the downside here is related to service distribution within the UAE. You see, you need a third-party, a local distributor, that will handle it in the country.
Mainland vs Free Zone - Which Is Better for You?
To choose the best business setup for your business, you need to know who your company is directed at. If your company’s focus is trading within the UAE or taking on governmental contracts, mainland is the answer. Of course you’ll have to have a physical office for that too. However, if the focus is international trades and need a place that offers tax benefits, it’s Free Zones all the way. So, to wrap the mainland vs Free Zone debate, it all comes down to your priorities.
Now, if you’re looking for help when it comes to corporate tax, you’re in the right place! Noraal can help you with as well as provide a wide range of services! From accounting and audit to business valuation and CFO advisory, your SME can have it all in one place. So, whether you’re a startup and need to grow or already have an established business that needs a revamp, we got it. All you gotta do is contact us today!