The UAE has earned a reputation as one of the best places to do business in the Middle East. The region offers many tax-friendly laws and a rapidly-growing economy. If you intend to set up a business in the region, you will need to choose from these company types: Mainland, Free Zone, and Offshore.
In this guide we will go over what exactly each company type is. We hope his information helps you understand the key differences between each one and select a company type suitable for your business.
- Mainland Companies
Mainland companies are UAE-based companies that have been registered under the Ministry of Economy and are supervised by the Department of Economic Development.
Work Space
Mainland companies have a mandatory office space requirement. As per DED, the minimum office space requirement is to lease a minimum 200 sq. ft. office. Virtual offices are not allowed for mainland companies.
Licensing Requirements
You will need to obtain your business license from the Department of Economic Development if you intend to run it as a Mainland company.
Trade Restrictions
Mainland companies have very few trade restrictions. They can freely trade with Free Zone companies and even place bids on government-sponsored projects.
- Free Zone Companies
Free Zones are special autonomous regions in the UAE. They function under a body called the Free Zone Authority. Companies that operate in these regions are referred to as Free Zone Companies.
Sponsorship Requirements
There is no need for Free Zone businesses to use a UAE-based sponsor or partner. These businesses can be 100% foreign-owned.
Work Space
Free Zones Companies do not necessarily require a physical office space. Anyway a wide range of office space choices are available within each free zone, ranging from virtual desks to offices and flexi-desks. Mainland companies must have a physical office space.
Licensing Requirements
Companies must obtain a license from the appropriate Free Zone Authority governing the area. Unlike Mainland companies, they don’t need permission from the Department of Economic Development.
Trade Restrictions
Free Zone companies must abide by more trade restrictions than Mainland companies. They can trade throughout the UAE, but face some restrictions if they plan to work directly with Mainland companies.
- Offshore Companies
The term “offshore company” might make you think the company in question is located outside the UAE. However, this is incorrect.
Offshore Companies are actually those that are registered in a particular jurisdiction and are then operated from a different jurisdiction.
Sponsorship Requirements
Like with Free Zone companies, there is no need for Offshore companies to get a sponsorship or partnership from a UAE resident. So 100% of the business can be foreign-owned.
Licensing Requirements
Offshore companies are required to get a license from the authority in the region they are registered in.
Trade Restrictions
Offshore companies aren’t allowed to do business in the UAE. They face the toughest trade restrictions of all three company types. This is a significant difference between the mainland, Free Zone and Offshore companies.
How Capatt Services Can Help
As you can see, there are many distinct differences between Mainland, Free Zone, and Offshore companies. If you need help choosing between company types, please contact Capatt Services. Our consultants understand the advantages and drawbacks of each company type and can help you select one that fits your needs.
