2023 Dubai company registration guidance

Business

Registration

Starting your own business in Dubai requires you to be aware of certain jurisdiction types to know which is suitable for your business activity. Registering your business can be complicated, however, the UAE accommodates every entrepreneurial structure and setup through three main economic jurisdictions; free zones, UAE mainland and offshore. With the first half of 2022 registering 25% more businesses than that of the same period of time in 2021, according to The National News, Dubai lives up to its reputation of being an active business hub. Depending on business activity, intended benefits, budgeted business costs as well as long and short-term objectives—you can choose between the three types.

It’s no doubt that the UAE is a gateway to business growth with its ‘zero-tax’ policies and bustling environment that promotes technology-infused business. Whilst setting up your business in such a location would guarantee a great ecosystem to work in, choosing your jurisdiction is contingent upon your business’s tailored requirements.

What Are Mainland, Free Zone,

and Offshore Companies?

The three types of jurisdictions have a couple of differences along with their own benefits and drawbacks; it’s important to establish the definitions and main attributes of each to gather a proper understanding of registering your business.

Mainland Company

Contrary to an offshore company, a business set up in the UAE mainland is deemed as an onshore company. The company is registered under the government authority which is the Department of Economic Development (DED) — the relevant emirate’s DED will resort to handling the registration process. A major point to note is that a mainland company is allowed to trade in any part and outside the UAE with minimal restrictions for economic development.

Free Zone Company

Dubai accommodates a large number of free zones to accelerate economic growth, and these unique jurisdictions pose their own regulations and governing bodies. Generally, you are only able to engage in business activities inside the free zone and outside of Dubai, whilst making use of 100% repatriation profits and 0% customs duty. 

Offshore Company

These companies are located in a different place from where the business owner lives and the business setup is in another jurisdiction than that of the UAE. In simpler terms, this means that the company is located in an international location — another country with a different set of regulations and conduct of business.

Even though offshore companies operate outside of Dubai, the company has the obligation of being a shareholder of a free zone or mainland business.

A Detailed Comparison:

There are quite a few variations between the economic jurisdictions that you need to take into account in order to choose the most suitable one for your business.

Ownership

Previously, ownership for mainland companies didn’t receive full ownership—rather, only 49% would be owned by the company and the remainder of 51% in shares will be given to a local sponsor or authority in the mainland. As of recent events, UAE law allows non-Emiratis of all nationalities to own 100% of onshore companies established by them for more than 1,000 commercial and industrial activities, excluding economic activities with a strategic impact in seven sectors.

Free zone companies have full ownership of shares, including profits and title, whilst offshore companies are required to be located outside of Dubai in order to gain full ownership.

Business Activities

Business activities for a company set up in the mainland can be easily conducted as these companies are able to engage in trade across all locations, abroad or locally.

For offshore companies, it’s mandatory to operate outside of the UAE to start your venture.

Visa Requirements

For mainland businesses, the size of your work premise determines the number of visas that you could issue. Simply, it depends on the scale of your business and the number of employees you undertake.

For free zone companies, visa packages differ based on the jurisdiction, and in Meydan Free Zone’s case, you can allocate up to 6 visas.

With offshore companies that aren’t in need of any physical presence in the UAE, visa allocation is irrelevant.

Capital Requirements

Mainland companies are codependent on legal and capital requirements, as the minimal capital requirement is solely based on the company’s legal structure. It depends on the activities carried out by the company.

For free zone companies, the minimum capital requirement is dependent on the emirate that governs the company.

On the other hand, offshore companies are void of any capital requirement.

Legal Requirements

If you decide to set your company up in the UAE mainland, gaining initial approvals and permits to obtain a perfectly legal business license is a strenuous process. You will need permits from organisations like the DET and the Ministry of Labour.

Contrary to this, free zone entrepreneurs only need to adhere to the specific rules, regulations and simplified processes crafted by the free economic zone. At Meydan Free Zone, the process of obtaining your online business license is extremely straightforward, and a team of experts provides you with guidance throughout.

Offshore company formation is supported by several local free zones and agents in Dubai.

Costs

The three jurisdictions incur costs different from each other. For instance, registering your start-up on the mainland can cost you AED 16,500 or more approximately for a trade license.

As for free zone companies, the costs are inherently lower compared to mainland set-up. With zones like Meydan Free Zone, you incur a lower company formation fee with licenses priced from AED 14,500 onwards.

Offshore companies are deemed to be the lowest with their costs in Dubai, starting with AED 12,000 only.

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