Foreign direct investment in UAE is expected to rise as the business-friendly policies and growing business ecosystem constantly supports business growth in the region.

Mainland, Free Zone, Offshore – Three Business Jurisdictions

In UAE, there are three main business jurisdictions – The Mainland, Free Zone, and Offshore.

Based on business requirements the investors can choose the required business jurisdictions. The three business jurisdictions of UAE are distinct and come with their advantages and business benefits for the investors.

Mainland Company in UAE

Mainland companies in UAE are mostly registered as Limited Liability Companies. The next common company type in the Mainland of UAE is the professional license category or Civil Company. There are other Public and Private Joint-Stock companies in Mainland that are Semi-Government companies.

The Department of Economic Development in Dubai is the Licensing Authority for registering a Limited liability or Civil Work Company. Global Investors can choose the various business license types and activities available to start a company in UAE.

Also, almost 122 business sectors are on the positive list that allows 100% ex-pat ownership with no minimum share capital requirements. The foreign ex-pat can register a company in the mainland without the requirement of a local sponsor.

There are many advantages for the investors for setting up a company in the mainland of UAE. It is a perfect choice for large-scale commercial and industrial units as well as retail businesses. Service License or Professional License is also one of the major business license categories in the Mainland.

100% Expat Ownership for Mainland Companies

The recent cabinet decision enables 100% ownership for expatriates and eliminates the need for local sponsors or local service agents. Most of the business activities in the mainland are obtained by foreign investors with 100% ownership.

Business Activities in the field of consulting, commercial, industrial, eCommerce, etc., can be opted by foreign investors to obtain the trade license. The process of mainland company formation is hassle-free and quick.

Investors can choose from a wide range of business activities and business license types at affordable trade license costs from the mainland of UAE.

Mainland Company Formation – Key Highlights

Depending on the business activity and company type, the mainland company registration requires certain pre-approvals and will enable the company to trade in the whole of UAE, GCC, and beyond.

• Mainland companies have total flexibility in carrying out a wide range of business activities including industrial, commercial, and professional sectors.
• Investors can take office spaces, retails shops, and showrooms in UAE and conduct business in the UAE and the rest of GCC regions seamlessly.
• Obtaining a UAE Residence Visa, sponsoring employees, and opening a corporate bank account in UAE is easier using a mainland license as the company has a physical address in UAE.

Pre-Approvals for Strategic Industries

The mainland company formation is relatively easier when compared to offshore companies. Depending on the business activity chosen, the offshore company will require a pre-approval to get the business license.

Whereas, for mainland companies unless healthcare, manufacturing, and other strategic business activities, the company registration process is instant and the company license can be issued within hours.

Professional License from UAE Mainland – Steps to Follow for Starting a Civil Work Company

Using the professional license category, a Civil Work Company can be registered through the DED, Dubai. Civil Work Company enables the professional to quote for Government orders and tenders.

Following are the steps involved in Opening a Civil Work Company in Dubai. Civil work Companies help professionals to set up their business ventures in the mainland of Dubai.

AURION will assist in setting up a Civil Company in UAE, our team of expert Mainland Company Formation Consultants will guide you through the complete process and handle all the related activities to ensure you get the Civil Work Company License at the lowest cost. Our team will assist in:

1. Choosing a tradename for the Civil Company and getting the pre-approvals
2. Filling up the Application form and submitting the shareholder details to the DED
3. Preparing the Tenancy Agreement for the office space
4. Preparing the Agreement for the Local Service Agent and Appointing an LSA for the Civil Company
5. Making the required fee payment for obtaining the Professional License
6. Obtaining and Delivering the Professional License to the investor
7. Applying for the investor visa and coordinating the opening of the bank account for the company.

In a nutshell, the Professional License from UAE mainland is one among the preferred business license categories by foreign investors who are looking to venture into services business and expand their business network in UAE

Free Zone Company Setup

Free Zone companies enjoy 100% foreign ownership, tax-free status, no customs duty for import-export. Also, there is a VAT exemption for designation free zone and investors get access to world-class business infrastructure and amenities.

Free Zones offers a cost-effective business setup and need not have a local partner or agent. It has fully furnished office space readymade warehouses and light manufacturing units readily available for investors to take.

The shareholders, directors, and employees of a free zone company are eligible for obtaining a UAE residence visa.

Free Zone Business Benefits

Free Zones enable investors to experience a hassle-free business setup and peace of mind. The business license fee is paid upfront for a year, also the rental expense of the office space is paid to the Free Zone as a whole yearly.

It gives relief for the rest of the year and the investor can focus on their core business activity more. Also, the Free Zones offer a perfect business ecosystem for investors to easily scale up their business. It also enables the business to get access to world-class amenities and facilities. 

Most of the Free Zones are VAT Exempted and consist of an in-house residence visa processing center. It is a perfect choice for trading companies as the customs clearance process is far easier and the proximity to airports and seaports make the transfer of goods and services easy,

What are Offshore Companies?

Offshore Companies are registered with the offshore jurisdictions of a business center. There are there offshore jurisdictions in UAE that are RAKICC, Ajman, and Jafza. Offshore companies do not fall under the legal and business regime of UAE mainland or Free Zone Authority.

Offshore companies also fall outside the scope of VAT (Value-Added-Tax) in UAE as these companies are deemed to be outside of UAE and does not have a onshore/resident status. The companies can neither open office spaces in the UAE nor can apply for UAE Residence Visa for the employees. It is an ideal option for investors to conduct international trading.

Ras Al Khaimah International Corporate Center –RAKICC

RAKICC is one of the most popular offshore business centers in the UAE. The key highlights of RAKICC Offshore are:

• 100% foreign ownership and confidentiality of the owner ( No public documentation, No audit reports for renewals, No share capital requirements)
• Robust Offshore infrastructure with easy company formation process,
• Ability to buy and own properties in UAE with the virtual license obtained.
• Operate the business from being at anywhere in the world

It is a perfect choice for companies looking at an international market expansion. The tax-free status of Offshore company makes it a favorite choice among foreign investors.

To know more, read : Offshore Company Formation in RAKICC

Jebel Ali Free Zone Authority (JAFZA) Offshore

JAFZA Offshore is governed by the Jebel Ali Free Zone Authority. The Offshore companies listed with JAFZA will have direct access to one of the world’s largest shipping ports to easily facilitate global trade.

JAFZA Offshore – Key Highlights

The exemption of taxation, absence of personal and corporate tax, no import-export duties currency restrictions, etc.; make investors choose JAFZA for setting up their offshore company. There are many business benefits for a JAFZA offshore Company such as no minimum capital requirement, the appointment of directors and secretaries are mandatory, annual reporting requirements, etc.

Offshore Companies in JAFZA can purchase real estate in Dubai upon receiving pre-approval from the developer and free zone authorities. Similarly, offshore companies can be owners of mainland and free zone companies by investing in company shares.

Ajman Offshore

Ajman is another choice and when it comes to offshore company setup. With a relatively low price, it offers a perfect choice for the investor. Ajman Offshore is the cheapest offshore business jurisdiction in UAE. The companies can conduct operations outside of UAE and have the ability to purchase a property in the emirate of Ajman.

There must be a shareholder and director to register the offshore company, the presence of the company is mandatory. There is no minimum requirement for the share capital in Ajman Offshore.

Read more about Free Zones vs. Offshore Companies in UAE and Which is the best Emirate in UAE for Company Formation. To know more about Company Formation in UAE, talk to our expert team right away!

The post What is the Difference between Mainland, Free zone, and Offshore Companies in UAE? appeared first on AURION.

However, there are a few differences in the company structure, company setup procedures, and nature of business operations for Free Zones and the Offshore jurisdictions in UAE.

What are the Advantages of a Free Zone Company?

The Free Zone company has many business advantages when compared to Offshore companies. The investor can easily setup a Free Zone company in UAE with the help of an experienced business consultant.

A Free Zone company can take an office space in the Free Zone if necessary and coordinate the business operations. The Free Zone company is eligible to can hire employees depending on the visa quota availability.

Free Zones are a preferred investment destination for foreign investors due to the 100% foreign ownership for the company. The investor can also repatriate 100% of the business profits and capital to the home country.

There is no income tax and certain Free Zones in UAE are VAT exempted. The business license in UAE Free Zones starts at AED 11,500 for zero visa quota to up to 6 visa quotas and more.

Free Zone Company – Key Highlights

The Free Zone Company is an onshore company governed by the respective Free Zone jurisdiction and eligible to apply for a UAE residence visa, hire employees, set up an office, open a corporate bank account, buy property, sponsor employee & investor visa, etc.

The Free Zones offer customized office spaces (Flexi-desk, shared office, furnished office -12 sq.m, 25sq.m, 50 sq.m, office + warehouse) and a host of other business benefits for the investors.

The company formation in Free Zones is easy with minimal documentation. However, it becomes quite confusing for the investors to choose the right business activity and Free Zone company package.

Also, depending on the nature of the business activity, it requires a few approvals from the Free Zone authorities and other government authorities in the UAE. It is best advisable for the investor to get the assistance of an expert Business Consultant to carry out the process of the company set up in the Free Zones of UAE.

Top Four Free Zones to explore in UAE

• Dubai Airport Free Zone
• Dubai Silicon Oasis – IFZA
• Sharjah Media City
• Sharjah Publishing City

What is an Offshore Company in UAE?

Offshore company in UAE is a type of business entity that is setup with the UAE offshore jurisdictions. In UAE there are mainly three offshore jurisdictions – JAFZA, RAKICC, and Ajman Offshore.

Offshore Company in UAE – Key Highlights

Offshore companies in UAE are governed by the respective Offshore jurisdictions and are non-resident companies. An offshore company is not eligible for applying UAE residence visa for the investors or the employees.

Also, the Offshore company cannot trade or involve in any trade operations with the mainland of UAE. Offshore companies are aimed at facilitating global trade only and they fall out of the UAE VAT regime and other local company governance.

Companies registered with the RAKICC Offshore have the provision to purchase a property in the Free Hold area in Dubai under the company name. 

Offshore Company Formation in UAE – Key Business Benefits

1. Tax Advantage

Offshore Companies do not fall into the tax regime of any business jurisdiction or country. They enjoy Zero taxation for the revenue generated.

Zero taxation for offshore companies is one of the major driving factors for global investors to choose offshore business.

2. Business Anonymity

One of the key reasons global investors prefer to register an offshore entity is to keep their ownership and assets invested confidentially. There is no requirement for keeping public records for an offshore company.

However, with the new law of global taxation, economic substance regulation filings, anti-money laundering, etc; the anonymity of offshore companies is subject to respective authorities’ inquiry. The company documents, transactions, and other trade details will have to be shared upon request by the Government authorities.

3. Ease of Formation and Low Maintenance Cost

The steps involved in setting up an offshore company are relatively straightforward with minimum documentation. It just takes 2 working days in UAE to complete the process of the offshore company registration. Offshore allows remote company registration without the presence of the shareholder (Ajman & RAKICC).

Also, the company is not eligible to open a physical office in UAE nor apply for an employee residence visa. The maintenance cost of an offshore company is relatively lower than an onshore company.

4. Access to Bank Accounts

Offshore companies registered in RAKICC, UAE are eligible to open a bank account in UAE and other global business locations. Individuals can protect their assets by opening a holding company and moving all the assets under the company name.

Also, by opening a corporate bank account in UAE the offshore company can handle all the business transactions via the bank account and successfully run the business.

To know more about the difference between Free Zone, Mainland, and Offshore Companies in UAE, talk to our expert team right away!

Contact Us: Aurion Business Consultants

The post Free Zones vs. Offshore Companies in UAE – Key Differences appeared first on AURION.