...

MAINLAND VERSUS FREEZONE

Introduction

United Arab Emirates is one of the fastest growing economies in the world, as the government of UAE provides ease in setting up business and companies and levy no income tax upon the individual income. However, the Federal Government of United Arab Emirates recently introduced corporate tax which is to be levied at the rate of 9% only on the net profitable income of any company or organization. Furthermore, some categories have been specified in the tax scheme which are exception to the corporate tax which also includes “Qualified Free Zone Companies” as the implementing regulation or cabinet resolution is still awaited in this regard, which will clarify the situation or stance of the law in more clear and precise manner.

Point of Attraction

Dubai, in the present time is becoming focal point of attraction for the businessmen, investors, and entrepreneur who wants to either start their business or want to expand their running business because of the ease of doing business, world class infrastructure, safety-security and resources provided by the government of Dubai.

The Queries

Generally, in the mind of investors, businessmen, and entrepreneur the question of law prevailing in field of companies and commercial transaction arise. In other words, concern about the structures of the company and beneficial option for selecting the best option for setting up companies arise in the mind of businessmen and investors. Therefore, to counter the same question in this article our Business Lawyer in Dubai inform you about the definition, difference, and importance of setting up of companies in Mainland or Freezone.

OUTCOME OF THIS ARTICLE

After reading this article, the reader will enable to understand the below mentioned subjects:

  • IDEA AND KNOWLEDGE ABOUT MAINLAND COMPANIES
  • IDEA AND KNOWLEDGE ABOUT FREEZONE COMPANIES
  • SIMILARITIES BETWEEN MAINLAND AND FREEZONE
  • DIFFERENCE BETWEEN MAINLAND AND FREEZONE COMPANIES
  • BENEFITS OF MAINLAND COMPANY
  • BENEFITS OF FREEZONE COMPANY
  • CONCLUSION

What is the Mainland Company?

Our Business Formation lawyer states that:

Mainland Company is a company which is formed and regulated by the rules of local authorities of a particular emirate. This means if a person “A” an Investor wants to setup his/her company is Dubai Mainland, then he has to obtain permission from the Dubai Economic Department and from the concern departments which possess the jurisdiction of a particular kind of business activity likewise Ministry of Justice for Legal Activities, Dubai Land Department for matters related to property and construction, Dubai Municipality for import and export activities, Dubai Health Authority for activities relating to health sector and so on.

What is a Freezone Company?

Our Business Lawyer in Dubai states that:

Freezone Company is a company formed by or with any free zone authority in any emirate regardless of the location of free zone. This means if any businessmen or investor wants to setup his/her company with any freezone authority then he must obtain permission and to abide by the regulation of a particular freezone authority.

Therefore, in most of the cases freezone authority provides easy license without the requirement for opening or renting a mandatory office so it also saves cost, time, and money. Moreover, it happens to be the best tool for the business startups.

However, most of the activities such as opening of education institutions, media and broadcasting etc., requires prior approval from the concern ministry or department of the Government of Particular Emirate in which the activity falls.

What are Business Activities?

The answer to this question is mentioned in detail under our previous article which is relation to how to choose your business activity, wherein detailed explanation is being provided by our Business Lawyer for selecting business activity.

What are the similarities between Mainland or Freezone company?

Our Business Lawyer states that:

Mainland and Freezone companies contain lot of similarities between them. Therefore, such similarities are mentioned hereinbelow for the better understanding of the reader:

  • Both can do business in UAE and outside UAE, unless activities are limited where the activities to be practiced, some Free zones have activities to be executed only outside UAE.
  • Both are subject to VAT and Corporate Tax unless exempt by the Law.
  • Both have all the corporate stander documents such as trade license, MOA, and Commercial Register, Partners, and Managers records.
  • Both are listed on the public records to some extent in the National Commercial Register.
  • Both can do business with mainland and free zone companies.
  • Both have the exact requirements of reporting about UBO and AML & ESR Regulations.
  • Both are treated on the same process for an opening of a bank account.

What are is the difference between Mainland and Freezone Company?

Our Company formation lawyer states:

The difference between Mainland and Freezone company is mentioned as follows:

MAINLAND COMPANY FREEZONE COMPANY
– Office can be formed or rented in any area of the Emirate.- License is managed through the request submitted to local authorities, which may require PRO Services to proceed with such changes.

– The visas are being issued through the Labour and Immigration Department.

– Generally, for most of the activities it still requires a local partner for the stake of 51% of the total shares.

– It requires preapprovals from the specific departments.

– Office can be formed or rented inly within the area of Freezone Authority.- Online portal is provided wherein changes can be made easily either for share transfer or adding any new business activity.

– For issuance of visa separate authority is established.

– Companies formed under freezones are provided with 100% ownership, and no such obligation.

– It does not require any preapprovals from any authority for staring the business except some activities.

Whether all activities which are available under Freezone are also available in Mainland Company?

The answer to this question is No, as some activities of the mainland company are not available for Freezone company, yet you may find the same activity available to be practiced outside the United Arab Emirates.

Whether both Mainland and Freezone Companies are subject to the Federal Company Law?

Our Business Lawyer in Dubai states that:

No, some of the free zones have their own corporate regulations that prevail over Federal Commercial Companies Law.

Whether Freezone Company can own shares in Mainland Company or vice-versa?

Our Company formation lawyer states that:

Yes, any of the Companies formed in UAE can own shares in other companies except in some professional licenses in Mainland that requires to be converted to LLC before a Freezone Company owns shares of it.

Whether a Freezone Company have an Office outside Freezone Area (akin to Mainland Companies)?

Our Company Formation lawyer states that:

Yes, Freezone companies can have a representation office in mainland, but this requires an additional license from the mainland authority and its approval for the Freezone Company to have such an office. This office cannot conduct business but introduce clients to the business of the Freezone Company.

How can we assist you?

Nour Attorneys & Legal Consultants tends to provide you with one of the best business lawyers in Dubai, which are highly experienced and skilled. Our team of lawyers tends to provide you with one of the best solutions in relation to Company Formation in Mainland or Freezone, Business Bank account opening and many more.

Our law firm consist team of Business Acquisition Lawyers which are experienced in Company Valuation and Restructuring, Mergers and Acquisition and Corporate Governance. Thus, to address the queries of businessmen and investors we have made an extensive video in this regard so that all the queries pertaining to company and business formation may be furnished.

More Services

Call Now Button