Starting a business in the UAE begins with a critical choice: selecting the right jurisdiction. Among the three options—mainland, free zone, and offshore—the mainland offers unmatched flexibility and market access. But what is mainland in the UAE? Operating within the mainland provides businesses with the ability to engage in a wide range of commercial activities without restrictions, enabling companies to operate across the entire UAE.
This makes mainland businesses an attractive choice for entrepreneurs looking to grow and expand. In our thorough guide on what is mainland in UAE, discover the key aspects of mainland business setup and its role in driving entrepreneurial success in the UAE.
Mainland in UAE:
Mainland refers to the geographical area in the UAE that falls under the direct governance of the Emirati government, outside the jurisdiction of designated free zones. Mainland incorporated companies can enjoy several benefits, including the ability to operate across the UAE and engage in a broader range of operations without any restrictions often associated with free zones.
Businesses in the Mainland are licensed and regulated at the emirate level by the Department of Economic Development or DED. This jurisdiction offers greater operational freedom, unrestricted market access, and the opportunity to conduct commercial activities on a larger scale. However, certain business activities may require a partnership with a local sponsor or a UAE national.
Key Features of Dubai Mainland
Dubai Mainland offers several key advantages for businesses, making it an appealing choice for entrepreneurs. Here are the main features:
Full Business Ownership
There is no need for a local partner for most of the business activities in Dubai’s Mainland, and foreign investors are free to own and manage the company on their own. This provides the entrepreneurs with more control and decision-making power, ensuring they can fully manage their operations.
Wide Range of Business Activities
Mainland companies can operate across a diverse range of industries, unlike free zones, which tend to have a more specific focus. It also breaks the rigidity allowing for corporations to expand in the variability of products offered and thus change to fill the market demands.
Direct Access to the UAE Market
Mainland incorporated ventures have full and unrestricted access to import and supply goods and/or provide services throughout the entire area of the UAE without restrictions and limitations in contrast with free zone ventures. This place mainland business at a favorable position in that they enjoy a wider market and more opportunities for expansion.
Greater Flexibility
Mainland companies benefit from more flexibility regarding their business location, the structure of their business and the ability to open branches in the UAE. By doing so, firms can easily grow and copy with different market conditions in the various regions of the country.
Government Contracts
Mainland businesses are eligible to bid on and secure government contracts, an opportunity typically not available to free zone companies. Securing government contracts can significantly boost a company’s reputation and growth prospects within the UAE.
What is a Mainland Company in Dubai?
A mainland company in the UAE is a legal entity established with an Emirate authority like the Department of Economic Development. These companies have unprecedented operational independence, enabling them to issue visas, engage in business with both local and international firms, and even bid on government contracts.
Under recent regulations, foreigners can now have 100% ownership of their mainland company in most business activities, a notable shift from the previous requirement for a local partner to hold 51% ownership. However, in terms of flexibility and freedom of operation companies in the mainland are preferable but the process of incorporation and management is comparatively more rigorous than in other regions.
Steps Involved in Mainland Company Formation in Dubai
Company formation in the UAE mainland involves several important steps, but the mainland setup process is well-known for its efficiency, enabling cost-effective business establishment. Here’s a general outline of the process:
Choose Your Business Activity and Legal Structure
Choose your business activity from the list of the Department of Economic Development (DED) and determine the legal status of your company. This decision lays the foundation for your operations and compliance, where trusted experts like Xpert Advisory can offer invaluable support.
Submit Company Name for Approval
Submit your desired company name to the DED for approval, ensuring it complies with their regulations. It should reflect your business activity and mustn’t violate cultural or legal norms of the region where your business is to be located.
Draft the Memorandum of Association (MOA)
Prepare the MOA and, if necessary, a side agreement. These legal papers determine management’s operations in the company and the discharge of responsibilities. The MOA describes the relation between the shareholders and matters of management.
Secure Office Space
Identify the appropriate office space and lease a place according to your financial capacity and demands of business and get lease agreement validated. The location of the office has to conform to the business activity, and the location has to be authorized by the DED.
Submit Documents and Application to DED
Submit the required documents, including the application form and necessary fees, to the DED for approval. Complete all the paperwork in order to prevent complications of the process.
Obtain Trade License
Once all documents are approved, pay the final fees to receive your trade license, officially registering your company. The trade license allows you to legally operate your business within the UAE mainland.
Open a Business Bank Account
Open a dedicated business bank account for handling company’s finances and transactions. This account will be useful when it comes to your company’s payments, investment and the various operational expenses.
Apply for Visas
Obtain employee visas and permits for residence so that your staff can legally work and live in the UAE. This step is required in the process of recruiting employees both inside and outside the UAE.
Attestation of Court Documents
If needed, arrange for the attestation of court documents to complete the legal setup. This ensures that all official documents are recognized and valid under UAE law.
Types of Mainland Business License in UAE
When establishing a mainland business in the United Arab Emirates, the type of license required is determined by your business activity. Broadly, business licenses in the UAE are classified into the following categories:
Commercial License
UAE commercial license covers all kinds of trading activities, including import, export and sale of goods. It permits the business to engage in a wide range of commercial activities within the UAE market.
Professional License
A professional license in Dubai is designed for specialized professional services, including craftsmen, consultants, lawyers, technical experts, and similar professions. The service allows representatives of specific professions to offer their services to individuals and companies in the UAE.
Industrial License
This license is for starting trading or business, and especially industrial or manufacturing, to enable businesses to conduct production and factory business. It is useful for the growth of the UAE industrial sector, thus it is applicable in manufacturing and construction.
Tourism License
This license is specifically for businesses in the tourism industry, such as travel agencies, tour operators, and hospitality services. It provides a legal framework for businesses offering travel and tourism-related services to local and international customers.
Dubai Mainland licenses are issued by the Department of Economic Development (DED), but some business categories may require additional approval from specific ministries or government authorities. DED provides 3000+ diverse activities under different categories of business license which gives investors a large pool of choices when they choose their business activity while registering a new company. This large list is crucial for helping entrepreneurs choose the most appropriate license for their enterprise.
Documents Required for Mainland Business Setup in UAE
A. Initial Approval
- Registration and licensing application, along with proof of reserved trade name
- Photocopy of applicant’s passport (and residence permit/visa details for non-GCC nationals)
- No-objection letter from the applicant’s current sponsor (for non-GCC nationals)
- Photocopy of the director’s passport, and no-objection letter from the director’s current sponsor
- Permission from the court to practice business (for applicants under 21 years)
- Approval issued by other government authorities based on the type of activity
- Board resolution (if the partner is an existing corporate entity)
B. Documents Required After Initial Approval
- Initial approval receipt – All documents submitted for initial approval
- Photocopy of office lease including the plot number
- Photocopy of the Memorandum of Association, duly signed by the Notary Public
Business Legal Structures for Mainland
A mainland business setup in Dubai offers several legal structures, allowing entrepreneurs to choose the one that best aligns with their business goals. The legal structures of business in the UAE include single-owner companies, partnerships, corporations, and LLCs. The following are the main legal entities available:
- Civil Company
This company is founded by two or more partners and is commonly involved in business related to professional services like consultancy, beauty salons, and coaching.
- Limited Liability Company (LLC)
This structure can have one up to 50 partners, with liability limited to the number of shares owned by the shareholders, offering protection to personal assets.
- Sole Proprietorship
A legal entity which is managed and operated by an individual and in which this individual takes full responsibility for the company’s debts and obligations.
- Private Joint Stock Company
A company with up to 200 shareholders, where all capital is equally distributed in nominal value shares among them.
- Branch of Foreign Company
An extension of a foreign parent company that is not a separate legal entity and must engage in any commercial activity different from the one carried on by the parent company.
- Branch of Free Zone Company
A branch of a parent company from a Free Zone, maintaining the same organizational structure and legal formation while conducting the same business activity as the parent company.
Advantages of Mainland Company Setup in UAE
Company setup in Dubai Mainland offers numerous advantages, such as the ability to conduct business across the UAE, a simple registration process, and the opportunity to establish a mainland company with full ownership. Setting up a business on the Mainland provides several advantages, including:
Minimum Capital Requirement
There is no minimum capital requirement for setting up a mainland UAE company, offering flexibility for entrepreneurs to start with low investment.
Broader Business Activity Scope
Mainland companies can engage in a wider range of business activities compared to free zone companies, which have more limited sectors.
Unrestricted Market Access Across the UAE
Mainland companies can operate in any part of the UAE, facilitating broader business opportunities and regional expansion without any geographic restrictions.
Eligibility for Government Contracts
Mainland companies can compete for and win government contracts, which is an opportunity typically unavailable to free zone businesses.
Flexible Office Location and Expansion
Mainland businesses have the freedom to choose office locations anywhere in Dubai and can open multiple branches, enhancing their market reach.
Full Repatriation of Capital and Profits
Mainland companies benefit from the ability to repatriate 100% of their profits and capital, allowing for easy transfer of earnings abroad.
Which Jurisdiction is Right for Your Business? Free Zone vs Mainland in Dubai
When deciding where to set up your business in Dubai, choosing between a Free Zone and the Mainland depends on several factors. There’s no one-size-fits-all answer, so it’s essential to consider your specific needs and consult with a business setup expert, like Xpert Advisory, to help guide your decision. Here’s a breakdown of important considerations to keep in mind:
Target Market
A Free Zone is particularly suitable for use by companies whose main operations involve export and import business and therefore can help companies that seek to venture into the international market. On the other hand, the Mainland is better suited for businesses targeting the local UAE market, as it allows broader access to customers within the UAE.
Business Activity
The Free Zones are designated for certain kinds of business, therefore it is crucial to check what kind of activity is allowed in the zone. Mainland companies enjoy greater flexibility in choosing their business activities, as long as they comply with regulations set by the Department of Economic Development (DED).
Ownership
In Free Zones, you can enjoy 100% foreign ownership, giving you full control over your business. Mainland companies generally allow 100% ownership for most business activities, but some activities may still require a local sponsor or partner to meet regulatory requirements.
Budget
Free Zones are often more budget-friendly in terms of initial setup costs, making them attractive for entrepreneurs looking for a lower-cost entry. Mainland companies, in contrast, may have higher initial costs such as license fees, rental and other overheads but in the long run, the benefits are much more attractive.
Operational Flexibility
Free Zone companies have restrictions on operating outside the Free Zone and may face limitations in hiring local staff. Mainland companies also provide better operational freedom, permitting them to operate throughout the UAE and to have a local workforce, which makes it a more appealing venture for those trying to expand.
Mainland vs Free Zone: What’s the Difference?
The key differences between mainland and free zone companies can help you determine which jurisdiction suits your needs best:
- Ownership:
- Mainland: Foreign investors were previously only allowed 49% ownership, with the remaining 51% going to a local sponsor. However, now 100% foreign ownership is allowed for specific business activities.
- Free Zone: Full ownership is allowed for foreign investors, thus there is no requirement for a local sponsor from the first day of their operation.
- Mainland: Foreign investors were previously only allowed 49% ownership, with the remaining 51% going to a local sponsor. However, now 100% foreign ownership is allowed for specific business activities.
- Business Scope:
- Mainland: No restrictions, mainland companies are allowed to operate anywhere in the UAE. This flexibility allows businesses to establish a presence in key commercial areas.
- Free Zone: Cannot do business outside the free zone without a local agent.
- Mainland: No restrictions, mainland companies are allowed to operate anywhere in the UAE. This flexibility allows businesses to establish a presence in key commercial areas.
- Workspace:
- Mainland: A minimum of 200 sqft office space is mandatory for registration.
- Free Zone: Many free zones allow companies to have virtual offices and do not require physical office space.
- Mainland: A minimum of 200 sqft office space is mandatory for registration.
- Visas:
- Mainland: A mainland company does not have any restrictions on the number of visas allowed but the company must expand office space if it requires additional visas.
- Free Zone: Visa numbers are limited and depend on the free zone’s specific regulations.
- Mainland: A mainland company does not have any restrictions on the number of visas allowed but the company must expand office space if it requires additional visas.
- Business Setup Approvals:
- Mainland: Needs approval of various authorities including the DED, Municipality and the Ministry of Labor.
- Free Zone: No clearance is needed from other government departments within the free zone, other than the approval of the free zone authority, but this is subject to the activity.
- Mainland: Needs approval of various authorities including the DED, Municipality and the Ministry of Labor.
- Company Audit:
- Mainland: Every mainland company has to produce the financial audit at the end of the fiscal year.
- Free Zone: Not all freezone companies need a yearly audit.
- Mainland: Every mainland company has to produce the financial audit at the end of the fiscal year.
Each setup in the UAE offers numerous advantages and limitations. Understanding these factors will help you make the best decision for your business in Dubai.
Conclusion
Choosing between setting up a business in a Free Zone or on the Mainland in Dubai ultimately depends on your business goals, target market, and operational needs. However, if you’re aiming for a broader market presence, local operations, and greater flexibility in business activities, the Mainland may be the better choice. By understanding the key differences and considering your long-term objectives, you can make an informed decision that aligns with your business vision. Consulting with a business setup expert can further help navigate the process and ensure the best choice for your entrepreneurial journey.
FAQs
1. What does Mainland mean in the UAE?
Mainland refers to the part of the UAE directly governed by the government, where businesses can operate across the country.
2. What are the benefits of setting up a Mainland business in the UAE?
Mainland businesses can operate throughout the UAE, access the local market, and utilize world-class infrastructure.
3. What types of Mainland business licenses are available in the UAE?
UAE’s Mainland licenses include commercial, industrial, professional, and tourism licenses, depending on the nature of the business activity.
4. What is the difference between the Mainland and the Free Zone in the UAE?
Mainland businesses can operate nationwide unlike the Free Zone businesses which are industry-specific and restricted to specific zones but enjoy tax advantages.