Mainland, Free zone, or Offshore company: all about UAE business jurisdictions UAE — the next big hub for opening your business

 

Mainland, Free Zone or Offshore company:

all about UAE business jurisdictions 

 

It can be a tedious task for a new international company or entrepreneur to navigate among the multiple jurisdictions that the UAE offers. Hence, it’s a smart idea to get fair understanding about this complex area of regulations and benefits of the wealthy UAE economy before starting a company registration and setup process. 

The UAE authority has created these jurisdictions to satisfy the need of every specific business entity type. Just the number of dedicated Free Zones - over 40, demonstrates that the UAE approaches the business needs of its companies by building a community for them. The choice of the correct jurisdiction for you is primarily based on the intended business activity. 

Going through this guide an entrepreneur can easily identify which type of three companies is the most suitable for their business. 

MAINLAND COMPANY

 

Mainland is the entire territory of the country that excludes Free Zones - the dedicated business complexes, and covers the entire onshore area of the UAE. This is the main UAE jurisdiction that allows registered companies to work Internationally and in the entire territory of the UAE and even potentially bid and work on UAE Government contracts. 

After November 2020 it is no longer required for foreign business investors to have an Emirati partner or sponsor, and a company can have 100 percent foreign ownership in over 1000 commercial and industrial activities in Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. This is the main reason why the UAE has become a desirable place to relocate businesses in recent years. 

The list released by the UAE government reveals many sectors that benefit from this law implementation. The UAE extensively supports the IT industry, creating science and innovation hubs and embracing AI and blockchain technology in their financial sector. 

There are some restrictions that are applied to the development of the oil industry since the agenda is to develop the country's economy without dependency on the oil sector. Another sector that cannot avail the benefits is foreign banking, as foreign banks are sufficiently represented in the country. Foreign banks share more than 50% of the UAE’s financial sector. 

Apart from that, practically every sector of economic activity receives a fair amount of support. For example, the tax rate in the Mainland is one of the lowest if the activity of your business doesn't include the oil or foreign banking sector. Some of the activities that are supported and encouraged include construction, manufacturing, agriculture, healthcare, and education. 

Mainland jurisdiction is the first choice for an entrepreneur who wants to make it big in the UAE. Registering a company here opens attractive opportunities in developing business and exploring the country in terms of work life and overall integration into the fabric of the diverse society of the UAE. 

Here is your step-by-step guide for registering a company in the Mainland:

STEP 1:   Decide on the business activity

STEP 2:   Choose the type of organization

STEP 3:   Register a Trade Name

STEP 4:   Apply for Initial Approval 

STEP 5:   Prepare MOA

STEP 6:   Choose location for physical office

STEP 7:   Obtain lease agreement and Ejari registration

STEP 8:   Get Government permissions if applicable

STEP 9:   Pay fees and duties and obtain the license

This process can take 11-15 days if all the steps are followed in proper order and all documents are submitted on time. However, the duration will ultimately vary depending on the business activity and special permission requirement. 

FREE ZONE COMPANY

 

There are over 40 Free Zones in the UAE and each of them specializes in particular types of business activities. 

The government regulatory body that issues licenses is called Free Zone Authority.

Each Free Zone provides unique offers and solutions for a particular type of business, so it would be a good idea to go through all of them and decide on choosing which Free Zone as your company’s headquarters will benefit your business. 

The Corporate Tax Law introduced a new tax regime for companies if their first financial year starts on or after 1 June 2023, but companies that will register in UAE Free Zones will have tax benefits and are exempted from paying Corporate Tax, considering that certain requirements are met. 

Registering a company with a Free Zone is easier and less expensive, so if working in the Mainland is not a priority for an entrepreneur, it is the best choice to register their business in one of the UAE Free Zones. It would still be possible to operate your business in the Mainland jurisdiction, that is just a subject of working with appropriate dealers, agents, and distributors. 

Here are the steps to register your business in the Free Zone:

 

STEP 1:   Decide on the business activity

STEP 2:   Choose a suitable Free Zone 

STEP 3:   Submit documents online or personally

STEP 4:   Choose a location for the office or virtual office option

STEP 5:   Pay fees and duties

STEP 6:   Collect additional approvals if required

STEP 7:   Receive registration approval

The process for registering a company with a Free Zone Authority is shorter and simpler. Such registration can be done in 3-5 days provided that all steps are followed in proper order and all documents are submitted on time. However, the duration will ultimately vary depending on the business activity and special permission requirement. 

OFFSHORE COMPANY

 

The Offshore type of company conducts international business activities outside of the jurisdiction where it is registered. And that is the main feature of this type of company. It usually is a holding rather than a company created for commercial purposes. 

Three Free Zone authorities welcome the registration of Offshore companies in their territory: Jebel Ali Free Authority, Ajman Free Zone, and Ras-Al-Khaimah Free Trade Zone. 

The process for registering an Offshore company in the UAE is simplified. There is just one form for it - International Business Company (IBC). This makes it very easy for an entrepreneur as they don't have to go through several steps that are necessary when registering their company in the Mainland or Free Zones. Moreover, the UAE allows Offshore companies to have up to 5 license types for conducting their business. 

An offshore company can own share capital in other companies in the UAE. There is a high level of asset protection provided and not less importantly complete confidentiality that guarantees a closed register of companies. The names and identities of owners, directors and shareholders of an offshore company are not made public. 

There are some restrictions for Offshore companies that need to be taken into account when opening a company in the UAE. An Offshore company cannot conduct any type of business activity in the UAE, have an office (but the registering agent will need to have an office), make residence visas for the employees, or have a taxpayer status in the country. 

The steps for registering an Offshore company are:

STEP 1:   Apply for registration in the three Free Zones: Jebel Ali Free Authority, Ajman Free Zone, and Ras-Al-Khaimah Free Trade Zone.

STEP 2:   Submit documents and required approvals

STEP 3:   Pay fees and duties and receive the license 

The registration can take about 3-5 days provided that all the documents are submitted and the process is thoroughly followed. However, the duration will ultimately vary depending on the business activity and special permission requirement. 

UAE JURISDICTIONS COMPARISON TABLE 

 

Here we provide a quick table of comparison between company types that will allow you to make the right choice for your business needs:

	MAINLAND COMPANY	FREE ZONE COMPANY	OFFSHORE COMPANY
Business operation	All over UAE (incl. Government contracts) International	International (with special benefits and privileges  Inside the selected Free Zone In other parts of the UAE through agents, and with permissions	Can own share capital in other companies but cannot conduct business activities
Office	Physical office required	Office options including a virtual office	No company office Office of registering agent required
Registration speed	11-15 days	3-5 days	3-5 days
Registration cost	High	Medium	Low

The choice of your company type will depend on the goals of your business. The Mainland is perfect for activity throughout the UAE as well as international operations. Free Zones are designed to benefit specific categories of businesses and provide many special offers, exemptions and incentives. The Offshore companies are suitable for international business operations and provide high-level confidentiality. It is based on analyzing your needs and making a balanced decision before opening your business in the UAE.