When setting up a new business or your first ever business, there are a hundred, if not thousands, of questions and concerns that go by your mind and finding the right answers to your questions and right solutions to your problems is vital and healthy for your upcoming business. Having the right placement for your business is as vital as any other. A business is close to a person who runs it and is of great value not only in terms of finance.
The right place to start your business could be at any point on the globe and it could be a great challenge to figure out the potential market for your business and the right placement for the business to be incorporated at.
What could be the best place to start your business?
UAE has always been on the move in making the country a global hub for entrepreneurs, businessmen and investors and the government has been doing a really good job at making this happen.
Since the UAE has been formed in 1971 by late Sheikh Zayed Bin Sultan Al Nahyan, the country and the government has been focused on making the nation stand out of the ordinary in every aspect, especially when it comes to setting up business. There is no barrier to business setup in Dubai and other emirates regardless of being a small business or a large scale incorporation or of what legal nature they be of.
The base of the business world in the UAE has been laid strongly by the governments of each of the 7 emirates and give you a peace of mind when worrying about business setup executions.
Each Emirate has its own Department of Economic Development (DED) and has its own set of rules which would slightly differ from the other emirate but there is no such huge difference.
The government gives you multiple options for your nature of business, as you are able to incorporate your business in the mainland, free zone or if you acquire a big business could give you an option of offshore incorporation of the business.
What is Free Zone in UAE?
Free zone means a special economic zone designated by the government for foreign or corporate businessmen in that jurisdiction to conduct business activities. The term “free Zone” is used to designate areas in which companies are not taxed at all to encourage economic activity.
Dubai, as a single emirate, has over 30 free zone alone. Each has its own advantages. These free zones are designed according to the themes they represent and hold various companies within them, all focused on one genre of business. For instance, Dubai Design District hold companies such as architectural firms, fashion and design, plus chic galleries showing work by up-and-coming designers and artists. Dubai Silicon Oasis is all about technology and cyber activities.
Having so many free zones in a city like Dubai could really rise a question; ‘Which free zone to incorporate the business in?’, this has been a concern for many entrepreneurs, startups and investors in Dubai and Dubai Business Advisors take pride in assisting them all since 2002. Our consultants study your business model and the nature of the business and give you the options to choose from according to your business model.
What is Mainland?
The emirate of Dubai provides business opportunities in free zones and the mainland of Dubai.
Having a business setup in Dubai mainland means you are free to conduct business activities anywhere in the UAE without appointing a local distributor and even foreign trade. (import and export)
Of course mainland license is the choice of many compared to free zones. However, there are pros and cons to this as well.
In a nutshell the advantages of Mainland business setup are:
- Target to trade with other mainland companies:
One of the most important reasons to set up a UAE mainland company is to be allowed to trade with other mainland companies. Whereas with free zone companies there is a strict restriction of trading only within the same jurisdiction and in case they want to trade with any mainland company they have to go through a local registered distributor and pay customs duty. Mainland companies, however, have access within UAE and beyond without any restrictions.
- Wider Scope of Business:
UAE free zones have a restriction when it comes to scope of businesses they cater to. For example, companies in Dubai Knowledge Village should only work in education or similar businesses. They do not allow any trading activities. The same goes for Dubai Healthcare City where healthcare related businesses are only allowed. Similarly, for Maritime businesses, RAK maritime city is the best bet
- Work along with government bodies:
Government projects in UAE are huge business propositions. These projects are high on investment as well as return. These projects need specialized companies to be their contractors. Its clear that being able to take up on such projects can be extremely profitable, and the only way to get such opportunity is having a mainland business license. As it stands, free zone companies are not allowed to pitch for such opportunities, they can only work with private commercial companies. Any business that intends to get contracts with UAE governmental bodies therefore must go ahead with mainland company formation.
- Market Presence:
The biggest and most important advantage of setting up a UAE mainland company is to allow one to open an office anywhere in UAE. This being the ideal way to trade in local market also allows you to open offices anywhere in UAE and thus have an enhanced presence all over the country.
Whereas companies set up in free zones are generally not permitted to operate outside of the free zone are they are registered in. These companies need a distributor to carry out their services in the mainland which eats into their profits. Therefore, for businesses looking for a strong presence and long lasting future in the market, a mainland setup is a more suitable option.
- Financially viable:
Free zones always make the headlines when it comes to taxes and duties but that doesn’t mean mainland companies don’t match this with some impressive incentives as well.
Also to be noted here is that no minimum capital requirement is required in mainland company formation- thus making them an affordable way of doing business.