The Business Environment-Understanding Mainland Company Form

• Complete ownership of a mainland company has been approved for 1000+ commercial and industrial licences
• The business owners interested in requesting the changes to be effected on their existing trade licences don’t have to fork out any additional fees. Neither do they have to meet any minimum capital requirement for the same
• 'Professional mainland licenses' in the UAE are not eligible for full foreign ownership
• The amended law not only allows foreign mainland companies in the UAE to enjoy a hundred per cent foreign ownership, but also exempts their branches from the requirement of appointing a 'National Service Agent' (NSA)
• 100% foreign ownership-eligible commercial activities in the UAE now include amongst others the business segments of 'general trading', 'gold', 'pearls', 'jewellery', 'cars', 'luxury watches', 'food' etc.
• The list of industrial activities that qualify for a 100% foreign ownership in the UAE include amongst others the industrial segments of 'construction', 'building materials', 'water production', 'paint', 'food', 'flooring' and 'flooring metal'
• Under the amended law, a reduction of the share capital of the Emirati partner or full withdrawal of the Emirati partner can be affected on the trade licence of the company
• Conversion of a limited liability company (LLC) into single-person ownership with limited liability structure along with 100% foreign ownership is possible now as per the new law

Dubai had also recently presented the 'Virtual Company Licence', which enables global companies to access a regulated e-commerce platform populated by Dubai-based companies while digitally exploring new markets and investment opportunities. The latest decision seeks to speed up the UAE's economic progress and to add to the gains the country has made so far. These strategic decisions intensify the investment attractiveness of the UAE and its advanced position on the global business map, while also fortifying the competitive advantages that UAE enjoys as an ideal investment destination.

A free zone entity, on the other hand, is an economic area where the trade of goods and services at typically a preferential tax and customs rate is permitted. The idea to launch free zones in the UAE was to attract and increase foreign companies to establish their presence in UAE leveraging on benefits such as 100% foreign ownership. Currently, more than 48 free zones are operating in the UAE with Dubai taking the majority.  

In business essence, a mainland or onshore is defined as the total geographical area of land as defined by the UAE’s  Department of Economic Development (Abu Dhabi or Dubai DED) that legally allows private companies and their representatives to operate commercially.

Businesses choose free zone jurisdiction for various reasons. And one of them was of course 100% ownership of the company, which was not available to the mainland business owners. More than 30,000 companies presently operate from the three biggest UAE free zones. However, despite the trading conveniences and several perks, the free zone business model has some limitations for business owners that are the benefits of mainland business structure. To enjoy the benefits of doing business in the UAE to the most, most businesses are shifting from free zone areas to mainland If you are interested in taking your free zone company to the mainland jurisdiction, you’ve got our back. The decision of choosing between free zone and mainland depends on your business plan. For instance, whether you want to:

• Perform commercial activities inside and/or outside of UAE
• Trade without any restrictions and freely in the UAE
• Set up a physical office to carry on your business activities

Mainland company formation is what you should do if any of your answers is a “yes”.  While incorporating a mainland company in the UAE, there are tons of things that might spring up in your mind. For example, what type of mainland licence will be applicable for your business? It is usually determined by the scope and activity of business, but approaching a professional would be able to help you in case you are not sure. Therefore, it is highly advisable to consult a business setup advisor who will answer all your doubts and show you the right path to reach your destination in the stranger country.  

• Whether it is Dubai or any part of the UAE, mainland companies can trade with other mainland companies. They are eligible to carry on their business activities in any part of the UAE or beyond, unlike free zone businesses that can operate within their designated free zone
• With a mainland company, business owners have to face fewer restrictions on how business activities can be undertaken and that the company can legally trade freely within the UAE. There are no constraints on the location of the business premises, provided it is situated onshore and in the respective emirate from where the licence has been issued
• Mainland companies can choose any location in Dubai for their office. This feature allows them to not only trade with the local market but also to open multiple company branches, allowing them to establish a strong presence in the UAE.
• Mainland companies get more options to conduct business activities, which is not possible for free zone companies. For instance, entities in Dubai Media City can engage in not just the media sector, but also related industries
• Mainland businesses are able to access the broader UAE economy, which provides a vast range of opportunities
• Mainland entities are allowed to work for the government, unlike free zone companies that are bound to carry out only private commercial assignments
• There is a 0% minimum capital requirement for establishing a mainland company
• Mainland licence doesn’t bring with it any restrictions on the number of visas. However, the ability to acquire visas is dependent on the availability of office space. This means, to be able to obtain more visas one has to have the more office space
• In Dubai, there are no currency limitations for onshore businesses
• The registration process for mainland companies is straightforward and needs no yearly audit
• 100% capital and profits repatriation is possible with a mainland company ownership
• Just like free zone companies, now mainland companies also can relish 100% foreign ownership and can be set up without the need of a local Emirati national/s
• Mainland business owners are able to trade locally and capture the UAE market
• Many entrepreneurs want a mainland business set up to offer services to the local UAE based market, as well as to leverage from obtaining government and semi-government projects

There are typically 4 types of business licences in the UAE to regulate more than 3000 business activities listed by the Free Zones and DED. You have to identify under which licence the chosen activity falls for your company formation in your favourite emirate. 

You can choose:

Commercial Business Licence if your mainland business involves trading of goods such as garments, textile, dry goods & any other consumer supplies and selling of certain services including brokerage and real-estate services. The commercial business licence holder is allowed to import any type of goods they can think of, from ornaments and artifacts to packaging, food & electronics items and sell in the UAE, export for sale outside of the UAE, or trade solely within the UAE. You may obtain the list of permitted commercial business activities from the Department of Economic Development (DED) or from a business setup company/expert in the UAE. Apart from import/export, general store, plumbing & sanitary contracting, radio, T.V. station, cinema theatre equipment installation & maintenance, rental services, general warehousing and trading in an automobile, medical gas, agricultural pesticides, used furniture fall under the commercial business category.

Note: A Foreign Branch / Representative Office falls under mainland company formation in the UAE and is set up to build your presence in the Middle East and UAE Market.

Industrial Licence if you wish to carry out large scale production and manufacturing processes. This licence also permits the packaging of products for sale. However, there are plenty of approvals from various authorities and institutions such as banks required. Manufacturing of fabrics & textile, uniforms, recycled paper products, plastic bottles & containers, mineral water bottling, recycling of used material, etc. are some of the examples of industrial activities that the UAE’s industrial licence allows the holder to perform. To qualify for an industrial licence in the UAE, one has to meet certain requirements, such as they must take on a physical premises – virtual offices are not permitted. You must also ensure that, along with your trade licence, you also hold a local industrial licence from the area in which your business operates. Any manufacturing unit requires compulsory licensing because of environmental, safety, and strategic considerations.

Professional Licence if you want to legally work for or provide your services to any customer, client, or employer in the United Arab Emirates. With the professional licence you are allowed to engage in activities that are in line with your qualifications and area of expertise such as teaching/training, business/management consultancy, PRO, digital marketing, insurance, waste management & recycling consultancy, to name a few. 

Difference between Mainland company and a Free Zone company in the UAE?

To explain the difference visually, below is a table of comparison between Mainland Company Formation & Free Zone Company Set-up