When considering business setup options in the United Arab Emirates (UAE), one crucial decision you’ll face is whether to obtain a mainland license or a free zone license. Both options have their advantages and disadvantages, and the choice depends on your specific business goals and requirements. Here, in this guide, we’ll compare mainland license Dubai and free zone licenses to help you determine which one is the best fit for your business.
Mainland license:
Wider market access: A mainland license allows you to operate your business anywhere within the UAE, including all seven emirates. This provides access to the entire local market, government contracts, and opportunities throughout the country.
No limit on business activities: Mainland licenses permit a broader range of business activities without restrictions. This is especially advantageous if you plan to engage in multiple business activities less than one company.
No minimum capital requirements: Many free zones impose minimum capital requirements for business setup, while mainland licenses do not have such strict financial obligations.
Flexibility for office locations: With a mainland license, you have the flexibility to choose your business location, including office spaces in various areas.
Local sponsorship required: One key challenge with mainland licenses is the requirement for a local sponsor or service agent. While the local sponsor does not have a financial stake in your business, they do play a significant role in the setup process and may have certain legal obligations.
Free zone license:
100% foreign ownership: Free zone licenses offer full ownership to foreign investors, eliminating the need for a local sponsor. This is a significant advantage for those who want complete control of their business.
Tax benefits: Free zones often provide tax incentives, including exemption from corporate and personal income taxes, import and export duties, and value-added tax (VAT). This can result in significant cost savings.
Simplified setup process: The process of obtaining a free zone license is generally faster and involves less bureaucracy compared to mainland licenses. Free zones are designed to attract foreign investment with streamlined procedures.
Limited market access: A key limitation of free zone licenses is the restriction on conducting business within the UAE mainland. To do business outside of the free zone, you’ll need to go through a local distributor or agent.
