How to Form a Business in the UAE
Ways to form a business in the UAE
Foreign investors can choose from two options when forming an entity in the UAE. They can establish a company in local Emirati territory, known as “mainland,” or they can set up in one of the many free economic zones. It is also possible to set up a business presence offshore, but this comes with limitations.
Mainland vs Free Zone Business in the UAE
There might appear to be a considerable difference between Dubai mainland versus Free Zones when it comes to ownership rights. But operational control is a separate matter.
A vital feature of a free zone entity is that it is not subject to the UAE mainland Companies Law foreign ownership restrictions. They also get ancillary financial benefits.
The UAE is home to more than 40 free zones, many of which are industry-specific and contribute to the economy in different ways. Each Free Zone complies with the federal regulations. Still, many of them have their own rules and regulations that they received from the government to apply to those entities registered in the Free Zone. Some of them, such as DIFC and ADGM, even have their court based on Common Law principles.
Critical considerations for business in the UAE
The decision to open a mainland enterprise versus establishing in a Free Zone depends significantly on the location of clients and customers and the nature of the business activity. If the customer base is across the Middle East rather than only in the UAE, then it would make more sense to open in the Free Zone. It is vital that the business licence obtained accurately reflects the intended and actual business activities.