Mainland Dubai: Doing business inside and outside the UAE

Mainland companies are among the most popular corporate structures in Dubai and the rest of the UAE. With a mainland company, you can do business not only in the UAE, but also worldwide. Find out below what other advantages you can expect when registering a company on the mainland and how a mainland company differs from a free zone company.

Table of contents

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The most important facts in brief

What is a mainland company?

How is a Mainland company founded?

What are the advantages of a Mainland company?

Full ownership rights

Various office options

No capital commitment

No trade restrictions

Business diversity

Do I need a license for a Mainland company?

What types of licenses are there?

Trade and industry

Consulting and services

The most important differences between a freezone and mainland company

Taxes

Branches

Management

Business activities

Change from Freezone to Mainland

Conclusion

FAQ

How much does a Mainland company cost?

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The most important facts in brief

• A mainland company is a company established on the mainland of the UAE.
• It is therefore also registered with the government authority of the relevant emirate and is therefore not subject to any trading restrictions.
• In contrast to other types of companies, a mainland company offers more flexibility and therefore also the opportunity to gain a foothold in different markets without restrictions.

What is a mainland company?

A mainland company is a company that is registered and licensed on the mainland and can therefore also do business there. It is therefore also subject to the regular regulations of the UAE, but has the advantage that it has access to the entire Dubai market and can also conduct international business. A mainland company can also operate in different legal forms:

• Sole proprietorship
• Civil society
• Limited liability company (LLC-Limited Liability Company)
• Public Joint Stock Company (PJSC)

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How is a Mainland company founded?

To set up a Mainland company, you must first decide on the sector in which you want to do business and choose a company name. You should also consider whether you want to run your company alone or together with other shareholders. Based on this, we will then apply for a license for you that covers your business activities. After that, all you have to do is sign the articles of association and a Memorandum of Association (MoA). 

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This enables you to remain 100% owner of your company.

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Good to know: A local partner or a local service agent is only necessary for the establishment of a mainland company in the rarest of cases, e.g. in the oil industry.

What are the advantages of a Mainland company?

If you decide to set up a mainland company, you will enjoy a number of advantages. Compared to other types of company, a Mainland company offers you a wider range of business opportunities and a high degree of location flexibility. But these are just a few of the many advantages that we will present to you in more detail:

Full ownership rights

Some time ago, foreign entrepreneurs were only able to retain full ownership of their company in Dubai under 2 conditions:

1. You had to set up a freezone company or
2. They had to set up a professional services company on the Mainland

However, in recent years, H.H. Sheikh Mohammed bin Rashid Al Maktoum has allowed foreign entrepreneurs to retain 100% ownership of their company in the UAE. This change has opened up new opportunities for international investors and business people. By retaining their own ownership rights, business owners can now enter the market directly with their business without having to depend on an Emirati company or person as a partner.

Good to know: H.H. Sheikh Mohammed bin Rashid Al Maktoum is Ruler of Dubai as well as Vice President, Prime Minister and Minister of Defense of the UAE.

Various office options

In Dubai, you have the option of renting an office without restrictions and at your convenience. This allows you to find the optimal location for your particular business activity and, if necessary, make it easier for your employees to get to your workplace. Especially if they commute.

No capital commitment

When setting up a company in the Mainland, you are not obliged to pay in a capital contribution in most cases. This gives you more capital right from the start, which you can use for other important business investments.

Extended visa options

A mainland company gives you access to several visa options. This makes it easier for you to recruit international employees. This flexibility also allows you to scale your company as required.

No trade restrictions

With a mainland company, you are not subject to trade and location restrictions. This gives you access to a wider customer base, including the ability to provide services to the government and trade directly with consumers throughout the UAE. In addition, a Mainland company allows you to open multiple branches in the UAE to increase your presence in the market.

Business diversity

With a Mainland company, you can operate in any sector. The only thing to note here is that you need a license for your business activity. However, if your business activities deviate too much from the powers of your license, you must either add the deviating activity to the license or even apply for a new license. Nevertheless, you can easily diversify your business portfolio in this way and at the same time adapt quickly to occasional market changes.

Good to know: Since June 2023, Mainland companies have been obliged to pay corporation tax of 9% on profits of AED 375,000 or more.

Do I need a license for a Mainland company?

In order to sell your products and services on the mainland, you need a business permit (license). This is the United Arab Emirates government's way of ensuring that you as an entrepreneur are qualified to trade services and/or goods in a specific industry. To do so, you must be able to demonstrate certain skills or training and additionally:

• Determine your business area (freelance, commercial or industrial) 
• Select a business area (Activity)
• Choose your company name and legal form

Good to know: Regardless of your chosen legal form, a Memorandum of Association (MoA) must be completed and signed.

What types of licenses are there?

Basically, you can distinguish between two major types of license that every company must comply with. Those of trade and industry and those of consulting and services.

Trade and industry

Trade includes all commercial activities that are related to general trade, but also, for example, the rental of goods. Industrial activities, on the other hand, include the manufacture and processing of goods and/or products. You do not need a local partner for the trading license and you retain 100% ownership of the company.

Consulting and services

In the consulting and service industry, you also retain 100% ownership of your company. You do not need a local service agent, and only in very rare cases for certain licenses. Consulting and services include, for example, business consulting or real estate.

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The most important differences between a freezone and mainland company

In the context of setting up a company in Dubai, sooner or later the terms mainland and freezone will come to mind. Both are specific company forms, but they should not be confused with each other, as they are associated with different privileges in day-to-day business. For this reason, we have summarized the most important differences below:

Taxes

The most important difference between these two types of company is probably the taxes. This is because a mainland company is generally obliged to pay corporation tax at a rate of 9%. In addition, VAT is payable on most business transactions. In contrast, the corporation tax rate for freezone companies is 0%. Freezone companies must also pay VAT. However, only if the profit limit of AED 187,500 has been exceeded.

Labor force

If you have a mainland company, you must comply with the UAE's general labor regulations when hiring an employee. In the Free Zones, the regulations regarding labor laws are less strict. However, the regulations vary from free zone to free zone.

Branches

With a mainland company, you can set up several branches or subsidiaries in the UAE without any problems. With a Freezone company, it is also possible to establish a branch office there. Be aware that your branch office will not be subject to the rules of your free zone, but to those of the mainland authorities.

Management

In terms of management and corporate governance, you are generally subject to stricter regulations with a mainland company than with a freezone company. However, there are exceptions here too. For example, free zones such as the DIFC also have strict regulations in this regard. 

Location regulations

If you intend to set up a mainland company, it must have a physical location in the UAE. With a freezone company, on the other hand, the location regulations are more flexible, so you can also have virtual office premises.

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Business activities

With a mainland company, you can operate in any sector. With a freezone company, however, this is not always possible. This is because many free zones are restricted to specific business areas. This means that you can only apply for licenses for those business activities that are permitted in the respective free zones. 

Change from Freezone to Mainland

As you can see, both company structures have their advantages and disadvantages. However, in the long run, the mainland company seems to be the better choice if you are planning to expand your business. But what can you do if you currently still have a freezone company? In principle, this is not a problem, as you can "switch" from a Freezone to a Mainland company and thus take the decisive step for your business expansion. However, you must first liquidate your free zone company and set up a new mainland company. We at EXTENT will of course be happy to advise you in this matter and take all the necessary steps for you.

Conclusion

Mainland companies in Dubai and the UAE are particularly interesting for you as an entrepreneur if you want to retain full ownership of your business and at the same time have a high degree of flexibility in your business activities. This is because these companies are not subject to any trade restrictions, which gives you access to the entire UAE market and facilitates expansion. Another advantage is the ability to incorporate without tying up capital, which takes some of the financial pressure off you right from the start. Compared to Freezone companies, Mainland companies again offer a greater variety of business opportunities and location flexibility. However, a small disadvantage with this type of company structure is that some taxes may apply and day-to-day business is more strictly regulated than is the case with free zone companies. Nevertheless, a mainland company allows you to effectively expand your business and have a strong presence in the UAE market.

FAQ

How much does a Mainland company cost?

The cost of setting up a mainland company consists of several items, including: the license fees, office costs, MoA and Emirates ID, the residence visa and the mainland business set-up fees. You can therefore expect to pay around 12,000 euros upwards.

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