Jurisdictions
Jurisdictions for Business Setup in UAE
The United Arab Emirates (UAE) presents many prospects for business people and investors willing to start or extend their companies in UAE. It is a business powerhouse of the world because its geographic location is strategic and its environment is friendly for business, along with sound infrastructure. The most crucial factor that any businessperson entering the UAE market needs to consider is the jurisdiction of the company. The UAE offers three main jurisdictions for business setup: the Mainland, Free Zones, and Offshore. Every type of legal system includes its attractive features, legal requirements, and allowable business activities.
It is important to comprehensively get acquainted with these points to avoid future misunderstandings and have a clear understanding of how your business will function with reference to your objectives. If, for instance, you want to trade domestically or internationally, or so you can take advantage of favourable tax regimes/legal requirements for foreign investors.
A Mainline Company is an onshore-based business company that is approved by the Department of Economic Development (DED) in the concerned emirates. The mainland companies are suitable for any company that requires the following:
- Access to the local markets in UAE
- A company that is in need of government contracts
- A company that needs access to international markets.
Mainland business entities are anymore bound by geographical location and can be located anywhere in the UAE and other parts of the world, unlike free zone and offshore companies
Advantages of Mainland Company Setup
Mainland company formation holds a lot of advantages, which make it the best option for those companies that aim at having a strong state in the UAE. Some of the key advantages include:
Local Market Access
The main land firms are allowed and have the freedom to set up in any region of UAE without restrictions regarding the area. It enables them to address the local market squarely and extend services to clients located in the UAE.
Government Contracts
There is good news from Mainland companies are now allowed to bid for UAE government tenders, which can be very advantageous for those who seek to grow quickly, especially in the construction, IT, and transportation industries.
No Trade Restrictions
While free zone companies are restricted about the type of commercial they can engage in, mainland businesses can trade and undertake any business activities within the UAE.
Unlimited Visas
Mainland companies have the lion share of employee visas, and they apply for visas for their employees in unlimited numbers. Actual issuance of the visa depends on the office space or the warehouse space the company possessing it occupies.
Wide Range of Business Activities
Mainland enterprises are allowed to engage in trading and manufacturing, feasibility study and consultancy, and contracting services, et cetera.
Ownership Structure in Mainland Companies
Until recently, the mainland companies could only demand that a UAE national controls the firm and that only 49% of the shares could be floated to foreign investors. However, the past reforms are permitting the 100% foreign ownership in many sectors such as trading manufacturing sectors and service inclined industries. The elimination of this has actually constituted a factor that make formation of companies in the mainland even more alluring to investors from other countries.
It is important to know that there are different types of licenses that operate in the mainland’s business. Mainland company formation requires you to acquire a license for your business activity when establishing the company. There are three main types of licenses issued by the DED:
- Commercial License: Contains information especially for businesses that involved in trading and commerce including import and export trade, general trading and retail trade.
- Professional License: Specialized for service industries such as consultancy, marketing, legal and IT service industries.
- Industrial License: Manufacturing and industrial sectors are included for businesses that engage in such operations.
Setting up a mainland company involves several steps, including:
- Business Name Registration: Biz name selection and its verification at the DED is the next step in business registration.
- Licensing and Approvals: Obtaining trade license and other permits from government bodies which have jurisdiction in the trade.
- Office Space: Mainland firms must find an obvious physical office location.
- Legal Documents: Execution of the Memorandum of Association, MOA & other legal documents for incorporation, such as an affidavit, Notarized documents, etc.
- Visa Processing: Getting the owners, employees and dependents visas.
Free Zone Business Setup in UAE
In the United Arab Emirates, free zones are specially designated economic zones. This is where benefits such as 100% foreign ownership, tax exemptions, and less difficult business setup processes are ensured and are considered to be the best zones for foreign investors and businesses to offer the business environment of the highest quality with no limitations on the ownership of foreign nationals and the freedom to unlimited profits.
More than 40 free zones are located in the UAE, which are particularly specialized in various industries such as trading, manufacturing, services, and logistics. The fundamental free zones among them are as follows:
- Dubai Multi Commodities Centre (DMCC)
- Jebel Ali Free Zone (JAFZA)
- Sharjah Airport International Free Zone (SAIF Zone)
- Abu Dhabi Global Market (ADGM)
A free zone setup is a clever creation of at least some distinct superiority over the counterparts,
which actually gives you a specific choice.
which actually gives you a specific choice.
- 100% Foreign Ownership: One of the main features of free zone companies is the fact that they do not need a citizen in this case to sponsor their organization, but the foreign ones can own the company completely.
- Tax Exemptions: Tax-free treatment is a paramount advantage for companies registered in the seed zones, among which 100% corporate tax exemptions, 100% import and export tax exemptions, and 100% personal income tax exemptions are the most prominent.
- Full Repatriation of Profits: The terms set for free zone companies to afford them this privilege are that they are allowed to bring in full capital and profits back to their places of origin without getting into any limitations on their own.
- Simplified Business Setup: Free zones have their own regulatory bodies. Makes the company formation process easier and faster compared to mainland businesses.
- Specialized Industry Focus: Many free zones cater to the needs of specific industries. by providing industry-specific infrastructure Support services and networking opportunities. For example, DMCC is ideal for commodities trading, while Dubai Internet City focuses on IT and technology companies.
Types of Free Zone Licenses
Free zone businesses get licenses based on what they do. Some common types of free zone licenses include:
Trading License
For firms that import, export, and sell goods.
Service License
For companies offering professional help like advice, legal work, and IT support.
Industrial License
For firms in making, building, and putting things together.
- Dubai Multi Commodities Centre (DMCC): DMCC is a global trading hub that specializes in commodities like gold, diamonds, and precious metals.
- Jebel Ali Free Zone (JAFZA): Located near the Jebel Ali port, JAFZA is a popular free zone for logistics, trading, and manufacturing companies.
- Sharjah Airport International Free Zone (SAIF Zone): SAIF Zone is a key free zone in Sharjah, offering competitive business setup packages for traders and manufacturers.
- Abu Dhabi Global Market (ADGM): ADGM is an international financial center that caters to businesses in the financial services sector.
- Dubai Multi Commodities Centre (DMCC): DMCC is a global trading hub that specializes in commodities like gold, diamonds, and precious metals.
Process of Setting Up a Free Zone Company
Setting up a company in a free zone typically involves the following steps:
Choose the Free Zone
This step requires identifying a free zone appropriate for the intended business activities.
Business Name Registration
This has to do with registering a business name with the free zone authority.
Submit Documentation
Present the necessary documents, such as a scanned passport, business plan, and application forms.
Obtain License
Once the documentation is acceptable, the free zone authority issues the business license.
Office Space
Present the necessary documents, such as a scanned passport, business plan, and application forms.
Visa Processing
Proceed to apply for the company's owners, employees, and dependents’ visas.
Offshore Business Setup in UAE
Offshore companies are ideal for those companies that wish to have the international business activities but do not want to have a physical presence in the UAE. Offshore companies are widely used for asset protection and taxation strategies. In the United Arab Emirates, offshore jurisdiction also includes the Ras Al Khaimah International Corporate Centre (RAK ICC) and Jebel Ali Free Zone Offshore.
Establishing any offshore company has certain advantages, especially for international business and protection of assets, in the following ways:
- Tax Benefits: Offshore companies are completely exempted from income tax for both corporate and personal level activities, thus being effective for placing investments.
- Security of Assets: Where the risk of external creditors is involved, funds are stored offshore, whose laws allow very restricted scrutiny operations.
- No Office Space Necessary: Offshore companies are not required to have an office in the United Arab Emirates, thereby minimizing set up and running expenses.
- Privacy: The offshore companies restrict the public disclosure of the company’s shareholders and directors’ profile along with their directors with much more restrictive information on the company.
Offshore companies in the UAE can engage in various international business activities, such as:
International Trade
International Trade
Offshore corporations are permitted to conduct commerce in the international market.
Holding Companies
Holding Companies
Outside ear companies can also be utilized for holding shares in one or more companies, assets, and real estate.
Wealth Management
Wealth Management
Offshore companies are often incorporated by individuals and their family members for the purpose of wealth and estate planning.
The process of setting up an offshore company in the UAE involves the following steps:
- Choose the offshore jurisdiction: Depending upon your requirement, you may have to choose an offshore jurisdiction like RAK ICC or JAFZA Offshore.
- Submit Documentation: If you want to apply for an overseas immigration policy to a foreign country, you will have to include this additional document in the list.
- Register the Company: After the completion of such documents, the required company is incorporated in the appropriate offshore country.
- No Physical Office Required: Offshore companies are not physically required to have an office or any presence within the boundaries of the UAE.
- Bank Account Opening: Offshore legal entities may open bank accounts for operations in the UAE as well as foreign countries.
How KGH Consulting Can Help You Choose the Right Jurisdiction?
Selecting the ideal UAE jurisdiction for your company is a calculated move that could have long-term effects on your operations, earnings, and expansion. At KGH Consulting, our specialty is offering knowledgeable advice on which jurisdiction is ideal for your demands as an industry and your business objectives.
From business registration and licensing to office setup and visa processing, our team of knowledgeable experts will walk you through every step of the process. We guarantee a simple and hassle-free setup process whether you choose to establish offshore, in a free zone, or on the mainland, freeing you up to concentrate on expanding your company.
From business registration and licensing to office setup and visa processing, our team of knowledgeable experts will walk you through every step of the process. We guarantee a simple and hassle-free setup process whether you choose to establish offshore, in a free zone, or on the mainland, freeing you up to concentrate on expanding your company.
Establishing a Mainland Business
Establishing a Mainland Business
We provide complete assistance for establishing mainland businesses so that you can take advantage of government contracts and the local market in the United Arab Emirates.
Free Zone Business Setup
Free Zone Business Setup
We help with free zone business setup throughout several UAE free zones for companies that are focused on export/import, international trade, or industry-specific operations.
Offshore Company Setup
Offshore Company Setup
We assist you in setting up an offshore business that will guarantee confidentiality and adhere to all UAE legislation, for the purposes of international trade, tax planning, and asset protection.
Frequently Asked Questions
The United Arab Emirates provides three primary business establishment jurisdictions: Mainland, Free Zone, and Offshore. It's crucial to select the appropriate jurisdiction for your business operations and objectives, as each one has unique advantages, rules, and constraints.
In the UAE, mainland businesses are free to operate, interact with the local market, and submit applications for government contracts. Free zone businesses, on the other hand, are restricted to working within the free zone or abroad but provide 100% foreign ownership, tax exemptions, and streamlined startup procedures. Free zone businesses must designate a local distributor in order to conduct direct business in the UAE mainland.
A free zone is a specially defined territory in the United Arab Emirates that provides advantages such as complete tax exemptions, zero customs duties, and 100% foreign ownership. Free zones offer infrastructural and industry-specific support in an effort to draw in foreign firms. SAIF Zone, JAFZA, and DMCC are a few well-known free zones.
Businesses that do not need to operate within the United Arab Emirates but wish to engage in international trade, asset protection, and wealth management may consider forming an offshore company. Tax advantages, more privacy, and the absence of physical office space requirements are provided by offshore businesses. They are unable to do business within the United Arab Emirates, nevertheless.
No, offshore companies do not require a physical office in the UAE. This makes them a cost-effective solution for businesses looking to engage in international activities without the need for a physical presence.
