Mainland Dubai: Doing business within and outside the UAE

Mainland companies are among the most popular corporate structures in Dubai and across the other Emirates of the UAE. With a Mainland company, you can do business not only within the UAE but also worldwide. Below, you will discover the further benefits you can expect when registering a company on the mainland and how a Mainland company differs from a freezone company.

Table of contents

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The key points at a glance

What is a Mainland company?

How is a Mainland company established?

What are the benefits of a Mainland company?

Full ownership rights

Flexible 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?

Commerce and industry

Consulting and services

The key differences between a freezone and a Mainland company

Taxes

Employees

Establishments

Management

Business activities

Switching from Freezone to Mainland

Conclusion

FAQ

How much does a Mainland company cost?

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The key points at a glance

• A Mainland company is a company established on the mainland of the UAE.
• It is registered with the government authority of the relevant Emirate and is therefore not subject to trade restrictions.
• In contrast to other types of company, a Mainland company offers greater flexibility and thus the opportunity to gain a foothold in various 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 conduct business there. It is subject to the general regulations of the UAE, but has the advantage of full access to the entire Dubai market while also being able to conduct international business. A Mainland company can operate in various legal forms:

• Sole proprietorship
• Partnership
• Limited Liability Company (LLC – Limited Liability Company)
• Public Joint Stock Company (PJSC)

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How is a Mainland company established?

To establish a Mainland company, you must first decide on the sector in which you wish to do business and choose a company name. You should also consider whether you want to manage your company on your own or together with other shareholders. On this basis, we will then apply for a license on your behalf that covers your business activity. After that, all that remains is to sign the articles of association and a Memorandum of Association (MoA).

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In any case, this will allow you to remain the 100% owner of your company.

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Good to know: A local partner or a local service agent is only required in rare cases when establishing a Mainland company, for example in the oil sector.

What are the benefits of a Mainland company?

If you decide to establish a Mainland company, this brings with it a number of advantages for you. Compared to other types of company, a Mainland company offers you a wider range of business opportunities and a high degree of location flexibility. However, these are only a few of the many benefits, which we will present to you in more detail below:

Full ownership rights

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

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

In recent years, however, 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 entrepreneurs. 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 individual as a partner.

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

Flexible office options

In Dubai, you have the option of renting an office freely and without restrictions. This allows you to find the ideal location for your particular business activity and, where necessary, make it easier for your employees to get to work, especially when they commute.

No capital commitment

When establishing a company on the Mainland, you are in most cases not required to provide a set amount of share capital. This gives you more capital right from the start that you can invest in other important business ventures.

Expanded visa options

Through a Mainland company, you gain access to a range of visa options. This makes it easier for you to recruit international employees. This flexibility also allows you to scale your business as required.

No trade restrictions

With a Mainland company, you are not subject to trade or location restrictions. This gives you access to a wider customer base and allows you, among other things, to offer services to the government and to trade directly with consumers across the UAE. In addition, a Mainland company enables you to open several branches within the United Arab Emirates in order to increase your presence in the market.

Business diversity

With a Mainland company, you can operate in any sector. The only point to note here is that you require a license for your business activity. However, if your business activities differ too significantly from the scope of your license, you must either add the additional activity to the license or even apply for a new license. Nevertheless, this allows you to diversify your business portfolio with ease and, at the same time, respond quickly to occasional market changes.

Good to know: Since June 2023, Mainland companies have been required to pay corporate 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 require a business license. Through this, the government of the United Arab Emirates seeks to ensure that you, as an entrepreneur, are qualified to trade in services and/or goods in a specific sector. To do so, you must be able to demonstrate certain skills or qualifications, and in addition:

• Determine your line of business (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?

In principle, you can distinguish between two main types of license to which every company must be assigned: those for commerce and industry, and those for consulting and services.

Commerce and industry

Commerce refers to all commercial activities that involve general trade, but also, for example, the rental of goods. Industrial activities, on the other hand, include the production and further processing of goods and/or products. You do not require a local partner for a trade license, and the company remains 100% owned by you.

Consulting and services

In the consulting and services sector, you likewise remain the 100% owner of your company. You do not require a Local Service Agent, and only in very rare cases for certain licences. Consulting and service activities include business consulting or real estate.

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The key differences between a freezone and a Mainland company

When setting up a company in Dubai, you will sooner or later come across the terms Mainland and Freezone. Both are specific types of company, but they should not be confused with one another, as they involve different privileges in day-to-day business life. For this reason, we have summarized the most important differences for you below:

Taxes

The most important difference between these two types of company is probably taxation. A Mainland company is generally obliged to pay corporate tax of 9%. In addition, value added tax applies to most business transactions. For freezone companies, on the other hand, the corporate tax rate is 0%. Freezone companies must also pay value added tax, but only if the profit threshold of AED 187,500 has been exceeded.

Employees

If you have a Mainland company, you must comply with the general UAE labour regulations when hiring an employee. In free trade zones, employment law regulations are less strict. However, the regulations vary from freezone to freezone.

Establishments

With a Mainland company, you can easily establish several branches or subsidiaries within the UAE. With a freezone company, it is also possible to set up a branch. Please also note that your branch will then not be subject to the rules of your free zone, but to those of the Mainland Authority.

Management

With regard to 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 as well. Freezones such as the DIFC, for example, also have strict regulations in this respect.

Location regulations

If you are planning to establish a Mainland company, it must necessarily have a physical location in the UAE. With a freezone company, on the other hand, the location regulations are more flexible, so that you can also make use of virtual office space.

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Business activities

With a Mainland company, you can operate in any sector. With a freezone company, on the other hand, this is not always possible, as many freezones are limited to specific business areas. This means that you can only apply for licences for those business activities that are permitted in the respective free trade zone.

Switching from Freezone to Mainland

As you can see, both corporate structures have their advantages and disadvantages. In the long term, however, a Mainland company appears 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 no problem, because you can “switch” from a free zone to a Mainland company and thus take the decisive step for your business expansion. To do so, however, you must first liquidate your freezone company and establish a new Mainland company. We at Danho & Partner will of course be happy to advise you on this matter and arrange everything necessary on your behalf.

Conclusion

Mainland companies in Dubai and the UAE are particularly attractive for you as an entrepreneur if you wish to retain full ownership rights over your business while at the same time enjoying a high degree of flexibility in your business activities. These companies are not subject to trade restrictions, which gives you access to the entire UAE market and makes expansion easier. Another advantage is the ability to set up without a capital commitment, which relieves you of some of the financial pressure right from the start. Compared to freezone companies, Mainland companies in turn offer a wider variety of business opportunities and greater location flexibility. However, a minor disadvantage of this type of corporate structure is that certain taxes may apply and day-to-day business life is more strictly regulated than is the case with companies in a free trade zone. Nevertheless, a Mainland company enables you to expand your business effectively and to maintain a strong presence in the UAE market.

FAQ

How much does a Mainland company cost?

The costs of establishing a Mainland company result from several items, including: license fees, office costs, the MoA and Emirates ID, the residence visa, and the Mainland business set-up fees. You can therefore expect costs of approximately 12,000 euros upwards.

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