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Mainland Company Formation in Dubai

by | Aug 23, 2022 | Business Setup

Interested in learning more about investing in Dubai? You’re in the right place. Here’s everything you need to know about mainland company formation in Dubai and why you should consider investing in the United Arab Emirates.

Did you know that 8% of all companies are registered in free zones in the UAE?

Free zones promise a whole host of benefits and people from around the world are flocking to Dubai to set up their businesses and take advantage of them. Initial reports say that free zone companies are on the rise, increasing by more than 4% every year.

With people coming from all corners of the world to set up companies here, you may have wondered what’s so special about mainland company formation in Dubai. While free zones have their limitations, mainland companies offer more opportunities to expand.

Why Start a Mainland Company in Dubai?

Free zone businesses are limited in many ways. This is why many business owners consider transitioning into mainland businesses to expand.

What Are Free Zone Businesses?

Free zone businesses make investing in Dubai easy. These zones are specifically designated to encourage investment in a specific location and offer a whole host of benefits to secure investments in the region.

Free zones are not unique to Dubai but exist all over the world. These areas are typically referred to as special economic zones and offer a similar set of benefits to business owners to encourage investments in the area.

While the most notable benefit that most special economic zones offer is direct tax breaks, international zones tend to offer residency or even citizenship in return for investment. The free zones in Dubai don’t offer citizenship but do include long-term visas and massive tax breaks for entrepreneurs investing in the area.

Why Transition to a Mainland Business?

While you may think that business tax breaks aren’t that much, these incentives can end up saving business owners between 30% to 40% every year. This makes one question why you would want to transition to a mainland business.

Location Flexibility

When you start a business in a free zone, you have to run your business from that location. Unlike in other instances, you can’t simply register the business in one location and operate the business elsewhere. This limits your ability to run the business where you want and can even cost you opportunities as you don’t have the freedom that you would have with a mainland business.

Trade Restrictions

Businesses evolve and change over time. However, if you register your business in a free zone, you have to operate your business in that specific way. For example, if you register a restaurant in a free zone and want to transition into something completely different, you may find it difficult to do so.

Having a registered mainland business places no restrictions on what kind of business you want to run. As a mainland business, you are also free to trade with whoever you want and can even compete for contracts to do business with the government.

Government Contracts

As a free zone business, you are receiving a direct benefit from the government. In addition to this, your business can get direct assistance from the government to help you set up the entire business. This helps get your business off the ground but also poses a conflict of interest if you ever want to do business with the government.

This is why transitioning into a mainland business can be so lucrative. As mentioned above, mainland businesses are free to compete for government contracts. These contracts are not small and can even be worth millions each. This is a great way to aggressively grow your business in the United Arab Emirates.

Ownership and Control

When you invest your hard-earned money into your business, you want to know that you have complete ownership and control over the company. However, 100% of foreign-owned businesses were not allowed on the mainland. This meant that you were confined to investing in free zones if you wanted to retain control over your entire company.

In the last few years, the leadership of the United Arab Emirates announced that they would allow 100% foreign-owned businesses throughout the rest of the UAE. This means that you can run your business exactly how you want to and keep complete ownership and control even if the business is on the mainland.

This news was welcomed with open arms and saw many entrepreneurs flock to register mainland businesses. While the process used to be complex and complicated, it has become incredibly easy over the last few years.

How To Start a Mainland Business in Dubai

Starting a mainland business in Dubai has never been easier. To give you a good idea of the process, here’s a quick overview of the steps you need to take.

1. Decide What Business You Want To Start

The first step to take is to decide what business you want to start. There are tons of business opportunities in Dubai, each with its unique challenges. The planning stages are incredibly important, so take your time to finalize your entire business plan.

2. Choose a Name

Once you know what business you want to run, come up with a unique name for your business. When you find a name, spend some time thinking about the branding of your business. This includes how you want your store or office to look to customers and clients.

3. Find a Location

Finding the right location for your business is just as important. You may not want to open a pizza restaurant on the same street as four other pizza restaurants, so take your time to find the best location to set up your business.

Free zones made this part of the process easy as they told you where you can operate your business. Mainland businesses have no geographic limitations, so you can operate your business anywhere in the country.

4. Dubai Company Formation

One of the most important things to remember is to apply for a Dubai mainland license. This license is issued by the Department of Economic Development and is compulsory for all businesses that want to trade in the UAE.

5. Start Running Your Business

Once you have all your legal documents in order, you can feel free to launch your new business in the UAE. Don’t forget to let everyone know about your new business on social media. You can also set up a website for your business so that people can find you online.

Benefits of Starting a Business in Dubai

There are tons of benefits to starting a business in Dubai. While some of these benefits are specific to free zones, some are simply because of the great city of Dubai. Here’s a quick look at some of the most notable benefits you can expect when moving your business to Dubai.

No Income and Business Tax

While Dubai and the UAE did not collect company tax for a very long time, it has recently been introduced. If you have a business that makes more than AED 375,000 in profit, your profit is subject to a tax rate of around 9%. The details of this tax have not been finalized yet as it’s set to be introduced in 2023.

However, free zones offer businesses the ability to make as much profit as they want in a completely tax-free environment. Whether you make AED 1 or AED 1 billion, free zones are completely free of tax and can be a massive saving for entrepreneurs looking to save on tax by moving to the United Arab Emirates.

There is also no personal income tax in the UAE. This means that if you take a salary from your business you won’t have to pay personal taxes on that income. This can end up saving you 20% to 30% every year, allowing you to build your business at a much faster rate.

Free zones are designed for this exact purpose. These regulations are set to help you build your business as fast as possible and to equip you with every tool you need along the way. This makes the UAE the perfect place for start-ups and small businesses looking to grow aggressively.

Technology and Infrastructure

Dubai and the United Arab Emirates have been steadily investing in infrastructure over the last few decades. We have all seen those iconic images of what Dubai used to look like in the 80s and are all amazed at the progress made in such a short time.

The United Arab Emirates has expanded its development throughout the country and has the infrastructure in place to bolster any business you wish to start. You can expect world-class internet, reliable transportation, and even local manufacturing partners to help you start your business in Dubai.

Geographical Location

Dubai is situated in the middle of the world. This makes it the perfect place to set up an international business as you can get on a plane and be anywhere within 10 hours. The United Arab Emirates is home to both Emirates and Etihad, two of the most successful international airlines in the world.

This makes both travel and transportation a breeze. If you want to set up an online business that ships products internationally, Dubai is the perfect place to be. Dubai has one of the most efficient ports in the world, allowing you to import and export products with ease.

The location and efficiency of the ports help cut down the cost of shipping as well. This means that you can save money by running your business through Dubai compared to other cities and countries around the world.

Stable Environment

The United Arab Emirates is evolving but remains one of the most stable and secure economies in the world. While you may have to worry about safety and security in countries like the United Kingdom and the United States, the United Arab Emirates offers peace of mind that no country can compete with.

The political and economic environment is geared directly to encourage foreign investment. This ensures that you’ll be welcomed with open arms when you arrive to start your business in Dubai.

Long-Term Visas

Starting a business in Dubai is one of the best ways to secure a long-term visa for you and your family. While there are a few different visa options available, most only last one to two years. Residency permits are far rarer nowadays, making investment visas the easiest option for many looking to relocate to Dubai.

The best visa you can get is the Golden Visa. This visa lasts 10 years and allows you to bring your entire family with you when you move to the United Arab Emirates. This visa is not easy to come by as you need to invest around AED 2 million in real estate or AED 1 million into a business.

Get Help With Mainland Company Formation in Dubai

Starting a company in Dubai is not as difficult as you may think. With the help of professional consultants, mainland company formation in Dubai can be done in the blink of an eye. This is a great way to move to the great city of Dubai and even secure a long-term visa for you and your family.

If you have any questions or want to learn more about how to set up a new business in Dubai, feel free to get in touch with us. Our friendly team of professionals is ready to help answer any questions you may have.

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