The UAE infrastructure includes free zones and a Mainland Business Setup. These locations have specific criteria, certain rules and regulations, and conditions according to their circumstances. The Freezone Visa UAE offers multiple benefits, such as quick and easy business setup, no personal tax, full ownership of the business, and various other perks. Then why do companies move to the mainland from free zones in the UAE?
This guide will explain the distinction between these two territories and help you understand the importance and need to move to the mainland for business in the UAE.
Understanding Freezone and Mainland Business Structure
The UAE has three jurisdictions for business locations: mainland, offshore, and freezone. These areas have certain rules and regulations, few limitations and restrictions, and various benefits according to their circumstances.
It’s essential to choose the right one for a business setup. Otherwise, you will lose the desired facilities, or you may face restrictions and penalties for further limited business operations.
Free Zone Business Setup
You will find forty-five free zones in the UAE with certain terms and conditions and specific regulations. Free zone businesses can practice trade, import, export, and other businesses with a hundred percent ownership rights. They can approach the international market to stay within a free zone and enjoy the tax-free policy of the UAE government. They can’t practice any business activity in the mainland or in offshore locations in the UAE.
Mainland Business Setup
The mainland offers a certain level of freedom for business operations and multiple rights, such as issuing work visas and sponsorships and dealing business with other organizations without restrictions inside the mainland and outside the UAE. They can even bid on high-profile government projects. A new law has been introduced on the mainland that foreigners have a hundred percent ownership of their business without a share of a local business owner.
Legal Considerations for Transition
These are a few legal considerations for the transition from a free zone to the mainland in the UAE.
Regulatory Framework:
The mainland business framework is under the control of the Economic Development Department in the Emirates. The legal framework complies with the licensing, individual business activities permit, and essential approvals from government bodies.
Licensing and Permits:
All business activities and operations on the mainland require specific licenses and permits. Licenses required in the mainland are commercial, professional, and industrial licenses. Additional licenses or permits may be required from regulated authorities for various other activities.
Ownership and Sponsorship:
Free ones provide a hundred percent ownership of the business, and the mainland has the same rule. However, some conditions may apply for specific business operations, and you require a local sponsor for ownership. You may consult a legal advisor for legal compliance according to your business.
Initial Planning and Assessment:
Assessment of the business goals, criteria, and activities before planning is essential for long-term success. You must consider the standard factors for the transition, such as market access, costs and expenses, VAT, and corporate tax implications on the mainland. These factors have a distinctive approach, and your business plan for the transition will create a roadmap to guide you through the process.
Legal and Administrative Processes:
Legal compliance and administration processes are comparative according to distinctive regulations in both territories.
Setting Up the Mainland Entity:
After the legal compliance and administrative setup, you can establish a mainland entity by registering, acquiring a proper license, and opening a corporate bank account in the local bank.
You must consider all the legal aspects and fulfill the requirements to avoid inconvenience and experience a smooth transition from the free zone to the mainland in the UAE.
Benefits of Transitioning to a Mainland Business
The Mainland offers expansive business criteria and unlocks the highest growth potential in the Middle East region. Businesses can enjoy more freedom to operate across multiple sectors and participate in local economic development and government projects. Mainland offers them a benefit from the tax exemptions in certain conditions and expands their business growth by launching new office branches in other UAE locations. Their business can extend their local presence and reach out to potential customers with flexibility in the mainland territory. This infrastructure offers great access to top talent and government projects that mark a remarkable strategic move for long-term business expansion and success in the UAE.
Market Access
The mainland business setup allows extended market access to a large customer base in the UAE. You can directly target and reach the diverse local market and acquire several potential customers from all over the Emirates.
Business Growth and Expansion
Moving to the mainland will unlock the highest business expansion and growth potential. It’s a massive client pool to extend your productivity, brand’s voice, and revenue. You can expand your business to open branches across the other Emirates and acquire government projects.
Networking and Partnerships
Companies can acquire a diverse network of business communities and reliable business partners on the mainland. They can focus on international trade and reach the buzzing commercial scene in this territory. This networking promotes potential connections with local companies, suppliers, distributors, and other businesses. Their networking can expand your activities and services and build a strong connection in the regional market.
Conclusion
The transition of your business from free zones to the mainland in the UAE provides long-term goals, unlocks various business growth opportunities, and provides reliable access to a dynamic business hub in the Middle East region. It will give you brand recognition and broad sales and develop a network of various business connections.
Business in the mainland gives you reliable opportunities to win government contracts, expand business by opening new office branches in different Emirates, and promote brand expansion to local and international markets in the UAE.
