Whether you are a seasoned entrepreneur or just starting your business journey, this blog post will equip you with the knowledge and insights needed to navigate the complex world of business jurisdictions. Let’s discover the perfect fit for your unique business needs.
Mainland
Mainland companies (or onshore companies) benefit by having access to the local market as well as outside the UAE. For a Mainland LLC company registration, you need to obtain a licence from the Department of Economic Development (DED) of the respective emirate.
1. Ownership Structure: 100% foreign ownership is permitted.
2. Share Capital: No minimum requirement
3. Business Activity: Trade freely within the UAE and International.
4. Cost of Setup: Cost of setup is variable on the amount of rent paid. As 5% of the rent paid is charged additionally as part of the license fee annually. Visa and related employee costs are variable based on the categorisation of the organisation by the Ministry of Human Resources & Emiratisation and the qualification of the employees.
5. Office Requirements: No restriction on location for business premises. Physical office space is mandatory.
6. Incorporation Process: Documents must be executed in Arabic; the shareholder of the company needs to be present in the UAE to sign documentation – or a fully attested Power of Attorney needs to be in place to allow another signatory to take the role.
7. Government Approvals: Approvals from various government departments: DED (Department of Economic Development), DM (Dubai Municipality), Ministry of Labour (MOL), Department for Naturalization and Residency affairs of Ministry of interiors or Immigration (MOI).
8. Visa Requirements: With the new amendment, Cabinet Decision 203 of 2022 in force, the visa quota is restricted to 3 employees for new establishments. The visa quota varies for certain specifically mentioned new establishments as 6 visas and for high priority economic sectors the visa quota is 50% of total workforce or 20 employees. The quota can be changed on request, by prior approval from the Ministry, based on the legal form of the company, the area of the premises, the projects involved and the demand of the work operation.
9. Incorporation: The shareholders can attest the documents electronically, even outside the country through Notary signing. Thus, physical presence of shareholders is not mandatory. Cost is variable and generally high. It depends on the number of signatories, share capital of the Company and the nature of amendment.
Freezone
Free zones are economic areas where investors can trade goods and services with preferential tax and customs rates. You can enjoy benefits, such as 100% foreign ownership, full repatriation of profits and capital funds. UAE has more than 40 free zones.
1. Ownership Structure: 100% foreign ownership is permitted.
2. Share Capital: Varies with Freezone. Typically, a minimum of AED 10,000 share capital is required.
3. Business Activity: Trading can be only inter-Free Zone and Internationally. Trade with Mainland is possible only through a local agent/distributor or through a mainland branch of the freezone company.
4. Cost of Setup: Cost of setup and visa fees are standardised and there is certainty in the rents of facilities.
5. Office Requirements: Physical Office space is not a pre-requisite. Many free zones offer Virtual or Flexible desk solutions at standardised rates. Physical offices in Mainland can be established based on NOCs given by certain freezones.
6. Incorporation Process: Documents are mostly in English. Freezones usually offer digital, remote signing and payments. Most freezones allow individual shareholders to virtually sign the incorporation documents.
7. Government Approvals: Approval only by Internal Governing Body of the Free Zone unless the activity requires pre-approval of certain government departments.
8. Visa Requirements: Setting up company in a free zone automatically makes you eligible for a visa depending on the Visa Package opted for. Visa costs differ per free zone.
9. Incorporation: Most freezones allow documents to be digitally signed and thus physical presence of the Shareholders is not mandatory.
Offshore
Offshore companies cannot directly operate any business activity in the UAE. However, they can be a shareholder of any UAE mainland or free zone company, enabling them to enter the UAE market and conduct business activities through such subsidiary companies.
1. Ownership Structure: 100% foreign ownership is permitted.
2. Share Capital: Offshore companies in the UAE have no minimum share capital requirements.
3. Business Activity: Offshore companies cannot directly operate any business activity in the UAE. However, they can be a shareholder of any UAE mainland or free zone company.
4. Cost of Setup: Cost of setup is usually low. There is no requirement for share capital before incorporation, no costs associated with office space or obtaining a visa.
5. Office Requirements: Offshore companies are not allowed to have any physical office in the UAE. Their office must only be located outside the UAE.
6. Incorporation Process: Documents are mostly in English. Digital and remote signing and payments is allowed.
7. Government Approvals: The free zone authorities offering the offshore formation look after the approval of offshore company.
8. Visa Requirements: Offshore companies are not authorised for issuing a resident visa.
9. Recruitment of Employee: As there is no office address in the UAE, employees cannot be recruited in the UAE.
10. Incorporation: Documents are digitally signed, and thus physical presence of the Shareholders is not mandatory.
We realize that choosing the right business setup is a critical decision for entrepreneurs and investors alike. At MITRAA, we understand the importance of aligning your business structure with your overall strategy and objectives. Hence, we ensure that you make an informed decision to determine, the option best suited for your business needs, thereby, supporting you in your long-term growth and success.
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