Here are the perks of setting up a company in the mainland in UAE

From its growth on the horizon, the UAE had arrived on the global stage as a strong economy by the second half of the past decade, and its surge was accelerated during the pandemic. Increasing digitisation, and the UAE’s ability to support it with connectivity and a tech infrastructure, complemented the country’s quick post-lockdown recovery. This not only attracted millions of tourists in a time of global travel restrictions, but also brought remote working professionals, startup founders and investors to the Emirati shores.

Over the past couple of years, the UAE has strengthened its push for a diversified economy, to prepare for a non-oil future, and has facilitated the growth of retail, cloud and fintech sectors in the country. The regime has established over 40 free zones to make business operations convenient for offshore companies, while the number of startup incubators is increasing, backed by global tech and venture capital giants. Perks such as pre and post incorporation support, accelerated banking and an entrepreneurial atmosphere suitable for networking makes dedicated free zones an attractive jurisdiction for businesses, but they also have their own restrictions

Which is why for smaller companies, or entrepreneurs looking to thrive in the retail business, or hoping to set up a restaurant or company that needs to conduct trade across the country, operating from the mainland is the way to go. Setting up a business in the mainland previously required foreign investors to have a local partner who held 51% stakes in the company, but just like free zones, now overseas investors can own the entire company. Coming back to limitations, firms in the free zones can only trade within those ecosystems and their jurisdiction, but those in the mainland get to trade anywhere in the UAE and also in free zones.

Apart from that advantage of having a business in the mainland over any free zone, another benefit is that entrepreneurs can engage in any business activity, as opposed to free zones where they must operate in specific sectors. For example Dubai Media City is more focused on media activities, while financial services are the core business for the DIFC. If your business deals directly with the consumer, having a presence and vibility in the mainland is naturally a preferable choice. The larger, more diverse consumer base also comes with flexibility, which is also supported by less administrative restrictions as compared to free zones.

Scoring points with the government

Being registered as a service provider or contractor in the mainland also makes a company an onshore organisation, which allows the firm to bid for government projects, that can be major source of income and growth divers. Partnerships with the government also increases goodwill in the market for a new, emerging private entity. The VAT to be paid in the mainland is just 5%, that’s among the lowest in the world, and from 2023 corporate taxes will be applicable, but at 9% they are lower compared to any other country.

There are no visa restrictions in the mainland, and the number of residency visas issues for employees is determined by the size of a workplace to accomodate them. Foreign firms are exempt from the UAE’s currency restrictions, hence they aren’t affected by the exchange rates for the Dirham.

Regulations to watch out for

Among things to be kept in mind apart from ensuring compliance with tax regimes and conducting regular audits, mainland companies need to rent an office space, which is required to get a trading license. Another regulation is making sure for companies with more than 50 employees is to hire at least 2% Emiratis in their workforce, to avoid fines up to $1600 per citizen not employed at private firms. The quota may increase as ministers are hoping to increase the proportion of Emiratis in the private workforce to 10% by 2026.