Dubai, known for its thriving business landscape, offers two primary options for entrepreneurs and businesses looking to establish their presence in the city: mainland license Dubai and freezone licenses. Understanding the differences between these two options is crucial for selecting the most suitable setup for your business. In this article, we will explore the main distinctions between mainland licenses and freezone licenses in Dubai.
Legal jurisdiction:
One of the fundamental differences between mainland licenses and freezone licenses is the legal jurisdiction they fall under. Mainland licenses are issued by the Department of Economic Development (DED) in Dubai and are subject to the laws and regulations of the United Arab Emirates (UAE). On the other hand, freezone licenses are issued by the respective freezone authorities and are governed by the specific regulations and policies of the freezone.
Ownership and shareholding:
Mainland licenses require local sponsorship, where a UAE national or a UAE-owned company holds a certain percentage of the shares in the business. The local sponsor or partner is usually a silent partner who does not interfere in the day-to-day operations of the company. In contrast, freezone licenses allow 100% foreign ownership, meaning entrepreneurs and businesses have full control and ownership of their companies.
Business activities:
Mainland licenses offer a broader range of business activities compared to freezone licenses. With a mainland license, businesses can engage in a wide variety of commercial and professional activities, catering to the local market and serving local clients. Freezone licenses, on the other hand, typically have specific restrictions and focus on specific industries or sectors defined by the respective freezone authority.
Flexibility in office location:
Mainland licenses provide flexibility in choosing the office location within Dubai. Businesses can establish their offices anywhere in the city, giving them the freedom to select a location that best suits their operational needs and target market. Freezone licenses, however, require companies to operate within the boundaries of the specific freezone where the license is obtained. This means that companies are limited to conducting their business activities within the premises of the freezone.
Customs and import/export regulations:
Companies with a mainland license can directly trade with the local UAE market and have the advantage of being part of the UAE’s wider customs and import/export ecosystem. They can freely import and export goods and services within the UAE and take advantage of the country’s extensive network of free trade agreements.
