FAQ

In Dubai, as part of the United Arab Emirates (UAE), there are different legal jurisdictions primarily categorized
into mainland and free zones. Each jurisdiction offers distinct advantages and caters to specific business needs.
Here's an overview:

1. Mainland Jurisdiction:

Governed by the laws and regulations of the UAE and the respective emirate (in this case, Dubai). 

Mainland companies can conduct business anywhere in Dubai and the UAE without restrictions. 

Companies established in the mainland no more require a local sponsor or agent, now with 100% Foreign ownership, although this arrangement may vary depending on the legal structure chosen. 

Businesses operating in the mainland are subject to UAE federal laws, including commercial and labor laws, and require approvals from the Department of Economic Development (DED) in Dubai.

2. Free Zone Jurisdictions:

Free zones are designated areas in Dubai (and other emirates) offering various incentives and benefits to businesses. 

Companies established in free zones enjoy 100% foreign ownership, some tax exemptions, and streamlined
incorporation procedures. 

Each free zone has its own set of regulations and licensing authorities, offering specialized facilities and infrastructure tailored to specific industries (e.g., technology, media, healthcare, logistics). 

Free zone companies operate within the boundaries of the respective free zone and are restricted from conducting business outside the zone without a mainland license or local distributor.

Some prominent free zones in Dubai include:

• Dubai Multi Commodities Centre (DMCC)
• Meydan Freezone (MFZA)
• Jebel Ali Free Zone (JAFZA)
• Dubai Airport Free Zone (DAFZA)
• Dubai Silicon Oasis (DSO)
• Dubai Internet City (DIC)
• Dubai Knowledge Park (DKP)
• Dubai Media City (DMC)

Dubai International Financial Centre (DIFC) - A financial free zone with its own legal and regulatory framework, operating as an independent jurisdiction within Dubai.

3. Special Economic Zones (SEZs):

Dubai also has Special Economic Zones, which are areas designated for specific economic activities, often with their own regulations and incentives.

For example, Dubai South is a large-scale SEZ focused on logistics, aviation, and trade.

Understanding the differences between mainland, free zone, and SEZ jurisdictions is crucial for businesses planning to establish a presence in Dubai. The choice depends on various factors such as the nature of the business, target market, ownership preferences, and regulatory considerations. It's advisable to seek professional advice directly to Chrysalis Serve to determine the most suitable jurisdiction for your business objectives.

A. Decide on Business Type and Legal Structure:
Choose your desired business activity you want to engage in. Decide on the legal structure, such as a sole proprietorship, partnership, LLC, or free zone company.
B. Choose a Business Name:
Select a unique and suitable business name that complies with UAE regulations.
C .Obtain Initial Approval:
Submit the required documents to the relevant authority for initial approval.
D. Draft a Memorandum of Association (MOA):
Prepare a MOA detailing the business activities, partners/shareholders, and capital.
E. Choose a Business Location:
Determine the location of your business and ensure compliance with zoning regulations.
F. Register the Business:
Register your business with the mainland government or DED or with the free zone authority.
G. Get Necessary Licenses:
Obtain the necessary licenses and permits based on your business activity and location.
H. Open a Corporate Bank Account:
Open a business bank account in a local bank.
I. Visa Processing:
If required, process visas for the business owner(s) and employees.
J. Compliance with Regulations:
Ensure ongoing compliance with local regulations, including financial reporting and other legal requirements.
K. Consideration of Free Zones:
If applicable, explore the option of setting up in a free zone for certain benefits.
It's advisable to seek guidance from Chrysalis Serve and talk with our best consultants or legal advisors to navigate the specific requirements based on your business type and location within the UAE. Keep in mind that regulations may evolve, so staying informed is crucial.

In the UAE, there are several types of company formations, each with its own characteristics and requirements. The most common types include:

1. Sole Proprietorship: Owned by a single individual. Full responsibility for the business and its liabilities rests with the owner. 

2. Partnership: Involves two or more individuals as partners.

3. Limited Liability Company: with many shareholders.

Here are some options:

Mainland:

• Suitable for businesses targeting the local market.
• Allows flexibility in choosing business activities.
• Provides 100% foreign ownership.

Free Zones:

• Ideal for businesses with an international focus.
• Provides 100% foreign ownership.
• Offers specific industry-focused zones with various incentives.
• Examples include Dubai Internet City, Jebel Ali Free Zone, and Abu Dhabi Global Market.

Offshore Companies:

• Suitable for international businesses without a physical presence.
• Provides tax advantages and privacy.
• Limited to specific activities such as holding investments or real estate.

Choosing the best location depends on your business goals, activities, and preferences. Consult with us ‘’Chrysalis Serve" and meet our legal advisors to determine the most suitable option for your specific circumstances.

The main differences between a mainland company and a free zone company in the UAE are related to ownership, business activities, and operational flexibility:

1. Ownership:

Mainland Company:

• Requires a local sponsor or service agent for certain business structures.
• Foreign ownership is limited, but in some cases, it's possible to have 100% ownership in specific sectors.

Free Zone Company:

• Allows 100% foreign ownership without the need for a local sponsor.

2. Business Activities:

Mainland Company:

• Offers flexibility in conducting a wide range of business activities.
• Ideal for businesses targeting the local market.

Free Zone Company:

• Usually designed for specific industries or sectors.
• Offers a focused environment with industry-specific facilities and incentives.
• Suitable for businesses with an international focus.

3. Operational Flexibility:

Mainland Company:

• Can trade directly with the local market without restrictions.
• Flexibility in choosing the business location within the UAE.

Free Zone Company:

• Limited to operating within the free zone or dealing with entities outside the UAE.
• Restrictions on doing business directly with the local market.

While setting up a business in a free zone in Dubai offers various advantages, there are some potential disadvantages to consider:

Restricted Local Market Access:
Free zone companies are typically restricted from conducting business directly with the local UAE market. If your primary target is the local market, a mainland company might be more suitable.

Limited Business Activities:
Free zones are often industry-specific, meaning they cater to certain types of businesses. If your business falls outside these specified activities, a mainland setup might offer more flexibility.

Dependency on Free Zone Authority:
Free zone companies operate under the regulations and policies of the respective free zone authority. This may limit autonomy and introduce potential dependencies.

Higher Setup and Operational Costs:
While free zones offer various incentives, the initial setup and operational costs can be higher compared to mainland companies. Additionally, there might be annual licensing fees and compliance costs.

Customs Duties for Local Sales:
If a free zone company wishes to sell products within the UAE, it may be subject to customs duties and other fees when moving goods from the free zone to the local market.

Complexity of Business Expansion:
Expanding a business outside the free zone or into the local market may involve additional complexities and requirements, possibly requiring a local distributor or agent.

1. 100% Foreign Ownership:

Free zones allow for 100% foreign ownership, providing full control to expatriate entrepreneurs and investors.

2. Tax Incentives:

Most free zones offer tax exemptions for a specific period, including zero corporate and income taxes. This can crucially reduce the financial burden on businesses.

3. Customs Duty Exemption:

Free zone companies benefit from customs duty privilege on imports and exports. This can lead to cost savings for businesses involved in international trade.

4. Repatriation of Profits and Capital:

Free zone businesses are often allowed to repatriate 100% of their profits and capital without restrictions.

5. No Currency Restrictions:

Free zones typically allow transactions in various currencies without imposing restrictions.

6. State-of-the-Art Infrastructure:

Free zones provide modern infrastructure and facilities, including office spaces, warehouses, and advanced technology, enhancing the overall business environment.

7. Quick and Efficient Setup Process:

Free zones are known for streamlined and efficient business setup processes, allowing companies to start operations quickly.

8. Access to Skilled Labor:

Free zones often attract a diverse pool of skilled professionals, making it easier for businesses to find qualified talent.

9. Industry-Specific Focus:

Many free zones are industry-specific, catering to sectors such as technology, media, healthcare, etc. This specialization can foster collaboration and networking within the same industry.

10. Confidentiality and Privacy:

Free zones may offer greater confidentiality and privacy for businesses, as information about shareholders and directors is often not publicly disclosed.

11. Renewable Long-Term Leases:

Free zone companies can usually benefit from renewable long-term lease agreements, providing stability and security for business operations.

Before choosing a free zone, it's essential to research and understand the specific incentives, regulations, and requirements of the chosen free zone to ensure it aligns with your business goals.

Mainland of the UAE comes with its own set of advantages:

• Access to Local Market:

Mainland companies have the freedom to conduct business anywhere within the UAE, including the local market. This is beneficial for businesses targeting the domestic consumer base.

• Diverse Business Activities:

Mainland companies have the flexibility to engage in a wide range of business activities without the limitations often imposed in free zones.

• No Restrictions on Local Sales:

Unlike free zone companies, mainland businesses can sell products and services directly to the local market without facing restrictions.

• Flexibility in Location:

Mainland businesses can choose their location within the UAE, allowing for strategic positioning based on market demands and operational requirements.

• No Requirement for Local Sponsor:

While certain business structures may require a local sponsor or service agent, many activities can be conducted without this requirement, providing more control to the foreign business owner.

• Ease of Business Expansion:

Expanding operations within the UAE or into the local market is generally more straightforward for mainland companies.

• Lower Initial Setup Costs:

Mainland setups might have lower initial setup costs compared to some free zones, especially when it comes to specific business activities.

• Local Banking Options:

Mainland businesses can easily access a broader range of local banking services.

• Networking Opportunities:

Operating in the local business environment facilitates networking and collaboration with other businesses within the UAE.

• Government Contracts:

Mainland companies are typically eligible to bid for government contracts, providing additional business opportunities.

Choosing between mainland and free zone setup depends on your specific business goals, target market, and the nature of your activities. 

The specific requirements for setting up a company in Dubai can vary depending on the type of business, business activities, and the chosen location (mainland, free zone, or offshore). However, here are some general steps and requirements:

For Mainland Companies 

• Business Activity Selection:
• Determine the nature of your business activities and select an appropriate business category.
• Choose a Legal Structure:
• Decide on the legal structure of your company, such as a sole proprietorship, LLC, or branch of a foreign company.
• Trade Name Approval:
• Choose a unique trade name for your business and get it approved by the Department of Economic Development (DED).
• Draft a Memorandum of Association (MOA):
• Prepare a Memorandum of Association detailing business activities, partners/shareholders, and capital.
• Select a Business Location:
• Choose a suitable location for your business and secure the necessary approvals from relevant authorities.
• Get Initial Approval:
• Obtain initial approval for your business from the DED.
• Submit Legal Documents:
• Prepare and submit the required legal documents, including the MOA and lease agreement.
• License Issuance:
• Obtain the required business license from the DED.
• Register with Other Authorities:
• Register with other relevant authorities, such as the Dubai Chamber of Commerce and Industry and the Federal Tax Authority (FTA).
• Visa Processing:
• If needed, initiate the process for obtaining visas for business owners and employees.
• For Free Zone Companies:
• The specific steps and requirements vary between different free zones, but the general process includes:
• Choose a Free Zone:
• Select a free zone based on your business activities and preferences.
• Business Activity Approval:
• Obtain approval for your chosen business activities within the selected free zone.
• Trade Name Reservation:
• Reserve a unique trade name for your business with the free zone authority.
• License Application:
• Submit the license application along with required documents to the free zone authority.
• Office Space:
• Arrange for office space within the free zone, as required.
• Visa Processing:
• If needed, initiate the process for obtaining visas for business owners and employees.

These steps provide a general overview, and the specific requirements can vary. It is advisable to seek guidance from Chrysalis Serve and meet one of the expert legal advisors that familiar with the UAE business environment to ensure compliance with all regulations and streamline the setup process.