Dubai offers an ideal environment to live and work in because of its advanced technology, infrastructure, and countless business opportunities. These benefits attract people from all over the world who want to build their business empire.
To reside and work in Dubai, a visa is required, which can either be a mainland visa or a free zone visa. There are two main types of visas in Dubai. Before knowing the difference between freezone and mainland visa, it is also important to know what free zones and the mainland are exactly.
Mainland
The mainland is any area in Dubai that is part of the city and not located in any special zones. These areas are under the control of the UAE government and follow general rules and laws. Companies located on the mainland are allowed to do business with both local and international markets. There is no restriction of specific location when establishing an office space. However, a Local Service Agent (LSA) or sponsor agent is required to operate business activities.
Freezone
Dubai free zone is a specific area within Dubai that offers many benefits and attracts foreign investors’ attention. These include complete ownership, tax relaxation, simple processing, and incentives.
There are 45 free zones in Dubai, each with its own rules and regulations. Unlike the mainland, each free zone is managed by a separate authority. The limitation of a Free Zone is that companies cannot operate in the UAE’s local market unless they hire a local agent or partner.
A relatively lesser-known type is an offshore company. In simple words, an offshore company is set up away from the place of original operations to enjoy financial, legal, and tax advantages. Ras Al Khaimah and Jebel Ali Free Zone are two popular destinations for setting up offshore companies in Dubai.
We hope the concept of the difference between mainland, free zone and offshore is now clear to you, let’s move on to a detailed discussion now.
9 Differences Between Mainland and Freezone Visa
Now that you know the difference between mainland and freezone, let’s discuss the difference in their visas. This can help you make a decision when starting a business in Dubai.
A mainland visa is provided to applicants on behalf of the company they own in the mainland. If the applicant is not a resident of Dubai, then appointing an LSA is not optional but mandatory to represent your business work. The reason is that a foreign investor cannot own more than 49% of the company, and a local citizen should own the remaining.
Understanding the rules and connecting with other companies, stakeholders, clients, and locals can be overwhelming for a foreign investor. An LSA is a guide that keeps things on track by following the rules in each business matter and avoiding penalties.
On the other hand, a free zone visa is provided to applicants who own a company in one of Dubai’s 45 free zones. So, the major difference between these visas is the location of the business and company.
Ownership
Secondly, if you apply for a Dubai mainland visa, all the administrative work, except for the license renewal, is performed by LSA. However, free zone visa holders get complete ownership and do all the paperwork without any help from LSA.
Business Activities
The mainland visa allows its holders to choose a number of business activities and trade with the UAE market. However, the Dubai free zone visa offers limited business activities in specific industries.
Validity
Another difference is the validity period of the visa. The validity of the mainland visa and the free zone visa is two years and ten years, respectively.
Application Process
The application process also varies depending on where you apply. For a mainland visa, UAE labor law applies. In the case of a free zone visa, the legal frameworks are quite different from the federal law that applies across the UAE.
Office Space Requirement
Mainland visa holders need an office within the mainland to perform business activities. There is no restriction or rule regarding the size of the office space. It can be large or small, depending on the business type and number of visas required.
On the other hand, free zone and offshore companies offer flexibility by allowing them to choose between shared desks, virtual offices, and flexi desks. This makes it cost-effective and a preferred choice for startups.
Processing Time
The time required to set up a company in a free zone is short, as free zone authorities do not need approval from any other authority. Mainland companies require extra time as they require approval from the Department of Economic Development (DED).
Type of Clients
Companies located on the mainland are allowed to deal with both international and local clients of the UAE. However, free zone companies have to follow strict rules for working with mainland companies.
Depending on the situation, some free zones allow mainland companies and international clients to deal freely.
Cost
When it comes to cost, the mainland visa is a little more expensive than other visas. It also includes local sponsorship costs, which is not required in a free zone visa. The cost also depends on the type of business, the number of shareholders, and the size of the office.
The visa fee for the mainland is AED 30,000, and AED 27,000 for a free zone visa. Remember that each free zone has its own cost, and some have the criteria of minimum capital.
Visa Restrictions
The number of visas allowed is also a major difference between freezone and mainland visa . In the mainland, the number of visas depends on the size of the office. The larger the office, the more visas there will be.
Freezone visas offer restricted visas, and the number varies from free zone to free zone. Generally, the range of visas is 1 to 6.
Step By Step Guide to Obtaining Visa
The application process for obtaining a free zone and mainland visa is also different. Follow these steps to get your visa.
For Freezone Visa
- The first step is to choose a free zone that is suitable for your business type.
- Choose those activities that are allowed to be performed in that specific free zone.
- Register yourself with e-channel services, a system designed by the UAE government to keep the process simple and transparent.
- Get a temporary entry permit with a 60-day validity. With this visa, you can complete the remaining procedures in the UAE.
- Complete your medical fitness test and apply for an Emirate ID.
- Submit your passport to the relevant free zone authority for visa stamping.
- After that, collect your passport, Emirates ID, and other documents.
For Mainland Visa
The procedure to get a mainland visa is different than a free zone visa in several ways.
- The first step is to choose a business activity and legal structure for the company.
- Get an initial approval from the Department of Economic Development (DED)
- Choose a trade name according to the UAE’s naming convention.
- Find a local sponsor who owns 51% of your business; however, there is no need for LSA in Freezone.
- Rent an office space on the mainland, and remember that the size of the office decides the number of visas issued to a company.
- Sign a memorandum of association by all partners and shareholders.
- Submit the application along with documents to DED for a Business License.
- The rest of the steps are similar to the free zone visa except for the stamping visa, which is done through the General Directorate of Residency and Foreigner Affairs (GDRFA).
Benefits of Setting Up a Company in Freezone
Just as there are several differences between free and mainland visas, their benefits also vary
- You can get 100% ownership in Freezone
- There is no need for a Local Service Agent
- The process is simple and quick as it involves fewer steps
- Free zones are tax-free, and you are allowed to send all your income to your home country without facing any restriction
- Import and export of goods is free
- Personal information of the owner and shareholders is kept private
- Hiring employees for Freezone is easier than in mainland
- Freezones support investors by guiding and monitoring business activities
Benefits of Setting Up a Company in Mainland
- No need to pay taxes on incomes or profits
- You can get visas as much as needed for employee
- You can have an office space in the selected emirate
- The company has access to the global market
- You are allowed to perform business activities in any area of the UAE
- There is no restriction on opening branches of your company in different locations
Conclusion
At the end of this article, we hope it has helped you understand the key difference between freezone and mainland visa. Choosing the right type of visa depends on your business activities. If your business activities focus on international clients only, a free zone visa is suitable for you.
However, if your business activities involve dealings with locals, a mainland visa is a more suitable option. Each visa type has several benefits, but before choosing a visa type, it is essential to understand your business activities so you can make the right decision.
Choosing the right visa and business activities can be tricky, as both mainland and free zones offer attractive benefits. If you find it challenging to decide, reach out to Al Riyady for assistance. Our team can also help you set up your business.
