When obtaining a business license in the UAE, entrepreneurs and investors have an important choice to make. Will they set up their business in one of the 51+ free trade zones located across the emirates or choose to do business setup in Dubai mainland.
What is a mainland license in the UAE?
A mainland license means setting up with the Dubai Economic Department (DED). Mainland Dubai licenses are a popular option, with issuances increasing year on year. In the first quarter of 2019, the DED issued 509 instant licenses and a total of 9,489 licenses overall.
The Abu Dhabi mainland authority issued 4,183 licenses in the first quarter of 2019, with RAKEZ noting 14,347 licenses issued through their offices over the years.
Also read: 5 facts about free zones in the UAE
Key features of business setup in Dubai mainland
1. Diverse trade opportunities
Whilst free zone companies enjoy significant advantages such as tax and customs exemptions, they’re also limited in where they can trade and with whom. A DED license, however, entitles business owners to trade with unrestricted freedom across the UAE and around the world.
Because there is no geographic restriction, it’s easier for businesses to diversify their products and services offerings to target much wider markets. The mainland license also allows companies to branch out overseas, creating multinational linkages that enable businesses to further scale up their operations.
When you register a business in the mainland, you become eligible to bid for lucrative government contracts in the UAE and the wider Gulf region.
With projects worth AED 50.6 billion ($13.8 billion) announced across the GCC in July 2019 and the UAE government reserving 5% of its projects for the current year and 20% of the remaining projects for Dubai 2020 for small and medium enterprises.
Maintaining a mainland license allows companies to actively compete for these contracts.
2. Initiatives to promote FDI
A recent change in economic policies has made the mainland license more appealing to foreign investors than ever before.
Previously, the mainland license only afforded full ownership to Emiratis, but it now extends the same ownership rights to foreign investors in 13 sectors, including, e-commerce, transport and logistics, storage, IT and communications, hospitality, entertainment, educational activities, healthcare, and administrative and support services.
Let’s look at this crucial development in more detail. In July, the UAE government put into effect the Foreign Direct Investment Law (FDI Law), which lifted previous restrictions on foreign investors conducting business in the UAE mainland.
Prior to the new FDI Law, foreign nationals could only own up to 49% of the shares in a business located on the mainland and had to engage an Emirati to be the majority shareholder.
The FDI Law removed this requirement, opening the market to foreign entrepreneurs interested in establishing their operations outside of free zones.
3. Grants unlimited visa’s
Unlike many free zones, where visas are issued in finite numbers decided by an independent governing authority. Mainland businesses can apply for an unlimited number of visas, as long as they can meet the minimum office space requirement of 80 sq ft per visa. With unlimited growth potential, business owners have a greater ability to utilise their human capital.
Now that you know the benefits of mainland license in the UAE, are you interested in exploring your business options in the UAE?
Get in touch with Decisive Zone to know more about mainland company formation in Dubai and how you can setup your business in the UAE.