Difference Between Foreign Trade Foreign Investment

Benefits of Setting up of Business in Dubai Mainland: The city of Dubai is growing faster and starting your own company in Dubai is much easier than you think. Thanks to the Department of Economic development as it ensures effective and smooth set up of businesses. In Dubai, you can find two kinds of jurisdictions, the Mainland and the Free Zone. Both these have their own set of pros and cons. From an outsider’s point of view, free zones look more accessible with all their promises and cost effective propositions, but an in-depth analysis would point out that free zones are not the only option available for offshore entrepreneurs looking to start a business in the UAE. It is also to be noted that free zones are not the most beneficial business structures to start with. Free zone companies are allowed to trade only within and not in the mainland, and hence if you want to trade in the mainland or acquire business contracts in the long run, it is always better to start trade in the mainland.

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Various factors determine the type of business set up including different business activities and target customers. You can set up a company in the mainland under the following circumstances

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Intend to Trade with other Mainland companies

UAE mainland companies have the freedom to trade within the mainland, whereas free zone companies are allowed to trade only in free zone areas. Free zone companies intending to trade with mainland companies need to undergo processes like paying customs and distributing through a local distributor. Meanwhile, mainland companies can trade freely within the mainland and beyond without any restrictions.

Comprehensive Business Scope

Free zones have a restriction with the scope of the business depending on the place. For example companies in Dubai Healthcare City are allowed healthcare related businesses alone. Similarly in Dubai knowledge village only education and similar businesses are allowed. Likewise for Maritime businesses RAK maritime businesses is the better option. It should be kept in mind that these companies’ activities should not expand beyond the free zone

Working along with Government Bodies

UAE government projects are huge with high investments and returns. These projects are mostly for specialized companies to be their contractors, and taking up these projects is an extremely profitable one. These projects are offered only to mainland businesses, and free zone companies are not considered here. Hence, to get a UAE government project, the company should be based on the mainland.

Market Presence

The major advantage that mainland companies have is opening offices anywhere in the UAE. This allows establishing trade in the local market. With offices open anywhere in UAE, chances of enhanced presence all over the country are high.

Meanwhile, free zone companies are not permitted to operate outside of the free zones that they are registered with. In order to trade in the mainland, they need a distributor and this burns a hole in their profits. This shows the mainland to set up is much advantageous over the free zone.

Financially feasible

The positives of free zone companies like low tax and duty tax is always highlighted but mainland companies do have impressive incentives. Mainland companies do not need a minimum capital requirement, making them an affordable business option.