I'm going to explain the two most common legal structures when setting up a business in Dubai. And I believe it's the most important decision that you need to make when you're considering setting up any business in the United Arab Emirates. you've probably heard of these types of companies and I'm going to speak about both of them The first one is a mainland company. The second one is a free zone company.
Today I'm just going to make an overview of mainland companies and free zone companies here in Dubai and I'll get around to a more detailed video in the future on each So mainland companies, or you can call them UAE mainland companies. These are limited liability companies. most often they'll end in LLC or LLC-SO, which is for sole owners. people from all over the world are familiar with LLC because that's typically what many companies may use in the United States, for example.
Mainland companies in the UAE come with fewer restrictions than free zone companies, and they pretty much enable you to sell anywhere within the UAE or globally, where it's legally allowed for you to do so, you can also sponsor any number of staff visas, which may, again, may differ for free zone companies. But with every upside, there's a bit of a downside.
So maybe not a downside, maybe more familiar with people from back in the United Kingdom or anywhere in Europe, really, is if you have a UAE mainland company, there are more regulations you need to adhere to because it is a mainland company for the United Arab Emirates.
And there are many different regulations, depends on the type of trade that you're doing, but one of the common ones, is the requirement for using WPS payroll, which effectively is putting your staff through a payroll system, which you don't need to do with free zone companies, and also the requirement for having an office, a physical office space, if you have a mainland company.
but let's bust this myth once and for all, because it's still commonly believed that for you to own a UAE mainland company, that you need a local sponsor who owns at least 51% of the business. Now, while that was true for a very long time, The rules changed and that's no longer the case. And when I say no longer the case, it comes with some exceptions.
So there are some trades which still require a local sponsor to be involved with the company, but for most trades, you as a foreigner, just like me, And most of the people watching this can own 100% of the mainland company in the UAE. So they can own 100 percent of the shares without needing a local sponsor for most types of businesses.
Now, there are some restrictions, like I mentioned, things like military telecommunications, things to do with space, the internet, banking and insurance, among a few, there are more. And if you're someone like me who operates predominantly remote businesses, you will need a physical office space. Even if you don't want to use one, you still need it. If you have a mainland company, it's just a requirement that still remains to this day.
Perhaps that will change one day, but at the time of recording, that's the requirement. Now, free zones. I have a free zone company in Dubai. Most of the people I know who have companies in Dubai operate through free zones. they're a lot more common with entrepreneurs who are in the online business space, professional services, like consulting services. And even things like e commerce or just generally when you're selling your services, not inside the UAE.
the free zone I'm personally with is called IFZA. IFZA is based in the Dubai Silicon Oasis, and it's a lot more popular with Foreigners like myself who are from the United Kingdom, Europe, United States, Canada, Australia, places like that. That's what it tends to attract because it has mainly European, management. Who operate the free zone, and that's just a lot more familiar with people like myself. there are over 40 free zones for you to choose from in the UAE.
So there's plenty around there, depending on what type of business you're doing. I think IFZA is great for the majority of businesses, but there are some specialist ones out there. they do vary on cost the general rules for the free zone, the type of people they attract, the type of help you'll get, and the way they do business may be more comfortable for some of you versus others. as I told you the, Mainland companies end in LLC or LLC-SO in most cases.
you may see free zones that also have LLC-FZ, just to confuse things a bit. Mine with IFZA is FZCO and there are others that exist. Ultimately, though, free zone companies are also limited liability companies. the sort of limited liability protections that you get through owning a mainland company, you still also get through owning a free zone company, just like back home in the UK, with a limited company, the sort of protections that you get with those.
there are fewer UAE regulations for you to adhere to, To be honest with you, the differences are becoming slimmer over time. However, things like I mentioned earlier, the WPS payroll system, you don't have to use that if you're operating through, certainly my free zone, and my free zone won't require you to have an office space. until you've got over four sponsored visas you may not need any other sponsored visas other than yourself, or maybe you and your business partner.
there are some people who particularly if you operate like me where I've got staff who are situated in other places other than the UAE who are operating in my business and as I've alluded to you can sponsor people's visas through the company.
In fact, your visa, if you decided to set up a company in Dubai, in a free zone, and you wanted to come and live here and get your residency visa and Emirates ID, you would get sponsored by your own company as an employee effectively, even though you own it, and then your company can also sponsor other staff members if they need to be in the UAE and actually live here. If they don't need to, then you don't need to sponsor them. It would make no sense.
And free zone companies can be 100% foreign owned. when I say foreign owned, you and me, most of the people watching this, we can own 100% of the free zone company without any need for a local sponsor. And as I've mentioned, the differences are reducing. And so mainland companies actually don't require it for most types of businesses.
The main downside to a free zone company, and it may not be a downside for you, it isn't for me in how I operate, but you cannot, typically sell physical products or have a physical shop inside the UAE if you're operating under a free zone trade license. For anyone who's selling professional services like consulting services, you can sell within the UAE under a FreeZone license, and you can also sell anywhere else in the world, or at least that's what I've been told by my FreeZone.
And everything I've just said there, if you don't plan on selling your products and services inside the UAE, which most people I speak to are not, that's not their market, that's not their market. then you don't need to worry about it because the free zone license will allow you to trade globally anyway without restrictions from the UAE.
It can be really hard to decide between starting a mainland company or a free zone company, particularly if you're someone who actually wants to do something like, a real world scenario, sell coffee beans inside the UAE, But you have no need for a physical office, and don't want to take on the extra costs that come with the mainland company. It can be a really tough decision because there are ways around it, and it's not the aim of the video for me to go into that.
So I will make more detailed videos on both free zone companies and mainland companies. But for now, I do have a blog post that I wrote, an article relating to this exact thing on how to choose between a UAE mainland company and a UAE free zone. So just look in the description and you'll be able to find a link to access that article. Now for those of you who are looking to set up a company in Dubai, you can do this yourself, you do not need an agency. However, I do have an agency here.
My company is called Handlr Zone. And if you'd like us to help you get your business set up in Dubai, then click on the link in the description or if you'd like to connect directly with my contact at IFZA, the free zone in Dubai, Silicon Oasis, there's also a link in the description for that as well. And all you need to do is fill in your details and I'll connect you up with my contact over at IFZA and you can go direct with them.
Since you've stayed with me this long, please like, subscribe, and share it with someone who you think may find this useful. I'm also going to be posting more videos about Dubai and getting your business set up here and related topics in the coming weeks. So I'm Aaron Henriques. Thanks for staying with me. Bye.