15 May Free Zone Company vs DED
I was recently speaking to a friend of mine about my job and how my company assists clients and he was surprised to find out that he could start business in dubai and it would be 100% owned by him. He was under the impression that you had to have a local Emirati sponsor who would have 51% ownership of your company no matter which business you choose to start and where you setup in the UAE. He did not know the difference between Free Zones and the DED Mainland. He did not realize that he could start his own business and have complete control of how the company is ran.
Free Zone Company
A free zone license is going to give you 100% ownership of your company and give you complete control of your business. This is one of the biggest advantages and why many expats choose to setup in a free zone. There are 38 different free zones in the UAE and all of them offer different activities to choose from, different pricing and different amenities. You may be allowed to obtain a certain license in one free zone where you wouldn’t be allowed to obtain the same license in another. For example, you can get a General Trading license in many different free zones, but you cannot in the Meydan Free Zone as they specialize in Consultancy licenses. Before you choose a particular free zone, it is best to consult with them first and determine if your activity would be allowed.
Free Zone company can also tend to be cheaper and be a quicker process to obtain whereas some of the quickest free zones in the UAE can process your license in just 2 working days.
A DED (Department of Economic Development) Mainland license can also be beneficial because you would not limit yourself to one particular area. When you have this type of license, you are free to operate in any area of the UAE. While it is true that you would have to acquire a local Emirati sponsor who would have 51% ownership of your company, certain businesses work better with a DED Mainland license. For example, a Freight Forwarding company or a Catering company would be ideal in the DED Mainland so that you can offer your services anywhere in the UAE and not just in a particular zone. When you have a free zone license, you are allowed to operate only within that free zone but if you had a DED Mainland license, you would not be restricted to one area.
The process for obtaining a DED Mainland license is quite different and a little more involved with more documentation needed to be signed. It can be a challenging process because not only do you have to sign these documents, so does your local Emirati sponsor and you would have to coordinate schedules for availability.
If you are not sure what is the best option for your business, DED or Free Zone company, it is always best to contact a Business Setup Consultancy to discuss your options. They can give advice on the best area for your proposed business activity and if a free zone is the most appropriate, they will advise you on which free zone will work best. Anytime you go into business with a partner, whether you know them or not, it is risky.
I would encourage you to learn all you can about your partner and make sure that you can trust them and they are reliable. Setting up a business in the UAE can be a challenging process no matter which jurisdiction you choose to setup in. It is best to go through a company who has experience in the process and who can get you your license with little hassle and in a time frame that works for you.
For a free consultation on which jurisdiction is better for you, DED or Free Zone, contact me today at firstname.lastname@example.org.