Setting up an IT company in Dubai: Mainland vs. Free Zone

Introduction:

Dubai has emerged as a global business hub and a hotbed for innovation, attracting entrepreneurs from around the world. With its strategic location, advanced infrastructure, and favorable business environment, Dubai offers excellent opportunities for setting up an IT company. However, the decision between Dubai's mainland and a free zone can significantly impact your business setup in Dubai. In this blog, we will explore the steps and considerations involved in establishing an IT company in both Dubai mainland and a free zone.

Setting Up an IT Company in Dubai Mainland:

1. Legal Structure Selection:

Choose an appropriate legal structure for your IT Company. Options include Sole Proprietorship, Limited Liability Company (LLC)

2. Local Agent:

For the sole establishment, you may need a local who will act as a service agent in license, as per new guidelines from the authority we can set up an LLC structure for service activity as well In cases where the shareholder frequently travels, it's advisable to have a UAE national as the service agent. This arrangement facilitates the smooth handling of any visa-related processes under the company's purview. In an LLC structure, each visa-related step might necessitate the involvement of the shareholder or their original Emirates ID.

3. Office Space:

Its mandate is to have office space for any company on the mainland. The size and type of office space depend on your chosen business activity.

4. Trade Name Registration:

Choose a unique trade name for your IT Company, the name should include the activity of the company

5. License

Once above all is ready we are good to go for submission and get the License from the authority

Benefits of Mainland Setup:

• Access to the local market
• No restrictions on conducting business within the UAE & International market.
• Potential for a wider range of business

Challenges of Mainland Setup:

• Requirement for a local partner or agent in certain legal
• Higher setup and operational
• Mandate office requirement

Setting Up an IT Company in a Free Zone:

1. Free Zone Selection:

Choose a suitable free zone that aligns with your business goals—Dubai-based Freezone is the most preferable option.

2. Business Activity and License:

Select the relevant business activity, some Freezone don’t have specific activity they have activity groups so before choosing any activity make sure you know what is allowed in that activity as some time activity group has some activity that falls under AML compliance and that will make renewal complicated.

3. Office Space:

Lease office space within the free zone's premises. Free zones often offer flexible office solutions which will make it easy to operate from anywhere

4. Zero Local Ownership Requirement:

Unlike mainland setups, free zones allow 100% foreign ownership, eliminating the need for a local partner, however, nowadays mainland companies can own 100 %.

5. Simplified Procedures:

Free zones typically offer streamlined business setup, licensing, and visa processing procedures.

Benefits of Free Zone Setup:

• 100% foreign
• Tax advantages and
• Simplified setup
• Access to a network of like-minded
• Online process no physical presence is needed for the license

Challenges of Free Zone Setup:

• Limited access to the local
• Restrictions on conducting business outside the free

Conclusion:

Setting up an IT company in Dubai mainland or a free zone offers unique advantages and challenges. Dubai mainland provides access to the local market but may be costly for starts ups. On the other hand, free zones offer 100% foreign ownership, tax benefits, and streamlined procedures. Carefully assess your business goals, target market, and operational requirements before making a decision. Whichever option you choose, we are available to provide assistance and support throughout the setup and post-setup phases of your business.