Mainland or Free Zone: Choosing the Right Location for Your UAE Business Post-Corporate Tax Law

The new UAE corporate tax law has left many businesses in a difficult spot. Should you operate in the mainland or a free zone? What’s the best option for your business in light of the new 15% tax on corporate profits? Don’t panic. This article will help you weigh the pros and cons of each option and make an informed decision.

Mainland Operations

Operating in the mainland is the traditional choice for many businesses in the UAE. One of the biggest advantages is access to a larger local market. Most of the UAE’s population lives in the mainland, making it a great option if you’re targeting local consumers. The mainland also offers greater flexibility in terms of hiring employees. You can recruit from anywhere in the UAE, rather than being limited to those with residency visas for the free zone in which you’re located.

However, there are also some drawbacks to operating in the mainland, especially with the new corporate tax law. The tax rates are higher in the mainland, which means that businesses will have to pay more tax on their profits. Plus, there are fewer incentives available to businesses. Free zones offer tax exemptions on profits, 100% foreign ownership, and streamlined processes for visas and permits, which are not available in the mainland.

Free Zone Operations

Free zones are becoming an increasingly popular option for businesses in the UAE, especially for those that are focused on international markets. Free zones offer a range of benefits, including tax incentives, ease of doing business, and 100% foreign ownership.

One of the biggest advantages of free zones is the tax incentives. Businesses operating in free zones are exempt from paying taxes on their profits, making it a great option for cost-conscious businesses. The ease of doing business in free zones is also a major advantage. These zones are designed to attract foreign investment, so they have streamlined processes for visas, permits, and other paperwork. Finally, the 100% foreign ownership is a huge benefit for businesses looking to maintain full control over their operations.

However, free zones also have some drawbacks to consider. These zones are often located in remote areas, which can make it difficult to access local consumers. This could be a deal-breaker if your business relies on local customers. Additionally, rent, and other expenses tend to be higher in free zones than in the mainland. Finally, free zones have more restrictions on activities, which could be limiting for some businesses.

Choosing the Right Location for Your Business

Ultimately, choosing between the mainland and free zone operations comes down to your business’s target market and long-term goals. Consider your options carefully and weigh the pros and cons of each location. It may even be worth obtaining separate licenses for both locations to take advantage of the benefits of each.

If you need help setting up your business in the UAE, Skwer Group Business Setup Consultants in UAE can assist you. We specialize in helping businesses navigate the complex process of business setup and can provide valuable insights into the advantages and disadvantages of operating in different locations in the UAE.

In conclusion, the new corporate tax law has left businesses with a tough decision to make. Should you operate in the mainland or a free zone? The right choice depends on your business’s specific needs and goals. We hope that this article has provided you with a better understanding of the pros and cons of each option and will help you make an informed decision for your business.