Ajman Free Zone License vs. Mainland License: Which One Is Cheaper?

Setting up a business in the UAE requires choosing between a free zone license and a mainland license. Ajman Free Zone is known for its affordability and investor-friendly policies, while a mainland license offers greater flexibility for local trade and business operations. This article will compare the costs of an Ajman Free Zone license versus a mainland license to help entrepreneurs make informed decisions.

Understanding Ajman Free Zone License

Ajman Free Zone is one of the most budget-friendly free zones in the UAE. It offers business licenses with minimal setup costs, attractive incentives, and a hassle-free registration process. Businesses operating in a free zone enjoy benefits such as 100% foreign ownership, tax exemptions, and simplified visa procedures.

Key Features of an Ajman Free Zone License

• 100% foreign ownership with no need for a local sponsor

• No corporate or personal income tax

• Quick and easy company registration process

• Cost-effective business setup with low renewal fees

• Ability to trade internationally but limited access to the UAE mainland market

• Access to business facilities such as office spaces and warehouses

Cost Breakdown of an Ajman Free Zone License

The cost of an Ajman Free Zone license depends on the type of business activity and the number of visas required. Here’s a rough estimate:

• Freelancer License: Starting from AED 6,000 per year

• Commercial License: Ranges from AED 11,000 to AED 15,000 annually

• Industrial License: Starts from AED 15,000 per year

• General Trading License: Typically AED 18,000 and above

• Office and Workspace Costs: Options for shared workspaces, flexi-desks, and private offices

• Visa Fees: Each visa can cost around AED 3,000 to AED 4,000, including processing fees

Understanding a Mainland License

A mainland license allows businesses to operate anywhere in the UAE, including engaging in direct trade with local markets and securing government contracts. However, mainland licenses usually involve higher costs compared to free zone licenses.

Key Features of a Mainland License

• Ability to do business across the UAE without restrictions

• Eligibility to secure government projects and contracts

• No limitations on business activities and trade

• Requires a local sponsor (for certain business types) or a local service agent

• Higher regulatory requirements and longer setup times

Cost Breakdown of a Mainland License

The cost of a mainland license varies depending on the business activity, office space requirements, and government fees. Here’s an estimated breakdown:

• Trade License Fees: Typically between AED 12,000 and AED 30,000 annually

• Local Sponsor Fee (if applicable): Around AED 10,000 to AED 25,000 per year

• Office Rental Costs: Mandatory physical office space, with prices starting from AED 15,000 per year

• Visa Fees: Employee visas range from AED 3,500 to AED 5,000 per visa

• Additional Approvals and Permits: Costs depend on industry-specific regulations

Comparing Ajman Free Zone License and Mainland License

1. Initial Setup Costs

Ajman Free Zone licenses have significantly lower startup costs, making them an attractive option for small businesses and startups. Mainland licenses, however, require more investment due to mandatory office space, local sponsorship, and additional fees.

2. Annual Renewal Fees

Ajman Free Zone licenses come with lower renewal costs, usually around AED 11,000 to AED 18,000 annually. Mainland license renewals cost more, often exceeding AED 15,000, plus office rental expenses and local sponsor fees.

3. Business Operations and Market Access

While Ajman Free Zone businesses can trade internationally, they are restricted from directly selling to the UAE mainland unless they work with a local distributor. Mainland businesses, on the other hand, can operate freely within the UAE market without restrictions.

4. Tax Benefits

Ajman Free Zone businesses benefit from 100% tax exemptions on corporate and personal income tax. Mainland companies are subject to UAE corporate tax, which varies depending on business size and revenue.

5. Flexibility and Expansion Opportunities

A mainland license offers greater flexibility for business growth, allowing expansion across the UAE. Free zone businesses have limited expansion opportunities within the UAE market but enjoy simplified international trade regulations.

Which One Is More Cost-Effective?

For startups and small businesses, Ajman Free Zone is the cheaper option due to lower setup and operational costs. The lack of corporate tax, minimal government approvals, and cost-effective licensing make it an ideal choice for budget-conscious entrepreneurs.

For businesses planning to trade within the UAE and work with government entities, a mainland license is a better long-term investment, despite its higher initial and recurring costs.

Conclusion

Choosing between an Ajman Free Zone license and a mainland license depends on business goals and budget. Ajman Free Zone is the most affordable choice for international businesses and startups looking for cost-effective operations. Mainland licenses, while more expensive, offer unrestricted access to the UAE market and better expansion opportunities. Entrepreneurs should carefully evaluate their business needs before making a decision to ensure they choose the most suitable and cost-effective licensing option for their venture.