What Is The Difference Between Freezone and LLC?

First, you should understand that the two most common forms of offshore companies are the LLC and Freezone. While both types are legal entities, they have a few key differences. Both have their benefits and disadvantages. The main one is the taxes. If you have a foreign company, you should understand the taxes in the country where the company is incorporated. In this article, I’ll give you an overview of the tax implications of each type of Offshore Company.

1: The Business Set up in Dubai Free zones allows expatriates to have 100% ownership of the company without needing a local sponsor or additional partners. It offers the same protections as an LLC company but without the costs of external approvals. While free zone entities require no licensing, they may need to rent physical space in the free zone. This is why discussing these issues with experts before starting your business is important.

2: LLCs are different from free zones, governed by different authorities. The company is limited to a certain number of visas in a free zone. The company can also opt for a share split with local sponsors, which will require renting out physical space within the free zone. LLCs benefit ex-pats because they can own 100 percent of the firm without needing to hire more local staff.

3: Ownership is the primary difference between an LLC and a free zone company. With an LLC, an expatriate can own 100% of the company without seeking local sponsorship or additional partners. The latter allows you to set your share distribution. LLC companies offer the same protection as mainland companies. However, not all free zones offer LLC structures. As a result, you should check the requirements of the location where you plan to operate your business.

4: Tax structure is the primary difference between a Freezone and an LLC. In a Freezone, a startup pays no income tax, while an LLC pays taxes at the individual level. On the other hand, a C-corporation pays income taxes separately from its owners. In the UAE, the standard corporate tax rate varies according to the business. As an owner, you must pay taxes on the dividend income. For this reason, you should avoid freezone incorporation for your business.

By admin