Business setup in Dubai for ex-pats and/or foreigners is governed by specific regulations. Many have found that starting a Mainland company is one of the best and most practical choices due to the numerous benefits offered by the UAE via this business setup process. A Mainland company is considered an onshore company that is licensed by the Department of Economic Development (DED). A DED Mainland company is allowed to do business within the local market as well as outside of the UAE without any limitations or restrictions. It is important to understand the specific regulations and parameters that are part of the process of setting up a DED Mainland company in Dubai.
Requirements for Starting a DED Mainland Company in Dubai
Setting up a Mainland company in Dubai is preferred for ex-pats as it offers full company ownership whereas in the past foreigners were only allowed to own up to 49% of a company. The Mainland company process is the best for individuals who want to operate and sell in the UAE. Likewise, with the Mainland business set up in the UAE, business owners are allowed to have 100% shares for holding. It should be noted that there are three specific circumstances under which a Mainland company is viable.
Set Up a Free Zone Company
Entities can use a local service agent to set up a branch of a free zone company. This particular setup offers the option of using a local distributor to help operate the company. The other option is to set up two separate entities at two different sites within the UAE which will result in payment of double the renewal fees. While both options are feasible, in terms of cost and efficiency, using the assistance of a local service agent is more efficient and economical.
Set Up a Professional Service Company
Professional companies allow ex-pats to operate a company with the assistance of a local service agent. The local service agent must be qualified as a UAE national or identify as a UAE company that employs UAE nationals. The local service agent assists ex-pats with the execution of company-related tasks per power of attorney. Is important to note that the local service agent is not an owner of the company. However, the local service agent will receive a fee annually for assistance with facilitating local government services.
Setup an Overseas Branch of a Company
Ex-pats that own a company in their own home country have the option of business set up in Dubai with an overseas branch. This will allow foreigners to expand their businesses and maintain 100% ownership. The overseas branch of a company must be engaged in the same line of business as the parent home company. Opening a branch of a company in the UAE does not require a UAE national as a shareholder. A local service agent will suffice for assistance with local government services.
Obtaining a License to Operate
For a business set up in the UAE, a license is required. It’s important to determine what type of license is needed because that also influences whether the ex-pat will need a local service agent or a local partner for the establishment of the company in Dubai. For clarity, local partnerships are generally required for those seeking commercial and industrial licenses. Local service agents are required for expatriates seeking a professional license. Unlike local partnerships, local service agents do not own a share of the company. They assist as representatives for administrative government services on behalf of the expatriate company owner. For their assistance, local service agents are typically paid a fixed fee annually.
The three main licenses offered for business operation in Dubai include industrial, commercial, and professional.
Industrial
Industrial licenses are for companies that turn natural materials and resources into finished products. These licenses are for both the creation and the sale of such products. With this type of license, the company owner can own a hundred percent of the company without involving a local service agent or sponsor.
Commercial
Commercial licenses allow companies to participate in active commercial trading which includes buying and selling and importing and exporting throughout Dubai without restrictions. Effective June 1st, 2021, local sponsors are not required for a UAE commercial company license. This allows ex-pats full company ownership without involving local sponsors or shareholders.
Professional
Professional licenses are for entities interested in offering non-physical products. This type of license covers such services as accounting, consulting, education, training, etc. With a professional license, 100% of the company or shares are owned by the ex-pat. However, a UAE national must be appointed as a local service agent to assist with government administrative tasks and paid a fixed annual fee for their services.
Ultimately, the type of license acquired is directly connected to the type of business the ex-pat is interested in conducting in Dubai. The type of business will also determine whether or not the business setup in UAE requires the involvement of a UAE national operating as a partner with shareholding investment or a UAE national operating as a local service agent without shareholding in the company.
For licensure to operate a business in the UAE, there are some special considerations. There are some businesses that require specific licenses from an applicable regulatory agency. These fields of practice include medicine, law, and education. When setting up a foreign-own business in Dubai, is important to meet the applicable standards set forth by governing agencies.
Seeking Business Setup Assistance
Although business set up in the UAE through the DED Midland process is highly preferred due to its clearly stated rules and regulations, ex-pats and foreigners interested in establishing a business in Dubai are encouraged to seek the assistance of qualified business creation and licensing professionals. Proper setup of a business is necessary for success, and ex-pats are often not well-informed about the most efficient and economically viable business setup options. A reputable business setup provider is an asset for ex-pats seeking to establish a business in the UAE.
