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Business Setup in Dubai
Dubai has proved to be an exceptional business destination for ambitious entrepreneurs from all around the world. The fantastic tax regime, cost-effective business solutions, and the long-awaited 100% business ownership for foreigners approved recently (within Free Zones and for conducting special services) have made Dubai one of the ideal business hubs in the world. There are two options that entrepreneurs can select from for operating a business in Dubai: Dubai Mainland and Dubai Free Zone. Here, the advantages and conditions of establishing a business on the Mainland are vastly discussed. The Dubai Department of Economic Development (DED) is the regulatory authority for issuing mainland licenses in the UAE.
Business Setup in Dubai
Dubai Mainland License    Â
Dubai Mainland or Onshore license helps entrepreneurs who wish to run their business inside the UAE directly and internationally without any limitations. Back then, commercial and industrial required a UAE national or a local sponsor to hold 51% shares of the company, and 49% of the total shares belonged to the expatriate or foreign investor. In 2020, Decree-Law No. 26 is amended, stating that non-Emiratis or expatriates of all nationalities can now hold full-foreign ownership of the onshore companies they established. Whereas a professional license allowed 100% ownership for foreign investors, giving them the advantage of a sole proprietorship. However, a local service agent (LSA) is required with a fixed annual fee, as they act as the company representative in all administrative dealings with government departments. A Dubai mainland license costs from AED 14,500 depending on the business activity.
Advantages of setting up a business in Dubai Mainland
There are plenty of advantages to establishing a business in Dubai mainland, such as:Â
- Freedom to rent a commercial space in any desired Dubai mainland area: Mainland businesses can choose any commercial space across Dubai mainland, offering strategic location flexibility.
- Flexibility to conduct a wide range of business activities
Trade anywhere in the UAE and internationally: Unlike free zones, Dubai mainland companies can engage in a wide array of business activities, supporting industry and service diversity. - Trade anywhere in the UAE and internationally: These companies can conduct business throughout the UAE and internationally, allowing for expansive market reach and growth.
- Opening a corporate bank account easily: Mainland businesses have straightforward access to opening corporate bank accounts, aiding in efficient financial transactions and management.
- A unique advantage of having the opportunity to bid on government projects: Exclusive to mainland companies, this advantage enables participation in government tenders, opening doors to significant growth and development contributions.
Company set up license types in Dubai MainlandÂ
Based on the activities involved in conducting a business, business owners can obtain various types of licenses. Types of licenses granted by DED can be categorized as:
- Professional License which includes a large variety of service activitiesÂ
- Commercial License that covers a wide range of trading activitiesÂ
- Manufacturing/Industrial License that covers the manufacturing activities and selling products manufactured from raw materials in the industryÂ
There are significant points that one should consider regarding various types of licenses. For a non-Gulf Cooperation Council (GCC) national looking to set up a business with a mainland commercial or industrial license in the UAE, some business activities require a local sponsor while some do not. On the other hand, a local service agent will suffice for setting up a professional services license.
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Dubai Mainland legal company structuresÂ
There are various types of company licenses that DED issues for different legal structures operative in Dubai Mainland:
Sole Establishment: An individual-owned business where the owner is personally liable for debts and obligations, suitable for entrepreneurs wanting to operate under their name.
LLC (Limited Liability Company): Offers limited liability to shareholders, requires a UAE national to hold at least 51% of shares, and can engage in various activities within and outside the UAE.
Civil Company: For professionals in recognized fields, allowing 100% foreign ownership with a local service agent, ideal for offering professional services.
Branch: An extension of a parent company, not a separate legal entity, which can perform contracts and business activities aligned with the parent company’s operations.
Representative Office: Limited to marketing and promoting the parent company’s activities, cannot conduct direct business transactions, suitable for market exploration.
Subsidiary: A separate legal entity owned by a parent company, offering operational independence and flexibility, capable of conducting a broader range of activities.
How to set up a company in Dubai Mainland
Establishing a company in Dubai Mainland is rather straightforward and takes a relatively short amount of time. The following steps cover the main stages of the process for starting a company in Dubai Mainland:
- Choose the business activities: although this step may seem trivial because there are over 2,000 business activities covered by DED, it is essential to list the activities a business or company will conduct in Mainland accurately before applying for the relevant license. It is also crucial to choose the proper jurisdiction and business activity and consider the most economical and suitable options.
- Choose the company’s right legal structure: this should align with your chosen business activity as this will provide ease of doing business in Dubai Mainland. The company structure must be decided upon before applying for the license, and there are several to choose from. Hence, a business setup consultant needs to come in this stage, as they know the right legal structure that fits your chosen business activity and jurisdiction.
- Get the trade name approval: the regulations set on assigning companies’ names may be unfamiliar to international entrepreneurs and businessmen. Thus, it is advised to carefully check the criteria and the availability of the chosen name.
- Obtain an initial license approval:Â this license will allow the entrepreneurs to start operating their business right after applying for their company license.
- Apply for external approval (if applicable)
- Collect the license:Â after the company license is issued, entrepreneurs can apply for their visas as well as their dependents and employees (the number of employee visas depends on the nature and size of the business). The Establishment Card and labour file can also be processed at this stage.
- Opening the company’s bank account: every bank has its criteria and offers its own specific services that cater to specific business activities’ needs. Hence, choosing the best bank that meets the entrepreneurs’ professional expectations is quite important.
- Apply for an Establishment Card:Â once the Establishment Card has been issued, the business owners can apply for their visas, as explained earlier.
- Obtain a labour file: A labour file is essential if entrepreneurs wish to hire employees.     Â
How Can Choose UAE Help
At Choose UAE, our Company Formation Specialists will help you choose the right license for your business activity. We provide informed choices for a hassle-free Dubai company setup, and end-to-end services with a dedicated account manager for your business venture. Schedule a free consultation today.
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