Business Setup in Dubai Mainland

UAE’s economic environment provides very advantageous conditions for investors and business owners. Whatever business you choose to run, there are plenty of options you can exercise in terms of business activities, company types, and location. And while UAE’s free zones may be more suitable for certain activities and especially as a starting point of your operation, a mainland company offers more variety and flexibility, ensuring your business’s success in the long run.

Mainland companies are also known as onshore companies and allow businesses to operate within the local market. Running a mainland company in the UAE comes with a set of both benefits and preconditions. Whether you’re starting a business from scratch or planning to move from a free zone to the mainland, this guide will provide you with all you need to know about mainland company formation in Dubai.

What Is a Mainland Company?

UAE’s mainland is basically the non-free zone territory of the Emirates. This is the jurisdiction regulated by the Department of Economic Development (DED), which is responsible for issuing mainland licenses. Such licenses allow for company operation all across the country without limitations.

Thanks to the Commercial Companies Law introduced by the UAE authorities in 2021, mainland companies presently allow for 100% foreign ownership. This is a huge advantage compared to the situation before this change, as all mainland companies owned by foreigners and expats were subject to having a UAE-national sponsor or a local service agent (LSA) that owned 51% of the business. Currently, this depends on your company’s license type and the business activities you engage in. For example, an Industrial license will most likely require you to have a local shareholder, especially if you’re planning to take on government contracts. However, there is a wide range of activities that are not subject to this requirement.

Why Switch from Free Zone to Mainland?

Opening a business in one of UAE’s free zones can be very beneficial, as they offer various packages of turnkey company formation solutions, including offices, licenses, and visas, allowing for an easy business setup. Moreover, many free zones provide significant advantages for particular activity types by having a field-specific focus, strategic location, or integration of airports and seaports. For example, Dubai Silicon Oasis supports technology-based businesses, while Dubai Airport Free Zone (DAFZA) offers direct connectivity to the Dubai International Airport, and Jebel Ali Free Zone (JAFZA) includes Jebel Ali Sea Port (Port Jebel Ali), the biggest port in the country, which may be crucial for logistics-oriented businesses.

However, this business model is subject to limitations in territorial coverage and overall flexibility in terms of business activities, capital and shareholder requirements, opening company branches, etc. So If you’re planning to expand your business, switching to a mainland company is the best choice in the long term.

It is essential to keep in mind that mainland company formation also comes with certain obligations, such as the requirement for a local partner or service agent in some cases, compliance with UAE labor laws, and adherence to specific regulations set by the Dubai Department of Economic Development.

Before proceeding with mainland company formation, it is advisable to consult with business advisors, legal experts, and relevant government authorities to ensure that you understand all the requirements, benefits, and obligations associated with this type of business structure in Dubai.

Advantages of Mainland Company Formation in Dubai

Opening a mainland company in Dubai can be an attractive option for a number of reasons, as it offers several advantages that may benefit entrepreneurs and businesses:

Access to the Local Market

Mainland companies in Dubai have the freedom to conduct business across the entire UAE market without geographical restrictions, not just in Dubai. This means you can tap into a larger customer base and explore opportunities in other Emirates and abroad.

No Currency Restrictions

Mainland companies can transact in any currency freely, providing flexibility for international trade and financial transactions.

Diverse Business Activities

Dubai mainland allows for a wide range of business activities, including trading, manufacturing, services, and professional practices. This makes mainland companies suitable for various industries and activity categories.

Expansion Opportunities

Running a mainland company allows for business expansion all over the UAE territory. You can open new branches in other emirates and trade with other local and international companies without limitations.

Local Government Contracts

Mainland companies can bid for government contracts, which can be lucrative and provide stable revenue streams.

No Minimum Capital Requirement

In many free zones, there is a minimum capital requirement for company formation. In the Dubai mainland, there is often no such requirement, making it more accessible for startups and small businesses.

Flexible Office Locations

While you need to have a physical office space, mainland company formation comes with a vast choice of locations within and outside Dubai, allowing business owners to consider factors like proximity to customers, suppliers, and transportation hubs. This can prove very cost-efficient for logistics and customer coverage.

No Limit on the Number of Visas

Dubai mainland companies can apply for an unlimited number of employment visas, which is especially beneficial for businesses with a significant workforce.

No Import/Export Duties within the UAE

When conducting business within the UAE, mainland companies do not typically incur import or export duties, which can be a cost-saving advantage.

Networking Opportunities

Dubai is a business-friendly city with a diverse international community. You can benefit from networking opportunities, industry events, and a well-established business ecosystem without being tied to a particular free zone.

Local Presence

Having a mainland company demonstrates a strong commitment to the local market and can enhance your reputation with local clients and partners.

Strategic Location

Dubai is geographically located between Europe, Asia, and Africa. It makes the city a perfect hub for international trade and commerce.

Access to Skilled Workforce

Dubai attracts a global talent pool, making it easier to find skilled professionals for various industries.

Mainland Company Licenses

Dubai mainland offers various types of licenses to accommodate a wide spectrum of business activities. The license type you need for your mainland company depends on your business activity and the services you intend to provide. Here are some common mainland company license types in Dubai:

Commercial License:

This license is for companies engaged in trading activities, such as buying and selling goods. It covers activities related to the import, export, and distribution of products.

Professional License:

Professionals, such as doctors, lawyers, consultants, engineers, and artists, require a professional license to offer their services in Dubai. This license is typically for individuals or firms providing professional expertise.

Industrial License:

Businesses involved in manufacturing, processing, or industrial activities need an industrial license. It covers activities like production, manufacturing, and assembly of goods.

Tourism License:

Companies operating in the tourism sector, such as travel agencies, tour operators, and hotel establishments, require a tourism license.

E-commerce License:

Companies engaged in online retail, e-commerce, and digital businesses need an e-commerce license.

Mainland Company Formation Checklist

Setting up a mainland company in Dubai involves navigating the legal and regulatory framework established by the DED. Here is a step-by-step guide to forming a mainland company in Dubai.

1. Decide on Your Business Activity:

Firstly, decide on the nature of the business activity for your company. This will largely determine the license type you’ll need to apply for. The DED-approved list of business activities available for mainland companies includes thousands of them under different categories as opposed to free zones, where your choice is usually quite limited by the nature of the particular free zone. If you want to diversify your existing business, you can simply re-register the desired activities with the DED.

2. Choose the Company’s Legal Structure:

There are different legal structure types available for mainland businesses. Common ones include Limited Liability Company (LLC), Sole Proprietorship, and Public or Private Shareholding Company. Each legal entity is subject to particular regulatory requirements and a set of papers for company registration. An LLC is the most popular legal structure requiring two or more shareholders.

3. Select a Company Name:

Choose a unique and appropriate name for registering your company. Ensure that it complies with the DED's naming guidelines. There are certain general company naming rules specific to the UAE, so it is advisable to consult with field experts before making a decision. To be on the safe side, prepare several name options in advance.

4. Prepare the Required Documents:

Prepare the necessary documents for company registration. The most common ones are the shareholders’ passport copies, passport-size photos, and entry stamps, but the list may vary depending on the company’s legal structure. It is preferable to seek consultancy and legal advice on this issue in order to avoid potential complications with the authorities.

Legal documents may include the Memorandum of Association (MOA) and/or the Local Service Agent Agreement. The latter is required if your company’s business activities and legal structure imply having a local partner or local service agent as a shareholder – for example, in the case of an LLC running an industrial or manpower supply operation. The sponsor can be a UAE national or a local company with a 51% share ownership of your business.

Note that there are companies providing the services of Corporate Nominees and LSAs. They take on the functions of a local partner or sponsor and help you deal with administrative issues, while you maintain actual control of the business.

5. Choose the Perfect Location and Office Space:

You will need to provide proof of office space in Dubai. This office space must suit your business activities and meet DED requirements. When it comes to mainland companies as opposed to free zone ones, you’re free to pick any location you like depending on your business needs. For example, if you’re running a trading operation focused on the import/export of goods, you can rent a warehouse adjacent to Dubai’s transportation hubs such as airports and seaports while having an office in a commercial area of the city.

You can choose an office setup suitable to your needs and funds. Some prefer turnkey options with all the necessities provided by the property owner such as furniture, phones, and internet access, while others prefer fully fitting the office out themselves or choose something in between. Note that each option implies different rent costs.

6. Apply for Company Registration and Mainland License:

Submit your application for company formation and license type to the DED or the relevant authority based on your business activities. You may also need to obtain additional approvals from government departments or regulatory bodies depending on your business type.

7. Pay Fees and Secure Your License and Approvals:

Once your application is approved, pay the necessary fees and you will receive your mainland license and any other necessary permits or approvals required for your specific business activity and company type.

8. Register for Taxation:

Register your company with the Federal Tax Authority (FTA) for taxation purposes. For instance, in 2023, the UAE authorities introduced a 9% corporate tax for particular businesses and entrepreneurs, so make sure that you comply with all the tax obligations. Seek expert advice if necessary.

9. Open a Corporate Bank Account:

Open a corporate bank account with a local bank in Dubai. You will need to provide the required documentation and meet the bank's criteria.

10. Apply for Visa and Labor Approvals:

If you plan to hire employees, you will need to obtain employment visas and labor approvals from the Ministry of Human Resources and Emiratisation. Mainland companies are not subject to restrictions on the number of employee visas, the only limitation is the size of your office space. The common rule is one visa per 100 sq. ft. (9 sq. m.).

Foreign owners of companies in Dubai mainland are eligible for residency visas, commonly referred to as investor or partner visas. These visas are issued for a period of one to three years. They can be renewed as long as you maintain ownership in the company and meet the visa renewal criteria. This also allows you to sponsor your family members and other possible dependents in terms of visas.

11. Seek Legal Counsel:

Consider seeking legal advice from a local business consultant or law firm with expertise in company formation in Dubai. They can guide you through the process and help you navigate any legal complexities.

It's important to note that requirements and regulations for company formation in Dubai may change over time, so it's essential to consult with local authorities or business consultants to ensure you have the most up-to-date information and guidance for your specific business venture.

Summary

Opening a company in Dubai mainland can be a vital step to success, whether it is your entry point in business or a transition from a free zone-based one. Mainland companies offer numerous opportunities for expansion and cost-effective business practices, especially if you come properly prepared and well-informed.

We at Emirabiz know all the ins and outs of company formation in Dubai and the UAE. Our team of field experts will gladly consult you on any related issue and assist you in the process of building or expanding your business.