Mainland Business setup in Dubai?

Learn about Mainland Business setup in Dubai, including the benefits of 100% foreign ownership, access to the local market, and the step-by-step process.

Key Takeaways:

• Mainland companies in Dubai offer direct access to the lucrative local and wider UAE market.
• Recent legal changes allow 100% foreign ownership for many business activities, eliminating the need for a local sponsor in those cases.
• Licenses are issued by the Department of Economy and Tourism (DET), formerly DED.
• A physical office space and Ejari registration are mandatory for mainland setups.
• While potentially taking longer than free zone setups, mainland companies offer greater operational flexibility.

Dubai stands as a premier global business destination, offering a robust economy, strategic connectivity, and a pro-business environment. For many entrepreneurs and investors, a Business setup in Dubai on the mainland presents a compelling proposition. Unlike free zones, mainland companies operate under the regulations of the Dubai Department of Economy and Tourism (DET), formerly known as the Department of Economic Development (DED), granting them extensive reach within the local market and beyond. Understanding the nuances of a mainland setup is essential for those aiming for broad operational scope and direct engagement with the UAE’s vibrant economy.

Advantages of Mainland Business setup in Dubai

Choosing a Mainland Business setup in Dubai comes with several significant advantages that cater to a wide range of business models and growth aspirations.

Firstly, and perhaps most importantly, mainland companies enjoy unrestricted access to the local UAE market. This means they can trade directly with consumers, businesses, and government entities anywhere across all seven emirates. This contrasts with free zone companies, which typically face limitations on direct mainland trading without specific arrangements or the establishment of a separate branch or distributor. For businesses aiming to serve the local population, engage in retail, or bid on government contracts, a mainland setup is the natural and often only choice.

A pivotal change that has significantly boosted the appeal of Mainland Business setup in Dubai is the 100% foreign ownership allowance for many business activities. Historically, foreign investors in mainland companies were required to have a UAE national hold a 51% share in most commercial and industrial activities. However, amendments to the Commercial Companies Law have removed this requirement for a vast majority of sectors, granting foreign investors complete control over their businesses. This reform offers unparalleled autonomy and flexibility, empowering international entrepreneurs to manage their ventures without the complexities of a local equity partner. For professional services companies (e.g., consultants), 100% foreign ownership was already permitted, though a Local Service Agent (LSA) might still be required for administrative purposes, without holding any equity.

Furthermore, mainland companies benefit from greater operational flexibility in terms of location. While free zones confine businesses to specific geographical areas, a mainland company can choose its office location anywhere in Dubai, allowing for strategic placement closer to target markets, clients, or specific infrastructure. This flexibility extends to the ability to open multiple branches across Dubai and the wider UAE, facilitating widespread market penetration and scalability. There are also generally no restrictions on the number of visas a mainland company can apply for, primarily dependent on the size of its physical office space, making it suitable for businesses planning to build a large local workforce.

What steps for Mainland Business setup in Dubai?

The process for a Mainland Business setup in Dubai is structured and typically follows a clear sequence of steps overseen by the DET.

1. Define Business Activity and Legal Structure: The initial and most critical step is to precisely identify your business activity from the extensive list provided by the DET. This determines the type of license you will need (Commercial, Professional, Industrial, etc.). Simultaneously, you must decide on the appropriate legal structure for your company, such as a Limited Liability Company (LLC), Sole Proprietorship, Civil Company, or a branch of a foreign company. The LLC remains the most popular choice for commercial activities due to its limited liability protection for shareholders.

2. Reserve Trade Name: You must apply to the DET to reserve a unique trade name for your business. The name must comply with UAE naming conventions, avoiding offensive terms or those already registered. It’s advisable to have several options in mind.

3. Obtain Initial Approval: After selecting your activity, legal structure, and trade name, you apply for initial approval from the DET. This signifies the government’s preliminary acceptance of your business concept and allows you to proceed with the next stages, such as drafting legal documents.

4. Draft Memorandum of Association (MOA) / Local Service Agent (LSA) Agreement: For an LLC, a Memorandum of Association (MOA) must be drafted and notarized. This document outlines the company’s capital, shareholder percentages, and management structure. For professional licenses allowing 100% foreign ownership, a Local Service Agent (LSA) Agreement may be required, where a UAE national is appointed to assist with government dealings without holding any shares.

5. Secure Physical Office Space and Ejari Registration: All mainland companies are mandated to have a physical office space. You will need to lease a commercial property and register the tenancy contract through Ejari, the online registration system of the Dubai Land Department. This Ejari certificate is a mandatory document for your license application.

6. Obtain External Approvals (if needed): Depending on your business activity, you may require additional approvals from other government ministries or regulatory bodies before the DET can issue your final license. For example, a restaurant needs approval from Dubai Municipality, while a media company might need approval from the National Media Council. This step can add to the overall timeline.

7. Submit Documents and Pay Fees: Once all documents are prepared, approvals obtained, and office space secured, you submit the complete application to the DET and pay the licensing fees. These fees vary based on the license type, business activity, and any additional permits.

8. License Issuance: Upon successful review and payment, the DET will issue your trade license, formally allowing your business to commence operations in Dubai.

Key Considerations for Mainland Business setup in Dubai

While mainland setups offer significant benefits, there are several factors to consider that differ from free zone companies, such as those found in SPC Free Zone in Dubai.

Firstly, the cost of a mainland setup can generally be higher than a basic free zone package. This is primarily due to the usually higher cost of a physical office space (compared to flexi-desks in free zones) and potentially higher governmental fees, depending on the chosen business activity and legal structure. It’s important to factor in annual renewal fees for both the license and the Ejari-registered office space.

Secondly, the timeframe for setup for a mainland company can be longer. While the DET has introduced initiatives like the “Instant License” for certain activities, the typical process, especially if external approvals are needed, can take anywhere from 2 to 6 weeks or more, in contrast to the often rapid (a few days) setup in many free zones. This is largely due to the sequential nature of obtaining various departmental approvals.

Finally, while 100% foreign ownership is now widely available, it’s crucial to verify if your specific business activity falls under one of the strategic sectors that still require a local partner. These sectors include activities related to oil and gas exploration, security, defense, and certain banking/financial services. It is always advisable to verify the latest regulations pertaining to your chosen activity.

Post-Setup Requirements for Mainland Business setup in Dubai

After securing your mainland license, several crucial post-setup formalities are necessary to ensure your business is fully operational and compliant. These include:

• Corporate Bank Account: Opening a corporate bank account is essential for all business transactions. UAE banks have strict compliance procedures, and this process can take several weeks, requiring various company documents and personal identification of signatories.
• Residency Visas: As a business owner, you will apply for an investor/partner visa. For employees, employment visas are required. The visa process involves medical tests, Emirates ID application, and visa stamping. Mainland companies typically have an unlimited quota for employee visas, subject to office space size.
• VAT Registration: Businesses exceeding AED 375,000 in annual turnover must register for Value Added Tax (VAT) with the Federal Tax Authority (FTA) and file regular VAT returns.
• Corporate Tax Compliance: With the introduction of corporate tax in the UAE, mainland companies are subject to a 9% tax on taxable profits exceeding AED 375,000. Understanding these obligations and ensuring compliance is crucial.
• Audits: Mainland companies are generally required to conduct annual financial audits, which need to be submitted to the DET.

A Mainland Business setup in Dubai offers unmatched opportunities for market access and growth within the UAE. While it involves a structured process and specific requirements, the benefits of full ownership (for most activities), operational flexibility, and direct engagement with the local economy make it a highly desirable option for serious investors and entrepreneurs. Engaging with a reputable business setup consultant can significantly streamline this journey, ensuring compliance and efficiency at every stage.