Understanding Mainland Company Formation in Dubai and the UAE
Mainland company formation in Dubai and the United Arab Emirates (UAE), also referred to as onshore licenses, involves UAE business licensing within the jurisdiction of the local government, as opposed to free zones or offshore jurisdictions. Mainland company formation in Dubai and the UAE enables businesses to carry out the selected business activities inside and outside the UAE with the necessary permits and licenses. The UAE acts as a business hub with a dynamic economy, an invest-friendly environment, and global connectivity that benefits business owners planning for UAE business licensing.
Until June 1, 2021, foreigners looking for UAE business licensing were required to give 51% of the company share to a local sponsor, who was usually offered a yearly fee while the foreigner continued to run the business. This requirement was then removed based on the provisions of Federal Decree-Law No. 32 of 2021 (Commercial Companies Law 2021).
Foreigners can now incorporate businesses in Dubai and the UAE with 100% full ownership. Each emirate in the UAE has its own Departments of Economic Development (DEDs) governing the rules and regulations for business incorporation in Dubai and the UAE. After the release of the amended law, Abu Dhabi and Dubai DEDs released their lists of over 1000 activities each that were allowed for business incorporation in Dubai and the UAE with 100% ownership. However, specific activities may require a local partner, including:
1. Oil exploration and production
2. Banking, financing, and insurance activities
3. Commercial agency
4. Medical retail (including pharmacies)
5. Blood banks, quarantines, and venom or poison banks
6. Security and military services
7. Pilgrimage and Umrah services
8. Water and electricity provision
9. Fishing and related services
10. Post and telecom services
11. Road and air transport
12. Printing and publishing
Legal Considerations for Mainland Company Formation in Dubai
Based on the UAE Companies Law 2022, it is necessary to keep some legal considerations in mind for mainland company formation in Dubai and the UAE. Business incorporation in Dubai and the UAE unlocks numerous possibilities and opportunities for businesses and entrepreneurs, but with this comes the responsibility of understanding and abiding by the legal landscape set by the UAE government for a smooth and successful business incorporation in Dubai and the UAE.
This can be achieved by considering the following:
1. Restrictions on foreign ownership may still apply to specific activities, limiting the ability of the foreign investor.
2. Consider trademarks, copyrights, and patents.
3. Employment procedures such as the Involuntary Loss of Employment (ILOE) scheme and the Emiratisation rules, both mandated by the Ministry of Human Resources and Emiratisation
4. Comply with all regulatory requirements such as Economic Substance Regulations (ESR), Ultimate Beneficial Owner (UBO), Tax Registration, Anti-Money Laundering (AML), Counter-Terrorism Financing (CFT), etc.
5. Place the shareholder agreement terms after discussion and negotiation.
6. For initial approval, the foreign shareholder must enter the UAE.
7. The minimum required number of shareholders must be met.
8. The maximum number of shareholders must not be exceeded.
9. Formal amendments will be required for any alteration to the company structure, Memorandum of Association (MoA), or any other documentation.
10. Do your research before planning for a company setup in the UAE to understand the options available.
11. Partner with expert UAE business licensing consultants like Gatestone Group to guide you in choosing the best activities and structure for your business incorporation in Dubai and the UAE.
Types of Mainland Company Formation in Dubai
1. Limited Liability Company (LLC)
2. Public Joint Stock Company (PJSC)
3. Private Joint Stock Company
4. Branch of a Foreign Company
5. Representative Office
6. Civil Company
Dubai Mainland Company Benefits
1. 100% foreign ownership
2. Flexibility to conduct business on a global scale
3. Physical office on the Dubai mainland with a minimum space requirement of 200 sq. ft.
4. Partner with government entities.
5. There are no currency restrictions.
6. Easy bank account opening procedures
7. It is easy to add more visas, allowing for flexibility in expansion.
8. Access to a local and international market network
9. Ability to conduct trade and business inside and outside the UAE
10. There is no minimum capital requirement for the majority of the activities.
11. Easy and simple registration and company formation process in the UAE
12. Minimum corporate tax with the exemption of 0% corporate tax for businesses with taxable income less than AED 375,000
13. Zero income tax
14. World-class Infrastructure
15. No withholding tax on income
Mainland Company Formation Process in the UAE
The company formation process in the UAE encompasses:
Step 1: Obtain local sponsorship
Even after the flexibility provided by the UAE government to foreigners on setting up their businesses with 100% ownership in the UAE, businesses conducting activities in sectors like gas, oil, energy, and others mentioned above still have restrictions. If your business falls into this category, you must choose a reliable UAE national, whether an individual or a company.
Step 2: Selecting a business activity
Choose from over 2000 business activities provided by the Department of Economy and Tourism (DET), including e-commerce, media, agriculture, or manufacturing.
Step 3: Select the legal business structure
This includes choosing the legal business structures such as a limited Company (LLC), a branch of a UAE company or foreign company, a Joint Stock Company (PJSC), a sole proprietorship, etc.
Step 4: Securing a unique business name
This includes choosing a business name that aligns with your business activity and your business ideology. It should be unique and compliant with the UAE requirements.
Step 5: Obtain initial approvals
This includes initiating the approval process for company formation in the UAE from the authorised government entities while ensuring that the documents are as per legal requirements.
Step 6: Draft legal documents
The in-house lawyers at Gatestone Group will draft your legal documents as per UAE legal standards.
Step 7: Lease office space
When choosing to lease an office space, it is important to adhere to the minimum requirement of office space for a mainland company formation in Dubai and the UAE. You can choose from a wide range of physical offices, such as co-working spaces, flexi-desks, etc.
Step 8: Obtaining the company license
After the submission of the documents and following the basic requirements for setting up a UAE mainland company, you will receive your trade license from DET.
Step 9: Tax registration with the authority
The FTA requires UAE companies to register for value-added tax (VAT) and corporate tax if the business meets the threshold.
Step 10: Corporate bank account opening
Once the company setup service in the UAE is completed, you can now open a corporate bank account for your business. This is a vital step to carry out any business activity in the UAE. Gatestone Group is proficient in providing a smooth and efficient bank account opening process, ensuring your business is up and running in no time.
Step 11: Visa application
This includes applying for visas under the company while adhering to the standard rule of 100 sq. ft. per visa.
Documents Required for the Mainland Company Formation in the UAE
The specific documents required for company formation in Dubai and the UAE may vary depending on the type of company structure and the nature of your business. However, some standard documents that are typically required include:
Documents required to establish a limited liability company in Dubai and the UAE:
1. Initial approvals from DET
2. Passport copies of all shareholders, directors, and general manager
3. Copies of Emirates IDs of directors, shareholders, and general managers (for UAE residents)
4. Notarised Memorandum of Association (MoA)
5. Proof of Address
Additional documents required to set up a mainland branch in Dubai and the UAE include:
1. 2-year audited financial statement
2. Identification documents of the local service agent
3. Local service agreement
4. Parent company documents
5. Board resolution from the parent company
6. Power of Attorney (PoA) for the general manager
Choosing Gatestone Group for Company Formation
Gatestone Group can guide you through the maze, providing expert advice on company formation, licensing, and post-incorporation compliances. We aim to guide businesses through every step of the process with our proficient company set-up services in Dubai and the UAE by ensuring compliance, efficiency, and strategic positioning within the UAE’s market and with our clients’ best interests at heart.
Ready to begin your journey toward business incorporation in Dubai and the UAE? The business consultant experts and in-house lawyers at Gatestone Group are ready to serve you with unparalleled mainland company set-up services in the UAE.
FAQs
The common structures for company setup in Dubai and the UAE include Limited Liability Companies (LLCs) for small to medium-sized enterprises and branches of foreign companies. Larger enterprises can opt for Public or Private Joint Stock Companies.
Yes, foreigners are allowed for setting up a business in Dubai and the UAE with 100% full ownership, based on the provisions of Federal Decree-Law no. (32) of 2021. However, specific activities may require a local partner.
The process of setting up a company in the UAE encompasses:
- Selecting a business activity
- Securing a unique business name
- Obtaining local sponsorship
- Drafting legal documents such as the memorandum of association
- Gaining initial approval from the Dubai Economy and Tourism (DET)
- Leasing office space
- Obtaining the necessary license
There are six main types of licenses in Dubai and UAE mainland:
- Commercial license: For businesses that engage in trading activities and e-commerce license in Dubai and the UAE.
- Industrial license: For businesses that are involved in manufacturing or processing activities
- Professional license: For businesses that provide professional services
- Tourism license: For businesses that operate in the tourism and hospitality sector
Share capital requirements vary based on the business activity and the emirate in which the company is established. It is typically specified during the licensing process.
The timeline depends on factors like business activity, approvals required, and the documentation efficiency.
Mainland companies are initially registered in a specific emirate. If they want to operate in other emirates, additional approvals or branch offices may be required.
Compliance involves submitting audited financial statements, license renewals, and adhering to changes in regulations. Non-compliance may lead to penalties or business suspension.
Yes, after obtaining the commercial license, mainland companies can open corporate bank accounts in the UAE.
Yes, businesses meeting the required turnover threshold must register for VAT. It is a standard practice for mainland companies engaged in taxable activities.
Yes, effective 1 June 2023, all mainland companies are subject to 9% Corporate Tax in the UAE.
Dubai Economy and Tourism (DET), formerly known as the Department of Economic Development (DED) in Dubai is the government body responsible for regulating and promoting economic activities in the Emirate of Dubai. It is the main licensing authority for businesses operating in Dubai.
