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Mainland Business Set-up in Dubai, UAE: Your Comprehensive Guide

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Dubai, a vibrant city in the United Arab Emirates (UAE), is an attractive tourist destination and a thriving business hub. Its robust economic policies, world-class infrastructure, and strategic location make it an ideal place for entrepreneurs looking to establish a mainland business. This article will serve as your comprehensive guide to setting up a mainland business in Dubai, UAE. 

Understanding Mainland Companies in Dubai

To successfully establish a business in Dubai, it’s crucial to have a deep understanding of the region’s different types of business entities. One of the most preferred options for businesses is a mainland company. 

Definition of a Mainland Company

A mainland company in Dubai is a legal business entity registered and licensed by the Department of Economic Development (DED). At the same time, free zone companies are licensed by free zone licensing authorities and offer licenses to operate from respective jurisdictional territories. Unlike offshore or free zone companies, mainland companies do their business anywhere in the UAE. These companies can engage in a wide variety of business activities, practically everything permitted in the country, making them a popular choice for entrepreneurs who wish to reach a broad market, especially within the country. 

The Scope and Reach of Mainland Companies

Mainland companies in Dubai have an extensive scope and reach. The primary advantage is their ability to conduct business freely within the local UAE market and outside the country without any restrictions. Since mainland companies can establish their office anywhere in the emirate, it offers an extensive advantage to base operations close to its customers and suppliers, which are abundant in the mainland. They also have the liberty to bid for lucrative government contracts. Mainland companies also have the advantage of hiring as many employees as they need as long as the requirements for facilities are met. These factors combined make mainland companies in Dubai an attractive prospect for businesses targeting growth and expansion. 

Distinguishing Mainland Companies from Free Zone Companies

While both mainland and free zone companies have their benefits, fundamental differences distinguish them. Mainland companies, as mentioned, can conduct business anywhere within and outside the UAE. On the other hand, free zone companies are restricted to doing business within their respective free zone, with other free zones, or outside the UAE. However, many free zones do not practically restrict doing business on the mainland. The only difference remains with the tax treatment if licensees intend to operate tax-free. 

Earlier, mainland companies had the requirement to have a UAE national as a local sponsor, owning 51% of the shares. The condition has been waived for most activities, except for critical sectors such as professionals in the legal domain or public accountants. In contrast, free zone companies were always permitted to have 100% foreign ownership. While free zone companies may have certain restrictions on the types of activities they can license for, mainland companies have 100% coverage in this regard. 

Use our comparison tool to make informed decisions about licensors that best suit your business objectives and operational needs. 

Advantages of Establishing a Mainland Company in Dubai

Dubai, a prominent hub for international trade, offers many advantages for businesses. Establishing a mainland company in Dubai, in particular, comes with numerous benefits that can substantially contribute to your business’s growth and profitability.

Unrestricted Trade Opportunities

As mentioned earlier, one of the most prominent advantages of setting up a mainland company in Dubai is its unrestricted trade opportunities. Unlike free zone companies that are limited to conducting business within their specific zones or internationally, mainland companies can trade freely within the entire UAE without any restrictions. This means you can do business with any company in the UAE, whether in a free zone or on the mainland. This unrestricted market access significantly widens your potential customer base and opens doors to many business opportunities. 

No Limit on Employment Visas

Mainland companies in Dubai are not subject to a cap on the number of employment visas they can issue. This is particularly advantageous for businesses that anticipate rapid growth or those in industries that require a significant workforce. The only condition the authority looks at is you are hiring for your own business and may ask you to produce the contracts or lease agreements. The ability to recruit from anywhere in the world and hire as many employees as needed can help businesses to scale effectively and meet their operational requirements. 

Greater Access to UAE and GCC Markets

Establishing a mainland company in Dubai provides access to the UAE’s lucrative market. It opens doors to the wider Gulf Cooperation Council (GCC) markets. This is a considerable advantage for businesses looking to expand regionally. Moreover, mainland companies are also eligible to undertake government contracts, which can be a significant source of revenue. With the UAE government frequently outsourcing projects to the private sector, this provides an excellent opportunity for mainland businesses to secure high-value contracts. 

With the above considerations, setting up a mainland company in Dubai makes an attractive option for entrepreneurs aiming for wide market reach, limitless growth potential, and lucrative business opportunities. 

Key Steps to Setting up a Mainland Business in Dubai

Embarking on the journey of establishing a mainland business in Dubai involves a series of steps. From having a robust business plan to registering your business and obtaining the necessary approvals, each step plays a critical role in the successful set-up of your business. 

Having a Solid Business Plan

The first step towards setting up your mainland business in Dubai is developing a robust business plan. Consider your business concept and objectives in detail, do your market research about where your customers and suppliers are, develop strategies, and project your finances. It serves as a roadmap for your business, helping you identify potential opportunities and challenges that may arise and make them to your advantage. A clear understanding will have long-term repercussions in terms of cost, operating efficiency and can affect your competitiveness. 

Selecting your licensed activity

One of the first steps you have to decide before starting the business set-up process is to decide on the activities your business has to engage in. With the suitable activities selected, your set-up process will get smoother as you will have clarity on what approvals are required until you obtain the license and during the renewal process. Further, banks and other service providers look at the activity you are licensed for and your relevant experience field as part of their compliance check. This can be relevant while you are opening a corporate bank account even. 

Further, licenses are categorised into different types, such as commercial, professional, and industrial. The classification depends on the nature of your business activities. The license type can be an important consideration when choosing the legal structure. 

Choosing the Appropriate Legal Structure

Once your business plan is in place, the next step is choosing the appropriate legal structure. The legal structure you choose will determine the number of shareholders permitted, the liability of those shareholders, and the corresponding documentation during formation and in the future. This can also play a key role while integrating your business in UAE with other entities in your group. Options include sole proprietorship, limited liability company (LLC), and public or private shareholding company. 

Registering the Trade Name and Acquiring Initial Approval

The next step in setting up your mainland business in Dubai involves registering your trade name and acquiring initial approval from the Department of Economic Development (DED). The trade name should reflect the nature of your business and must abide by the trade name guidelines set by the DED. You can choose business names in the English Language, as you prefer. 

Preparing the Memorandum of Association (MOA)

The Memorandum of Association (MOA) is a document that outlines the relationship between the company and the shareholders. This document should be drafted carefully and notarised by a legal counsel in the UAE. The MOA contains essential details about the company, including its capital, rights and duties of shareholders and key management personnel. 

Obtaining your lease agreement

Every business must have a tenancy contract linked to the license in mainland Dubai. This will be the registered address of the company. It is permitted to enter into a lease agreement on behalf of the company after obtaining initial approval for the company. You have to be careful while selecting the office/warehouse/ shop, as the visa quota varies based on the area occupied by you. Further, there can be inspections by the labour departments and banks as they approve your visa applications or corporate bank accounts. It is good to have a closed office, with a name board showing the company name in English and Arabic. Dubai offers options to get a business license in the first year without an office, which is preferred by many startups that do not require visa quota allocation in the first year.  

Enter into a service contract with a local sponsor, if opted for

While many expatriates and foreign businesses do not prefer entering into a sponsorship with a UAE national sponsor, it has its benefits. At this stage of company formation, you must enter into a service agreement with the sponsor if you have opted for this option. The service contract can be notarised, and you can get it attested as well.  

Applying for the Business License

The final step in setting up your mainland business in Dubai is applying for a business license. After submitting the necessary documents and paying the required fees, the DED will issue your business license, marking the official start of your business in Dubai. 

By following these steps and ensuring all legal requirements are met, you can pave the way for a successful mainland business set-up in Dubai. 

Legal Requirements and Regulatory Bodies for Mainland Businesses in Dubai

Navigating the legal landscape of business set-up in Dubai can be complex, particularly for foreign investors. Understanding the essential legal requirements and the roles of regulatory bodies can simplify the process and ensure compliance. 

For mainland businesses in Dubai, the primary regulatory authority is the Department of Economic Development (DED). The DED oversees the business registration process, issues licenses, and ensures compliance with the rules and regulations related to business activities in Dubai. 

However, depending on the nature of your business, you may also need to interact with other regulatory bodies. For example, suppose your company operates in the financial sector. In that case, you may require approval from the Central Bank of the UAE. Healthcare businesses must work closely with the Dubai Health Authority (DHA), and those in the food sector must comply with regulations set by the Food Control Department of Dubai Municipality. 

Understanding these regulatory bodies’ roles and ensuring compliance with their regulations is vital for the smooth operation of your mainland business in Dubai. 

Tips for a Successful Mainland Business Set-up in Dubai

Setting up a mainland business in Dubai can be a rewarding endeavour. However, every entrepreneur should keep a few key considerations in mind to ensure a smooth and successful set-up process. 

Adapting to UAE's Business Culture and Etiquette

Understanding and adapting to the local business culture and etiquette is crucial for any business aiming to thrive in Dubai. Respect for local customs and traditions is highly valued in the UAE. 

It’s also important to be aware that Dubai follows a calendar week while other countries in the Arab region follow the Islamic working week, which traditionally runs from Sunday to Thursday. 

Dubai is a multi-culture city, wherein you will need a multi-culture environment to be developed for a balanced and motivated team.  

Dubai will also have reduced working hours during the holy month of Ramadan, in which most employers offer flexible working hours to employees in solidarity with those who fast during the period. Further, Dubai cares a lot for humanity. In summer, when the mercury soars, employees working outside covered spaces shall be provided with mid-day breaks as directed by the government.  

Seeking Professional Assistance

Setting up a mainland business in Dubai involves navigating complex legal and financial landscapes. Engaging professional assistance to help you through these processes can be beneficial. Professionals can guide you through the intricacies of local laws, regulations, and the company formation process. They can also provide valuable advice on how best to structure the company. 

Consultants can also help understand the local tax environment, set up banking, and manage financial records following local regulations. They can also assist with the financial planning aspects of your business, helping ensure the economic viability and sustainability of your operations. 

By keeping this information in mind and proactively addressing the challenges associated with setting up a mainland business in Dubai, you can pave the way for a successful entrepreneurial journey in this vibrant city.  

If you need any assistance, contact us or schedule a meeting with one of our consultants. 

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