Dubai Mainland

Dubai has two primary areas for business setup: mainland and free zones. While free zones cater mainly to foreign investors with specific industry requirements (offering benefits like full foreign ownership and tax exemptions), Dubai mainland is regulated by the Department of Economic Development (DED) and allows businesses to operate across Dubai without restrictions.

Businesses set up in Dubai mainland benefit from:

• Freedom to operate across the UAE and expand into the GCC region.
• Ability to participate in UAE government projects.
• Option for flexible business activities and locations.

The DED categorizes business licenses based on the nature of activities. There are four main types:

• Commercial License: For businesses engaging in trading activities, including general trading and specialized retail or wholesale trading.
• Professional License: For service-oriented businesses such as consultancies, medical practices, and educational institutions.
• Industrial License: For manufacturing, production, and industrial activities.
• Tourism License: For businesses operating in the tourism and hospitality sectors, like travel agencies, tour operators, and hotels.

Choosing an appropriate legal structure is essential for compliance with the DED regulations. The main legal entities available in Dubai mainland include:

• Sole Establishment: A business entity owned by a single person with unlimited liability, often used for professional licenses.
• Limited Liability Company (LLC): A popular choice for foreign investors; allows multiple shareholders and requires 51% local ownership (or 100% foreign ownership in specific industries since recent reforms).
• Civil Company: Suitable for professional partnerships, where owners are fully liable.
• Branch Office: A branch of a foreign or UAE-based company, often used by established businesses to expand into Dubai.
• Representative Office: Enables foreign companies to market and conduct market research without engaging in profit-generating activities.

For many years, foreign investors required a local sponsor (a UAE national) who would hold a 51% share in the business. However, recent amendments in UAE’s business laws allow 100% foreign ownership in most business sectors, eliminating the mandatory requirement for a local partner.
That said, having a local service agent remains beneficial in certain cases, especially for professional licenses. They facilitate smoother processing and local support but don’t hold ownership or profit rights in the business.

Step 1: Determine Business Activity

Select a business activity that aligns with your goals. Dubai’s DED provides a detailed list of permissible activities that cater to a wide range of industries.

Step 2: Choose a Legal Structure

Decide on the appropriate legal structure based on your activity, capital investment, and ownership preferences. For instance, a foreign investor may prefer an LLC due to the flexibility it offers.

Step 3: Register the Trade Name

Choose a trade name and register it with the DED. Ensure the name adheres to DED’s guidelines, avoiding any offensive or religious references. The trade name should be unique and relevant to the business activity.

Step 4: Apply for Initial Approval

The initial approval certificate from the DED indicates that the government has no objection to your business activity. This approval is mandatory and is required to proceed further.

Step 5: Draft the Memorandum of Association (MOA)

An MOA is required for LLCs and other multi-partner structures. The MOA specifies the business’s ownership and profit-sharing arrangements. This document should be notarized and can be drafted with the help of legal advisors.

Step 6: Secure a Business Location

Every business must have a physical address registered with the Dubai Municipality. You can either lease or purchase office space depending on your budget. Office space requirements vary based on business activity and licensing regulations.

Step 7: Obtain Necessary Approvals from Relevant Authorities

Certain business activities may require additional approvals from authorities such as the Ministry of Health, Dubai Municipality, or the Roads and Transport Authority (RTA), depending on the nature of the business.

Step 8: Submit Documentation and Pay Fees

Submit all necessary documents, including the MOA, lease agreement, initial approval certificate, and copies of identification for all shareholders. Pay the required licensing and registration fees.

Step 9: Receive Your Trade License

Once all the documentation is approved, you will receive your business trade license from the DED, allowing you to officially commence business activities.

The documentation requirements vary depending on the business type but typically include:

• Trade name reservation certificate
• Initial approval certificate
• Passport copies of shareholders and managers
• Memorandum of Association (MOA)
• Lease or tenancy contract for office space
• Additional approvals, if applicable, from relevant regulatory authorities

The cost to establish a business in Dubai mainland depends on factors such as licensing type, business structure, office space, and additional approvals. Approximate costs include:

• Trade Name Registration: AED 620 - AED 2,000, depending on name type.
• Initial Approval: AED 100.
• License Fee: AED 10,000 - AED 30,000, varying based on business activity.
• MOA Notarization Fee: AED 1,500 - AED 3,000.
• Office Lease Costs: AED 20,000 and up annually, depending on the size and location.

As of now, there is no corporate or personal income tax in Dubai mainland. However, some businesses, such as those in oil and gas, are subject to certain taxes. Additionally, the UAE has introduced VAT at a standard rate of 5%, applicable on goods and services. Dubai mainland businesses are obligated to register for VAT if their annual revenue meets or exceeds AED 375,000.

Businesses in Dubai mainland is required to register employees with the Ministry of Human Resources and Emiratisation (MOHRE) and provide work visas. Each business has a quota for employee visas based on the size and type of operation, which can be arranged with the help of local service agents.

Once the business is operational, it’s crucial to stay compliant with Dubai’s regulations, including:

• Renewing the trade license annually.
• Complying with VAT filing if applicable.
• Ensuring that employee visas and Emirates IDs are up-to-date.

Renewal of trade licenses involves paying fees and may require updated lease contracts and clearance from government departments.