Introduction:
Dubai, renowned for its towering skyline and thriving economy, has evolved into a global business hub. If you want to Launch your business, Mainland company formation in Dubai should be your first move.
What is Mainland Company Formation in Dubai?
UAE is divided on the basis of jurisdictions for Company formations. The mainland is one of the region’s locations. You can set up a business on the mainland under its specific rules and regulations. Mainland company formation in Dubai can be a good option for businesses that want to access the UAE market and benefit from the country’s favorable business environment. However, it is important to carefully consider the challenges and costs involved before making a decision.
Locations under Mainland Dubai
The major areas covered under Dubai’s mainland are:
- Downtown Dubai: This is the central business district of Dubai and is home to some of the tallest buildings in the world, such as the Burj Khalifa and the Emirates Towers. It is also home to many government offices, hotels, and shopping malls.
- Business Bay: This is another major business district in Dubai and is home to many multinational corporations. It is also well-connected to the rest of the city by public transportation
- Deira: This is one of the oldest areas in Dubai and is home to the city’s gold souk and textile market. It is also a major transportation hub, with many bus and metro stations
- Bur Dubai: This is another historic area in Dubai and is home to the Grand Mosque and the Al Fahidi Historical District. It is also a major commercial area, with many shops and restaurants.
- Sheikh Zayed Road: This is a major highway that runs through the center of Dubai and is home to many skyscrapers and hotels. It is also a major business and transportation hub
- Al Qusais: This is an industrial area in Dubai and is home to many factories and warehouses. It is also a major residential area, with many apartments and villas.
- Jebel Ali: This is a major port city in Dubai and is home to many multinational corporations. It is also a major free zone, with its own set of laws and regulations.
These are just some of the major areas covered under Dubai mainland. There are many other areas in Dubai that are not part of any free zones, such as Umm Suqeim, Jumeirah, and Al Barsha.
When choosing an area to set up a business in Dubai mainland, it is important to consider the following factors:
- The type of business you are starting
- The target market you are trying to reach
- The cost of rent and other overheads
- The availability of labor and other resources
- The infrastructure and amenities in the area
Legal Requirements for Mainland Company Formation in Dubai
A Mainland Business License requires adherence to specific legal procedures and regulations. These include:
- Obtaining a trade license: A trade license is essential for conducting business activities in Dubai. It is issued by the Dubai Department of Economic Development (DED).
- Choosing a business activity: Define the nature of your business activity, as different activities have varying licensing requirements.
- Local sponsor requirement: Mainland companies must have a local sponsor or a UAE national as a partner or shareholder. The local sponsor holds a 51% share in the business, while the foreign investor owns the remaining 49%.
Benefits of Mainland Company Formation in Dubai
Mainland company setup in Dubai offers several benefits, including:
- Access to the local market: Mainland companies can trade directly with the local market, providing access to a diverse consumer base.
- Global connectivity: Dubai’s strategic location facilitates easy access to international markets, making it an ideal location for global business operations.
- Tax advantages: While there is no corporate tax on business profits, businesses can enjoy 100% repatriation of capital and profits.
- Business flexibility: Mainland companies have the flexibility to operate in any part of Dubai without geographical restrictions.
Expert Insights: Navigating the Process
“Mainland company setup in Dubai requires meticulous planning and understanding of local regulations. Collaborating with a reputable business consultancy can expedite the process and ensure compliance with legal requirements.” – John Smith, Business Consultant at SetupBiz Consultancy.
Steps of Mainland Company Formation in Dubai
Mainland company Setup in Dubai involves a series of steps that are crucial to a successful setup. Let’s break down the process into a comprehensive guide:
Step 1: Determine Business Activity
Define your business activity and select a suitable category from the DED’s list of activities.
Step 2: Choose a Company Name
Select a unique and appropriate company name that aligns with your business activity and complies with the naming conventions set by the authorities.
Step 3: Obtain Initial Approval
Submit the required documents to the DED for initial approval of your business plan and proposed company name.
Step 4: Lease Business Premises
Secure a physical office space in Dubai as per legal requirements. The office’s location must align with the chosen business activity.
Step 5: Prepare MOA and LSA
Draft the Memorandum of Association (MOA) and Local Service Agent (LSA) agreement. The MOA outlines the company’s structure and activities, while the LSA is a legal requirement for mainland companies.
Step 6: Notarize Documents
Notarize the MOA and LSA documents through the Dubai Courts Notary Public.
Step 7: Submit Documents to DED
Submit the notarized documents, along with the necessary applications and fees, to the DED.
Step 8: Obtain a Trade License
Upon approval, you will receive your main trade license, allowing you to commence business activities.
Step 9: Register for VAT
Depending on your business activity, register for Value Added Tax (VAT) with the Federal Tax Authority.
Cost of Mainland Company Formation Dubai
The cost associated with mainland company setup in Dubai depends upon variables like the nature of the business operation, the specific jurisdiction governing the company, and the necessary authorizations and endorsements. Drawing upon extensive experience in assisting entrepreneurs with Dubai company setup, SetupBiz has formulated a comprehensive breakdown of expenses, taking into account prevailing and customary costs for initiating business activities in Dubai.
The price of the mainland business license given in this list may vary according to Future Government Policies.
- Initial Approval in DED (Department of Economic Development) AED 235 (One-time cost)
- Approval of trade name – AED 735 (One-time cost)
- Office rent – depends on the size of your office. Average office rent would be AED 50 and above per sq. feet per annum. Office rent depends on location and required area.
- Attestation of Memorandum of Association (MoA) – AED 1200 (One-time cost); to be drawn up and approved by all partners of the company
- Drafting of contract and court agreement attestation – AED 500 for typing (One-time cost); all the partners or their attorneys will need to go sign the court agreement attestation
- Registration with the Ministry of Economy – AED 3,000 (One-time cost); your company will be registered upon the payment of this fee.
- Trade license fee – AED 10000 Approx.
- Market fees – to the government as a percentage of the office rent – 5% of the rent for shops, 20% of the rent for warehouses.
- UAE local Sponsorship fees depend on the nature of the business. Average sponsorship is between 10,000 to AED 25,000. Certain activities like contracting and real estate would be more.
Renewal cost of Mainland Company Formation
Usually, the fee for renewing a standard license falls between AED 8,000 and AED 15,000. If you want a more detailed price quote based on what you need, you can reach out to the SetupBiz team.
FAQs
Q: Can a foreign investor own 100% of a mainland company in Dubai?
No, mainland companies require a local sponsor or UAE national shareholder who holds a 51% share. However, certain professional activities may allow 100% foreign ownership.
Q: Are there restrictions on repatriating profits?
No, mainland companies enjoy 100% repatriation of capital and profits, enhancing their attractiveness to international investors.
Q: What advantages do mainland companies offer over free zone companies?
Mainland companies have the advantage of trading directly with the local market and greater flexibility in choosing business locations within Dubai.
Q: How long does the mainland company formation process usually take?
The timeline can vary, but with proper documentation and guidance, the process can be completed within a few weeks.
Q: Can mainland companies operate in free zones?
Yes, mainland companies can establish branches or subsidiaries in free zones, allowing them to benefit from specific free zone advantages while maintaining their mainland company status.
Q: Is it mandatory to have a physical office space for mainland company formation?
Yes, having a physical office space in Dubai is a legal requirement for mainland companies. The location must align with your chosen business activity.