HOW TO START A BUSINESS IN DUBAI WITHOUT A LOCAL SPONSOR

How to Start a Business in Dubai Without a Local Sponsor

How to Start a Business in Dubai Without a Local Sponsor

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Starting a business in Dubai without a Local Sponsor

If you want to start a business in Dubai and escape the hassle of a Local Sponsor, you’re in luck. Recently, the UAE has implemented legal changes that allow foreign investors to fully own 100% of their company, particularly in Dubai’s free zones. Now, entrepreneurs can bypass the 51% local sponsor prerequisite and claim control over their business operational control.

In this directive, we will walk you through the business in Dubai process without a local sponsor, outlining the benefits, actionable steps, and associated costs of the undertaking.

What is a Local Sponsor?


In Dubai, a local sponsor is a UAE national or a UAE-based company that forms a partnership with a foreign investor seeking to establish a business in the country, usually on the Dubai mainland. A local sponsor is required in certain business structures like limited liability company (LLCs), where the foreign investor only has 49% of the company shares, while the local sponsoring party holds 51%.

is possible through Dubai’s free zones, where foreign entrepreneurs can maintain 100% ownership. By selecting the right business activity and jurisdiction, such as DMCC or Dubai Internet City, you can bypass the need for a local partner. Free zones offer benefits like tax exemptions, simplified registration, and access to global markets. Understanding the licensing process, VAT compliance, and office space options ensures a smooth setup with full control over your business.

Steps to Starting Your Business in Dubai Without a Sponsor


Step 1: Choose the Right Business Activity


The first step is to select your business activity. Dubai allows full foreign ownership in several sectors, such as technology, e-commerce, consulting, and trading. Make sure to consult with the Dubai Department of Economic Development (DED) or the relevant free zone authority to confirm the activity you choose is eligible for 100% foreign ownership.

Step 2: Select the Best Jurisdiction: Free Zone vs. Mainland


You can set up your business either in a free zone or on the mainland.

  • Free zones offer 100% ownership, tax exemptions, and simplified registration processes.

  • Mainland businesses allow you to access the local market directly but often need a local service agent for certain activities. Free zone setup is recommended for those seeking full control and ownership.


Step 3: Register Your Business Name


Once you’ve chosen your business activity, you’ll need to register a unique business name that complies with Dubai’s naming regulations. The name should avoid offensive terms and ensure it aligns with the nature of your business.

Step 4: Apply for Your Business License


Dubai requires businesses to have one of the following licenses:

The license type will depend on your business activity. Ensure you have all the required documents ready for submission.

Step 5: Set Up Your Office Space


To operate legally in Dubai, your business must have a physical office. Free zones offer flexibility in office space arrangements, including:

  • Virtual offices

  • Shared workspaces

  • Dedicated office spaces


Choose an office type that fits your budget and business needs.

Step 6: Open a Corporate Bank Account


You will need to open a corporate bank account for your business. Dubai has several banks to choose from, including Emirates NBD, Mashreq Bank, and HSBC. Make sure to provide the required documents, such as your business license and articles of association.

Step 7: Hire Employees and Apply for Visas


If you plan to hire staff, you will need to comply with UAE labor laws and apply for work visas for your employees. Free zones often provide visa sponsorship services as part of their setup packages.

Step 8: Understand VAT and Tax Compliance


Businesses with annual revenues exceeding AED 375,000 must register for VAT. Ensure you’re compliant with Dubai’s tax regulations to avoid penalties.

Costs of Starting a Business Without a Sponsor in Dubai


The cost of setting up a business in Dubai without a local sponsor depends on several factors, including the free zone you choose, the type of business, and the office requirements. Below is an estimated cost breakdown:

Business Need Estimated Cost (AED) Business License 10,000-30,000 Office Space Rent 15,000-50,000 Visa Fees (per person) 3,000-7,000 Bank Account Setup 5,000-10,000

 

 

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