Are you thinking about creating a company in Dubai or another city in the United Arab Emirates? The UAE can be a popular place to create an international business, especially since the country encourages start-ups. Foreign investors have several different ways they can go about creating a business in Dubai, but before you decide on one of your options, it’s best that you fully explore the differences between them. If you don’t, you may find later that you should have gone with a different type of business.
Before You Decide
Before you can decide on what type of business you want to create, you need to look at a few factors. This includes where you want to actually reside and work, what type of marketing or industry you want to be in, and how you want to structure your business. Without a rough idea of this information, you may not be able to make the most informed decision.
A Mainland or DED Company
A mainland company is very similar to an LLC or Limited Liability Company that can be formed in many other countries. This type of business can enter many different industries because it can be launched from any part of the UAE. You can locate your company headquarters anywhere you want in Dubai, which gives you an advantage over some of your competitors.
However, there is a downside to forming a Mainland company in Dubai. The majority of your business (51%) must be owned by a UAE citizen. These citizens are often called sponsors, and they’re usually a silent majority owner. In most cases, you are solely responsible for determining the direction of the business and handle all of the day-to-day operations. Your UAE partner is simply on the paperwork as your sponsor. Depending on how involved he or she wants to me, he or she may help you with your paperwork, provide input into the business, and more.
Note that you will need to pay your sponsor an annual fee. This fee is negotiated between the two of you when you create your Mainland company, although a consultancy company such as Amtecum Consultancy may help you with your negotiations.
A Freezone Company
A Freezone company, on the other hand, does not require a native UAE individual to own any percentage of the company. You can own 100% of your business, but you do have to be located in one of the UAE free zones. While this works for some businesses, it may not be the right option if you’re planning on opening a restaurant or a store.
An Offshore Company
Finally, if you plan on doing all of your business activities in other countries, you can create an offshore business. Like Freezone companies, you own 100% of the business. However, offshore companies cannot have a physical office anywhere in the country. Your business is simply registered in the UAE, while all work is done elsewhere. This does limit what your company can do, but if you never plan on conducting any business in the UAE, you may never have to worry about those restrictions.