Establishing a Mainland Company in the UAE: Advantages, Costs, and Other Considerations

August 16, 2023by Amy Denny0

The United Arab Emirates (UAE) has successfully diversified its economy over the past four decades, creating a host of international business opportunities across multiple sectors. With a highly flexible government that continuously introduces incentives for businesses at every stage, the UAE has emerged as a favorable destination for startups, established enterprises, and aspiring entrepreneurs. In this article, we explore the enticing advantages and thriving prospects that await those considering the trade license for establishment of a mainland company in the UAE. The UAE ranks 16th globally in ease of doing business according to the World Bank. The incorporation and operationalization of companies can be completed within one week, with minimal documentation requirements.

What is a mainland license?

A mainland license, alternatively referred to as an onshore license, empowers companies to engage in business activities within the UAE and on an international scale, without any limitations. The Department of Economic Development (DED) in the UAE is responsible for issuing these licenses. Notably, recent amendments to the Companies Law have eliminated the requirement for a local sponsor who is a UAE national, allowing for 100% foreign ownership of businesses in the mainland region. The Department of Economic Development (DED) has granted approval for more than 1,000 activities, allowing complete ownership by expatriates.

Incentives of a mainland license

·     100% foreign ownership: Businesses can be fully owned by foreign entrepreneurs.

·     Extended visas: Entrepreneurs can benefit from extended visa durations.

·     Low corporate tax rate: The corporate tax rate in the UAE is remarkably low compared to other jurisdictions.

·     No withholding tax: There is no withholding tax on earnings.

·     Funding and support opportunities: Funding and support options are available to cover the costs associated with company formation.

·   Excellent infrastructure and business environment: The UAE boasts exceptional infrastructure and a business-friendly environment, striving to build the world’s richest economy with the highest GDP.

Establishing a mainland business in the UAE

The process of establishing a mainland business in the UAE is straightforward. Here are the steps involved:

·     Determine the business activity: It will influence the type of license required and other prerequisites.

·     Assess location suitability: Consider factors such as accessibility, cost, and suitability of the location for your business.

·     Obtain initial approval from the DED:  The DED typically grants initial approval within a few days.

·     Apply for a mainland license: Once the initial approval is obtained, apply for the mainland license.

·     Submit the required documents and pay the fees: After approval, submit the necessary documents and pay the license fee.

Advantages of mainland business setup in UAE:

UAE being a popular tourist and business destination offers numerous advantages for mainland business setup. Here are some key reasons:

Broader reach: Mainland companies can conduct business with other mainland companies and operate anywhere within the UAE, providing a wider reach compared to free zone companies confined to their designated zones.

Greater business activity options: Mainland companies enjoy more flexibility in choosing business activities, as they face fewer restrictions compared to free zone companies.

Location flexibility: Mainland companies have the freedom to select their office location within the Emirate, ensuring the best fit for their needs.

Government partnerships: Mainland companies can collaborate with the government, enabling them to participate in government projects and initiatives.

Visa flexibility: Mainland companies face no restrictions on the number of visas they can obtain, making it easier to hire foreign employees.

No currency restrictions: There are no currency restrictions for mainland businesses in the UAE, allowing for the repatriation of capital and profits without limitations.

Simple registration process: The registration process for mainland businesses is streamlined, making it convenient for entrepreneurs to establish their presence in the UAE.

Cost of a mainland business license in the UAE:

Before commencing a mainland business, it is essential to consider the costs, including the expense of obtaining a mainland business license in the UAE. The cost of a mainland business license can vary based on factors such as the license type, business location, and the number of partners involved.

Types of mainland business licenses:

There are three main types of mainland business licenses in the UAE: commercial, industrial, and professional.

·     Commercial licenses: Issued to businesses engaged in trading activities.

·     Industrial licenses: Granted to businesses involved in manufacturing or processing.

·     Professional licenses: Designed for service-based businesses, such as accounting, legal, or consulting firms.

·     Freelance license: Granted to individuals who would like to work on a freelance basis.

Cost considerations:

The cost of a mainland business license in the UAE typically ranges from AED 16,000 to AED 50,000. Several factors can influence the cost:

License type: Commercial licenses tend to be more expensive than industrial or professional licenses.

Business location: Licensing fees in Dubai are generally higher compared to other emirates.

Number of partners: The number of partners involved in the business can impact the overall cost. Sole proprietorships often have lower license fees compared to partnerships or limited liability companies.

Additional costs: In addition to the business license fee, setting up a mainland business in the UAE entails other expenses, including:

Registration fees: Fees associated with the registration process are payable to the DED.

Office space: Costs for renting or purchasing office space should be considered, with prices varying based on location and size.

Visas: If your business plans to hire foreign employees, visa costs need to be factored in.

Salient features of mainland company setup in the UAE:

The UAE offers two primary jurisdictions for mainland business setup: Dubai Economy and Abu Dhabi Department of Economic Development. Both jurisdictions provide several advantages, including:

  • Flexibility across the UAE: Mainland companies can conduct business anywhere in the UAE, providing wide-ranging market access.
  • Reduced nationality-based restrictions: Ownership and visa restrictions for mainland companies are comparatively less stringent.
  • World-class infrastructure: The UAE boasts top-notch infrastructure, supporting business operations with advanced facilities and services.
  • Efficiency and cost-effectiveness: The mainland setup process is known for its efficiency, facilitating cost-effective business establishment.

When applying for a business license in the UAE, seeking legal support is crucial. Expert legal assistance offers several benefits:

  • Knowledge of local regulations: Legal professionals possess an in-depth understanding of UAE’s specific regulations and can ensure compliance during the license application process.
  • Document preparation and review: Lawyers experienced in UAE’s business laws can assist with accurate document preparation and review, minimizing errors and enhancing application efficiency.
  • Industry-specific compliance: Different industries have unique regulations and licensing requirements. Legal experts help navigate sector-specific regulations, ensuring completeness and adherence to criteria.
  • Mitigating legal risks: Legal support reduces the risk of non-compliance, delays, penalties, or license rejection by identifying and addressing potential legal pitfalls.
  • Handling legal complexities: Legal professionals provide guidance on complex legal matters, protecting business interests through contract drafting and negotiation.

In conclusion, establishing a mainland company in the UAE offers numerous advantages, including flexibility, wider market access, and favorable business policies. Seeking legal support during the license application process is crucial for ensuring compliance, mitigating risks, and navigating the complexities of UAE’s legal framework. With expert guidance, entrepreneurs can maximize their chances of a successful application and set their businesses on the path to success in the thriving UAE market.

About ATB Legal

ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats. Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Amy Denny

Amy is a legal consultant at ATB Legal, with a unique blend of skills for corporate, commercial and litigation matters. She is a law graduate and certified in Intellectual Property from the World Intellectual Property Organization.

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