Dubai’s growing economy and stability have paved the way to many foreign investors to open up their businesses there, offering a plenty of opportunities, taking into advantage the growing traffic of the city for an unlimited number of potential customers. Yet, there are some laws and procedures, that you need to be aware of before setting up your business; which usually causes some confusion. The most important condition of them all; is whether you need a local sponsor in Dubai or to get into a partnership with a UAE national, to establish your company.
There are some factors that determine whether you need a local partner or not; the type of business you are aiming to set up and if it will be based in one of the UAE’s free zones. Dubai offers three main options for foreign entrepreneurs to setup their business within the UAE; obtaining a professional license, setting up in a free zone or forming a Limited Liability Company (LLC).
It is the most common type in the UAE, requiring a local sponsor who will typically own 51% of the shares. However, it does not mean that you will share your profits with your local partner; he will only be paid an annual fee, while you continue to run your business without any interference and retaining 100% of your profit.
Setting your business in a free zone is your way out to retain 100% ownership of your own business, enjoying 100% personal and corporate tax exemption. You do not need a local sponsor; however, you cannot trade directly with the local market in the UAE without the help of a local agent, who will have to be paid for the job.
Professional Services License
It is the only way for a foreign entrepreneur to own 100% of his business without even setting it up in a free zone area. Professional services licenses are issued to service providers and professional services businesses such as doctors, lawyers, engineers, consultants and accountants. However, a national service agent is required for the set up, who receives a fee as well, but does not have any liability or authority over the business.
In conclusion, it is not necessarily to open up your business with a local partner and even if you did, you still get lots of benefits that you will definitely favor from. But, if you need to deal directly with the local market in the UAE, a local partner will be your best option. You get the full control over your business, managing all day-to-day activities without any interference from your local partner, and most importantly, you will not share your profit with anyone. However, the local partner has the knowledge and connections that you can make use of, to open doors and relationships within the UAE, bringing plenty of unique benefits.