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Do you really need a sponsor to start a business in the UAE?

There are different types of companies you can form in the UAE. In addition to these, there are different economic zones and countless sectors you can enter. So, if you ask, ‘Do you really need a sponsor to start a business in the UAE?’ The answer is both yes, and no. It depends on the type of business you are trying to set up in which business sector and economic zone.

However, the laws are constantly changing in the UAE as the government is trying to change the economic focus of the country from the oil and gas sector. Less than a year ago, you could not own a mainland business setup by yourself as a foreigner. You had to have a local sponsor to share the ownership with you. On top of that, you could only own 49% of the business, even you are the one who did the company formation Dubai. The rest of the 51% had to owned by a UAE citizen.

Then, on 16th November of 2020, the authorities announced that foreigners can own 100% of a mainland business in selected sectors. That is why you need to do market research in the UAE regarding the business you have in mind. Even if the UAE does not allow 100% ownership of a business in that sector today, they might allow it tomorrow. Nevertheless, here is the current status of ownership in the different economic zones in the UAE.

Mainland Business Setups

Currently, you can own 100% of a business in any sector except those which are strategically important to the UAE. These strategically important sectors include transportation, weapons manufacture, oil and gas, etc. Other than these there are countless other sectors that are profitable as well. You can own 100% of a business in any of those sectors. You could either invest in such a business or incorporate your own startup in the mainland.

There are certain benefits of owning a business on the mainland. For starters, you can take on the lucrative government and private contracts anywhere in the country. You can sell your products and conduct your business activities anywhere. The other economic zones, like the free zones, do not allow the business to carry out their business anywhere they want. That is why even before the UAE allowed 100% ownership of businesses on the mainland, entrepreneurs and investors still choose the mainland as their destination.

Even if you choose to open a business with a local sponsor, it is not a big deal at all. Just because you are sharing half the ownership with a local sponsor does not mean you need to share half the profit as well. There are local sponsor agents who charge a flat fee every year, so you do not need to worry about sharing profits. They also do not interfere with your business decisions and objectives.

Free Zone Business Setups

Free Zone businesses allow 100% ownership of businesses to foreigners regardless of the business type and sector. There are over 45 free zones in the UAE right now. Each free zones specializes in different areas of the market in the UAE. For example, the Dubai Healthcare City is a free zone in Dubai that focuses specifically on the healthcare sector. You can incorporate a business in this sector in Dubai Healthcare City very easily.

You can choose any of the allowed company structures for your business in these free zones. This enables you to own 100% of the business there, or even choose to have one or multiple partners. You can go one step further and open a public shareholding company here in the free zones that allow it. So, as you can see, you have a lot of flexibility in the free zones as well. The free zones allow you to ship and sell your products outside the UAE without restrictions. So even if you are not able to sell on the mainland, you can still sell elsewhere.

A company formation in any of the free zones is generally easier than a company formation in the mainland. However, since you have access to Company Setup consultants, you can easily form a company in any of the economic zones. There are certain benefits that are exclusive to the free zone you have in mind. Similarly, there are specific benefits provided by all the free zones in the UAE. So do your research before settling on a free zone.

Offshore Companies

The UAE is a popular choice for people around the world who are looking to open an offshore company. First and foremost, the UAE allows 100% ownership of offshore companies for foreigners. You do not even need to be present in the UAE to open a 100% owned offshore company here. However, you do have to visit the UAE at least once as mandated by the government.

Other than 100% ownership and an easy formation process, there are several other benefits of offshore companies in the UAE. When you open an offshore company here, your assets are protected. The UAE has several laws that do not allow lawsuits against offshore companies from abroad. Owners of these offshore companies also get complete privacy. All these combined make offshore companies a great choice for anyone who wants 100% of their business.

The Bottom Line

So, do you really need a sponsor to start a business in the UAE? Unless you are absolutely determined to open a business in those sectors on the mainland, then no, you really do not need a sponsor to start a business in the UAE. The UAE is one of the most flexible countries when it comes to the ease of doing business here.  As long as the government is focusing on the non-oil economy of the country, foreign investors and entrepreneurs will continue to get more and more benefits.

If you want to start a new business with 100% ownership in the Dubai, UAE, then we got your back. Company Setup professionals have experience incorporating new companies in all of the economic zones in the UAE. So contact us today.

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