More and more entrepreneurs want a Set up a company in Dubai. But often a simple company in a free trade zone is not enough and a mainland company in Dubai has to be established.
Here is the comprehensive guide to setting up a mainland company in Dubai.
Advantages Mainland vs. Freezone
In the comprehensive guide Dubai Mainland vs. Freezone the differences have already been described in detail. Here is a brief summary of the advantages and main differences to freezone companies in Dubai.
Legal capacity on site
The most important difference is the ability to do business locally in Dubai. With a mainland company you have the possibility to do business with other local companies in Dubai or the Emirates. This is not possible, or only to a limited extent, with freezone companies.
For example, anyone involved in real estate trading or brokerage needs a mainland company. The same applies to other services that are provided locally. Trade in various goods or physical sales outlets on site also require a Mainland company.
So if you want to do business in Dubai or the Emirates, you generally need a mainland company.
License diversity
The next point is directly related to the variety of licenses. Mainland companies usually have a higher variety of licenses to choose from. Depending on the activities, it is sometimes necessary to set up a mainland company.
Reputation
The next point is the higher reputation. As mainland companies are usually more strictly monitored, are more complex to set up and require a local office, their reputation is higher. This can sometimes be useful in practice when it comes to opening local bank accounts or applying for loans.
Internationally, it is often less important.
Potential disadvantages
Despite its advantages, establishing operations on the mainland presents some challenges that should be realistically factored in.
Costs The most obvious disadvantage is the higher costsA mandatory office, notarized MOA, higher license fees, and more complex bureaucratic procedures make mainland incorporation approximately 50–80 % more expensive than in a Freezone, both at the time of establishment and annually.
Founding period In addition, there is a longer founding processWhile a free zone company can often be set up remotely in 3–5 business days, a mainland setup typically takes 2–4 weeks and requires several in-person steps.
Compliance Another point is the higher compliance burdenMainland companies are subject to stricter supervision by the DET, must allow regular office inspections, and have more extensive reporting obligations in certain industries.
A company with a purely international business model that does not wish to serve local customers in the UAE generally benefits from lower costs, faster processing, and less bureaucratic effort with a Freezone company.
Local Sponsor: When is it still necessary?
For a long time, establishing a mainland company in Dubai was linked to a 51/49 rule: foreign founders were allowed to hold a maximum of 49 % of the shares, while a UAE citizen had to act as the majority shareholder. This regulation was abolished in 2021 with the amendment of the UAE Companies Law for the vast majority of activities – foreign entrepreneurs can now hold % of the shares in most licenses. 100 % Ownership hold without the need for a local partner. Exceptions continue to exist for strategically sensitive sectors such as telecommunications, energy supply, defense, and certain areas of transportation. In these cases, an Emirati majority shareholder or a local service agent is still required. Anyone unsure whether their planned activity falls under these exceptions should have it checked with the DET before establishing the company.
Legal Structures: LLC vs. Sole Establishment
On the mainland, there are generally two main legal forms to choose from, which differ in liability, costs, and ownership structure. LLC (Limited Liability Company) is the most common choice and offers limited liability for the partners – so personal assets are separate from business risk. LLCs are suitable for commercial and industrial companies, as well as for service providers with multiple partners. Sole Proprietorship On the other hand, a sole proprietorship is a company without its own legal personality - the owner has unlimited personal liability. The advantage: It is cheaper to set up, easier to manage and is preferred by freelancers, consultants and individuals in the service sector. Important to know: The Sole Establishment can only be held by one individual and does not allow the admission of additional shareholders. So if you are planning to scale your company in the medium term or take on investors, the LLC is better advised in the long term.
Process
Below is the process for establishing a mainland company in Dubai. As mentioned at the beginning, the process takes a bit longer compared to a free zone company, requires more steps, and ultimately leads to higher costs. More on that later.
Object of the company / License
The first step is to define the purpose of the company and find the appropriate license. You can do this at Dubai Department of Economy and TourismDET for short. There are basically four different license types:
- Industrial License - For industrial companies with manufacturing operations such as factories and manufactories
- Commercial License - For all trading companies that import / export.
- Professional License - For all service companies such as lawyers, notaries or consulting agencies.
- E-Trader License - For sole proprietorships or home businesses that sell products and goods online without a physical retail location.
There is also a dual license that allows you to work in the mainland and in the free zones at the same time.
Name
It is then crucial to choose the right name. This should suit the company and fulfill all legal requirements or not violate certain laws.
Pre Approval
With the name and the desired licenses, you can obtain a pre-approval. This pre-approval confirms that the requirements have been met.
Mao
A step often underestimated when establishing a company in mainland China is the creation and notarization of the Memorandum of Association, also, MOA. This legal founding document is the equivalent of a partnership agreement and contractually governs all essential aspects of the company: the names and shares of all partners, the rights and obligations of the general manager, the share capital, and the company's business purpose. The MOA must be signed by all partners and subsequently notarized by a licensed notary in Dubai – without this notarization, the license will not be issued. Those who have multiple partners or are planning a complex shareholding structure should exercise particular care here, as subsequent changes to the MOA are costly and time-consuming. Usually, the preparation and notarization of the MOA take 2–3 working days and cost between 500 and 1,500 AED, depending on the law firm.
Office
The next step is to buy or rent an office. Compared to freezone companies, it is crucial that the company has a physical office. A flexi office or a desk in a coworking space is not enough.
If you don't need a physical office yourself but just want to meet the requirements, you should consider the cheapest options available. These usually start at around €200/month for a compliance office.
After you have rented the office, you will receive confirmation of this via the so-called EJARI directory. This directory regulates the real estate market in Dubai and is an official confirmation of the rent.
Submission of all documents
As soon as you EJARI certificate, this can be submitted together with the other documents. This is also where the license costs and official fees are paid. This officially completes the incorporation process. As a rule, you will receive the confirmation together with the founding documents within a few working days.
Emirates ID & Visa for the General Manager
An important intermediate step is the receipt of a Emirates ID and the Residence Visa for the General Manager, meaning the managing director. Because they must have the bank account for the company, and this is only possible with an active Emirates ID and VISA.
After founding, you can apply for an e-visa for entry. This usually only takes a few business days. With this e-visa, you enter the country and get a stamp at passport control or have this document scanned electronically at the airport during passport control.
After successful entry, it is necessary to carry out the medical check on site. The short medical check usually only takes 10 minutes and you will receive the result in 1 hour.
After that, you submit an application for the Emirates ID and take this form to biometrics. Your fingerprints will be taken here. Then, you resubmit the documents, and within 3-5 days, you will receive the Emirates ID by mail.
The whole process can be a little challenging, which is why we always recommend using a service provider for this. We handle this together with our customers to guarantee a smooth and fast process.
Bank Account Opening
You need a bank account to actually be able to do business. Ideally, you should choose an account with a physical full-service bank in Dubai. As a rule, it is much easier to open accounts for mainland companies than for free zone companies.
There are some Banks in DubaiWe recommend different banks depending on your activity and turnover. These include, among others:
- WIO
- Mashreq
- FAB
- HSBC
Ideally, you should combine your personal account with your business account and open both at the same bank.
Corporate Tax Registration
After incorporation, you are obligated to apply for a tax number within 90 days. The so-called Corporate Registration has been mandatory since 2023.
Ongoing: Accounting & annual financial statements
In addition, it is important to maintain clean accounting records on an ongoing basis, pay VAT quarterly, and submit annual financial statements at the end of the year. Here, as in other countries, it is highly recommended to have a Tax consultants in Dubai to commission.
Taxes
One important point is the topic of Taxes in Dubaiwhich also apply to mainland companies. Here is an overview of the most important tax rates for mainland entrepreneurs in Dubai:
- Mehrwertsteuer / VAT: This amounts to 5 % and must be registered and accounted for from an (expected) turnover of over AED 375,000.
- Corporate income tax: Die KöSt. beträgt 9 % auf Unternehmensgewinne mit einem Freibetrag von rund 100.000 USD, den man nicht versteuern muss. Für kleine Unternehmen unter 3 Millionen AED Umsatz gibt es den Small Business Relief, unter dem man weiterhin 0 % Steuern zahlt.
Costs
The costs of establishing a mainland company vary and depend heavily on the selection and combination of licenses, as well as the number of visas the company holds. Generally, establishing a mainland company starts at around €13,000 – €15,000.
FAQ
An overview of the most frequently asked questions about setting up a mainland company in Dubai.
How long does it take to set up a Mainland company?
Generally, the whole process takes 1-2 weeks to incorporate the company and another week to obtain the Emirates ID locally and open the bank accounts.
Is a Mainland company suitable for real estate trading?
Yes, a Mainland company is required to trade in real estate or to act as a broker in the form of an independent real estate agent.
However, it is not necessary for private buying and selling.
Summary
In summary, the primary purpose of mainland companies in Dubai is to enable local business operations. This means that one can conduct business with other companies in Dubai, such as trading goods or providing services locally. The setup process typically takes a bit longer than for a free zone company, and the overall endeavor is also slightly more expensive.
If you need support with a Company formation in Dubai you can contact us at any time.
