It’s a question many entrepreneurs and investors ask: Can you truly own 100% of a business in Dubai? Yes, both free zone and mainland setups allow for 100% ownership. This is thanks to significant changes in the UAE’s business laws with regard to mainland businesses which previously required a local sponsor.
So in this article, we’ll explore the ownership rules in Dubai and the UAE, including the types of business licences available, the key differences between free zone and mainland companies, and the unique advantages of starting a business in this thriving global hub. Whether you’re looking to expand your operations or establish a new venture, understanding these options is crucial to making informed decisions.
Can you own 100% of a company in Dubai?
Yes, you can own 100% of a company in Dubai. Previously, 100% foreign ownership of a UAE company was only allowed under specific circumstances – either by establishing a business in a free zone or setting up a professional services company. This meant that mainland businesses required at least 51% ownership by UAE nationals when foreign nationals sought to establish a business. This regulation was a cornerstone of the UAE’s approach to business ownership, limiting full foreign control in most cases.
But things have changed and new provisions enable expats to establish mainland businesses without needing a local partner. While previously limited to professional services and certain free zones, the revised laws now allow foreign nationals to fully own companies onshore, provided they adhere to specific government policies.
Types of business licenses in the UAE
In the UAE, obtaining the right business licence is essential for legally operating your venture and accessing the region’s dynamic market. Each licence type is tailored to specific activities, making it crucial for entrepreneurs to choose one that aligns with their business goals. Below is an overview of the key licences available, highlighting options that particularly suit small business owners:
- Commercial Licence: A commercial licence is ideal for small businesses involved in trading goods, commodities, or services. Entrepreneurs can choose this licence if their activities include for example logistics, car rentals, or real estate brokerage. Before applying, business owners should determine their primary and secondary activities, with up to 10 activities permitted per licence. This flexibility makes the commercial licence a popular choice for those seeking to enter diverse markets.
- Professional Licence: The professional licence is well-suited for skilled entrepreneurs and freelancers offering services based on their expertise or qualifications. Examples of activities covered under this licence include carpentry, consultancy, beauty salons, medical services, repair services, and computer graphic design.
- Tourism Licence: This licence covers businesses such as travel agencies, guest houses, restaurants, cruise boat rentals, and tourist camps. With tourism playing a significant role in the UAE economy, this licence offers a promising opportunity for small businesses to cater to both local and international visitors.
- Craftsmanship Licence: The craftsmanship licence is essential for individuals and companies providing skilled labour services, such as plumbing, carpentry, and electrical work. Entrepreneurs starting small-scale service businesses in these trades can benefit from this licence to operate legally and establish their reputation in the local market.
- Industrial and Agriculture Licences: While typically suited for larger ventures, small business entrepreneurs venturing into niche markets may also consider industrial and agriculture licences. An industrial licence allows businesses to assemble and process goods such as textiles, food, and equipment, while an agriculture licence supports activities like greenhouse installation, crop cultivation, and agricultural consultancy.
Operating without a valid business licence in the UAE is illegal and can result in hefty fines or bans. Entrepreneurs must renew their licences annually to avoid penalties, ensuring their operations remain compliant with UAE regulations.
Free Zone vs Mainland Company
When choosing between setting up a mainland or free zone business in the UAE, it’s essential to understand the distinct corporate structures and regulations of each jurisdiction. Below are the main differences to help you determine which option best suits your business needs:
- Ownership: 100% foreign ownership for specific activities on the mainland are now allowed, apart from a few select regulated industries. Free zones, on the other hand, have always offered complete foreign ownership from the start, without requiring a local sponsor.
- Scope of Business: The key distinction lies in operational flexibility. Mainland businesses can operate across the UAE and internationally without restrictions. Free zone companies, however, are limited to operating within their designated zones or internationally and need a local agent to trade directly within the UAE mainland.
- Workspace Requirements: Mainland companies must secure a physical office space of at least 200 square feet before obtaining a licence from the Department of Economic Development (DED). Free zone companies are not bound by this requirement and can often operate with virtual offices, making them a more flexible option for certain business types.
- Visa Eligibility: Mainland companies have no visa limitations, though the number of visas they can obtain is tied to their office space size. Businesses needing more visas must acquire additional workspace. Free zone companies, by contrast, face restrictions on visa numbers depending on the specific free zone’s regulations.
- Regulatory Approvals: Starting a mainland business requires approvals from multiple government agencies, including the DED, municipality, and Ministry of Labour. Free zones streamline the process by having their own regulatory frameworks, eliminating the need for permissions from external government bodies.
- Financial Audits: Mainland companies are required to conduct annual financial audits to ensure compliance with UAE laws. In contrast, free zones only mandate audits for certain company structures, such as Free Zone Establishments (FZEs) and Free Zone Companies (FZCOs), while others are exempt.
Benefits of starting a business in the UAE
Here are some of the key benefits of starting a business in Dubai.
- Global Commercial Hub: Dubai is recognised as a leading global business centre. Its advanced infrastructure, liberal taxation policies, and high-return real estate options make it an attractive base for growth. The city’s shift towards a diversified, non-oil-dependent economy further enhances its appeal for entrepreneurs aiming to establish an international presence.
- Business-Friendly Environment: Dubai’s pro-business government policies and streamlined regulations create a welcoming atmosphere for businesses of all sizes. The city offers diverse opportunities across industries, positioning itself as a major economic force that draws investors from around the world.
- Attractive Tax Policies: Dubai’s tax structure is a significant draw for investors, offering exemptions on personal and capital gains taxes. With only a 5% VAT (lower than most global business hubs) it provides a highly competitive environment for both startups and established companies.
- Exceptional Connectivity: Dubai’s seamless transportation links, including world-class airports and thousands of weekly international flights, ensure businesses are well-connected to global markets. This accessibility is particularly beneficial for companies that rely on frequent travel or international trade.
- Simplified Setup and First-Class Facilities: Setting up a business in Dubai is straightforward, with minimal paperwork and expert consultancy services available to handle licensing and registration. Entrepreneurs also benefit from modern commercial spaces, including flexible co-working options and plug-and-play offices, making transitions smoother and more cost-effective.
About Creative Zone
Creative Zone, one of the UAE’s largest and most trusted company formation specialists, brings extensive expertise in helping you own 100% of a company in Dubai. With over a decade of experience and more than 12,000 successful business setups, Creative Zone offers a team highly skilled in navigating the specific requirements and regulations of company ownership in Dubai, ensuring a smooth process with quick turnaround times.
Our personalised assistance includes support across all stages, from structuring and governance to compliance and strategic planning, making it seamless for businesses to establish and operate successfully in Dubai. Contact us today.
