The Advantages of Mainland Company Formation for Foreign Investors in Dubai

May 2, 2023May 2, 2023 Arslan Mainland Company Formation

Dubai has become a hub for business activities, and many investors are looking to invest in the city due to its strategic location, infrastructure, and business-friendly environment. One of the key considerations for investors is the type of company formation they should opt for when starting a business in Dubai. Mainland Company Formation is one of the popular choices for foreign investors due to its many advantages. Today, we will discuss the advantages of Mainland Company Formation for foreign investors in Dubai.

What is Mainland Company Formation?

Mainland Company Formation is a type of business setup that allows foreign investors to own a company in Dubai without the need for a local partner. Mainland companies are registered with the Department of Economic Development (DED), which is the authority responsible for issuing licenses to companies operating in Dubai. Unlike other types of company formation, mainland companies are allowed to conduct business activities throughout the UAE, including the local market.

There are two types of Mainland Company Formation:

Limited Liability Company (LLC)

Sole Proprietorship

LLC is the most common type of Mainland Company Formation in Dubai, where multiple shareholders can own a company. In contrast, a Sole Proprietorship is a type of business formation where a single owner runs the company.

Advantages of Mainland Company Formation for Foreign Investors in Dubai

100% Foreign Ownership Allowed

One of the significant advantages of Mainland Company Formation for foreign investors in Dubai is the ability to own 100% of the company without the need for a local partner. Previously, foreign investors were required to have a local partner who owned 51% of the company’s shares. However, this requirement was removed in 2019, making Mainland Company Formation a more attractive option for foreign investors.

Access to Local Market

Another advantage of Mainland Company Formation is access to the local market. Mainland companies can conduct business activities throughout the UAE, including the local market, which is not possible with other types of company formation. This advantage allows foreign investors to tap into the vast potential of the UAE market.

Tax Benefits

Mainland companies are eligible for tax benefits offered by the UAE government. For example, companies can avail of the Value Added Tax (VAT) refund scheme if they export goods or services outside the UAE. Additionally, the UAE has signed several Double Taxation Avoidance Agreements (DTAAs) with other countries, which means that companies operating in Dubai can avoid paying taxes twice on the same income.

Easy Business Setup Process

The process of setting up a Mainland Company in Dubai is relatively easy and straightforward. The process involves registering the company with the DED, obtaining a trade license, and getting approval from other relevant authorities, depending on the type of business activity. The entire process can be completed within a few weeks, making it an attractive option for foreign investors.

Employment Visa for Business Owners

Foreign investors who set up a Mainland Company in Dubai are eligible for an employment visa, which allows them to live and work in Dubai. This advantage makes it easier for investors to manage their businesses and operations in Dubai.

Flexibility in Business Activities

Mainland companies offer more flexibility in terms of business activities compared to other types of company formation. Mainland companies can engage in a wide range of business activities without restrictions. This flexibility allows foreign investors to diversify their business activities and explore different sectors.

Banking and Financial Support

Mainland companies have access to a wide range of banking and financial services offered by local and international banks operating in Dubai. This advantage makes it easier for foreign investors to manage their finances and operations in Dubai.

Company Registration and License

Mainland companies are required to register with the DED and obtain a trade license before starting their operations in Dubai. The process of obtaining a trade license is relatively easy and straightforward. Additionally, Mainland companies are not required to renew their trade license every year, which reduces the administrative burden.

Reduced Operating Costs

Mainland companies offer lower operating costs compared to other types of company formation. For example, Mainland companies are not required to pay corporate taxes, which reduces their operating costs significantly. Additionally, Mainland companies can operate from any location in Dubai, which reduces their rental and office expenses.

Protection of Intellectual Property

The UAE has a robust legal framework that protects the intellectual property rights of companies operating in Dubai. Mainland companies can register their trademarks, patents, and copyrights with the relevant authorities, which provides them with legal protection against infringement and theft.

How to Setup a Mainland Company in Dubai

The process of setting up a Mainland Company in Dubai involves several steps:

Choose a business activity

Choose a company name

Obtain initial approval from the DED

Rent an office space

Obtain approvals from other relevant authorities

Obtain a trade license

The cost of setting up a Mainland Company in Dubai depends on various factors such as the type of business activity, office space, and the number of employees. On average, the cost of setting up a Mainland Company in Dubai ranges from AED 25,000 to AED 50,000.

Conclusion

In conclusion, Mainland Company Formation offers several advantages for foreign investors in Dubai. The ability to own 100% of the company, access to the local market, tax benefits, easy business setup process, employment visa for business owners, flexibility in business activities, banking and financial support, company registration and license, reduced operating costs, and protection of intellectual property are some of the significant advantages of Mainland Company Formation.

FAQs

Can a foreigner own 100% of a mainland company in Dubai?

Yes, a foreigner can own 100% of a mainland company in Dubai without the need for a local partner.

How long does it take to set up a mainland company in Dubai?

The process of setting up a Mainland Company in Dubai can be completed within a few weeks, depending on the type of business activity and the approvals required.

Do Mainland companies have access to the local market in Dubai?

Yes, Mainland companies have access to the local market in Dubai, which allows foreign investors to tap into the growing economy of the UAE.

What are the benefits of setting up a Mainland Company in Dubai?

The benefits of setting up a Mainland Company in Dubai include 100% ownership, access to the local market, tax benefits, easy business setup process, employment visa for business owners, flexibility in business activities, banking, and financial support, company registration, and license, reduced operating costs, and protection of intellectual property.

What is the cost of setting up a Mainland Company in Dubai?

The cost of setting up a Mainland Company in Dubai varies depending on various factors such as the type of business activity, office space, and the number of employees. On average, the cost of setting up a Mainland Company in Dubai ranges from AED 25,000 to AED 50,000.

Can Mainland companies operate from any location in Dubai?

Yes, Mainland companies can operate from any location in Dubai, which provides them with more flexibility in terms of office space and rental expenses.