Trade license in Dubai without a local sponsor – Complete guide
UK entrepreneurs are always interested in starting a business in Dubai but they aren’t interested in sharing their business with a UAE citizen. Therefore, they want to know if it is possible to get a trade license in Dubai without a local sponsor. Well, the answer is yes it has become possible now. Prospr is going to guide you on how you can get a trade license in Dubai without hiring any sponsor for your business.
Understanding the changes in Dubai’s business Laws
Before 2021, every entrepreneur who wants to start a new company in Dubai Mainland must hire a local sponsor. This sponsor is mainly a UAE citizen who holds a 51 percent share of a company.
Some amendments made to the CCL -Law on Commercial Companies and they are effective from June 1, 2021. As per these changes, expatriates can now enjoy 100 percent ownership in a company or business they set up in UAE Mainland.
The purpose of this change is to attract expats who would be more interested in getting full ownership of their business instead of sharing it with anyone else. There are certain industries to which this amendment is not applicable. Here are some industries that still require a local sponsor for business setup, and UAE residents will hold 51 percent of shares:
- Oil exploration and production
- Security and military services
- Banking, finance, and insurance
- Water and electricity provision
- Fishing and related services
- Postal and telecom services
- Road and air transport
- Printing and Publishing
- Commercial agency
- Medical retail (including pharmacies)
Guide about how to start a pharmacy business in Dubai
It means that if you want to start a new company in any of the above industries, you need to hire a local sponsor. Here is a comprehensive guide that explains how to find a local sponsor for your business. When you are unsure whether you need to hire a local sponsor to get a trade license in Dubai or not, it’s always a good idea to consult with experienced business consultants from Prospr. We will clear your confusion and provide you with the with the utmost guidance and support for your UAE business setup.
What was the reason behind the amendments?
The UAE government wants to turn Dubai and other emirates into business hubs, and thereby they made changes in the law to set up a favorable framework for the business environment. The purpose was to attract entrepreneurs and encourage global investments. Once entrepreneurs know that they will have full control over the ownership of their businesses in a city with zero income tax, they will be taking a good interest in Dubai. Another reason is to reduce local interference and to simplify the business operations. The government aims to align the UAE business environment with global standards.
Steps to obtain a Trade license in Dubai without a Local Sponsor
Here are some steps you need to follow to get a trade license in Dubai from DED.
Step 1-Choose the right business activity.
First of all, you will define your business activities. There is a list of business activities allowed by the government. Choose one as per your industry and sector. If that activity falls under the category where you are allowed to have 100% foreign ownership, you won’t need to hire any sponsor.
Step 2-Select the appropriate jurisdiction.
When it comes to setting up your business in the UAE, you need to choose from different jurisdictions, such as:
- Mainland: It allows you to conduct your business throughout the UAE. You can operate anywhere, and there won’t be any area restrictions, especially when you are involved in trading business. Read all about Mainland company setup in Dubai.
- Free Zones: Another option is to start your business in a free zone. You need to keep your business limited to a specific zone, though. You can’t operate any business on the mainland. Besides, you can make the most of 100% foreign ownership and tax exemptions. If your business doesn’t need a local presence, you can set up a company in Free Zones.
- Offshore: If you want to benefit from the business-friendly and tax-free regime of Dubai, you can start an offshore company in the UAE. It will let you run a business outside the UAE with favorable terms. Must read; How to Start an Offshore company in Dubai.
Step 3-Choose a trade name.
Once you are done selecting a jurisdiction, the next important thing to do is to decide on a trade name for your business. Make sure this name doesn’t have any offensive or religious terms, if you need its quick approval. Double-check it with the business directory so that you don’t propose a duplicate name.
Step 4-Apply for initial approval.
Before you start any business or apply for any license in Dubai, you need to get initial business approval from the Dubai Department of Economic Development (DED). If this department has no objection, then you can continue with the remaining process of getting a trade license in Dubai without a local sponsor. You need to provide a copy of your business plan, passport, and personal details to get approval at this stage.
Step 5-Draft the Memorandum of Association (MOA) and Local Service Agent Agreement (if applicable)
As you are going to set up a business in the Mainland, you need to hire a legal expert who can create a Memorandum of Association (MOA).In the free zone, you may not need to draft an MoA. Although no local sponsor is required in the business, depending on your business activity, you may still need an expert who will draft a Local Service Agent (LSA) for certain activities.
Step 6- Secure a business location
Depending on the jurisdiction you pick, you will have to pick a business location as per requirements set by the jurisdiction. If you open a new company in Freezone, you can save on office costs by relying on virtual offices. It’s a cost-effective choice for startups. Mainland companies usually need to rent office space.
Must read: How to get trade license without office
Step 7-Obtain necessary approvals
You may need to seek additional approval from the government department based on your business activities. Let’s say you start a business in the educational department, you will first need to get approval from the educational ministry. Read about How to add activities in trade license Dubai
Step 8-Submit final documents and pay fees.
As you have collected all the required documents, it’s time to submit your trade license in Dubai application, either with Free Zone Authority or DED– depending on your jurisdiction. Submit all the documents alongside the trade license fee and administrative expenses.
Step 9-Receive your trade license.
Once you submit the application and pay the fee, you will receive your trade license in Dubai. Now once you have this license, you can apply for your Emirates ID and bank account.
Benefits of setting up a business without a Local Sponsor
Here are some benefits of getting a trade licence in Dubai without a local sponsor.
- Full Ownership: You don’t need to face any kind of local interference in your business because you hold 100% ownership of it. As a result, you enjoy complete control over operations and profits.
- Increased Flexibility: Another plus point of skipping local sponsors from the process is to run business operations with ease. You don’t need to coordinate with any local sponsor from time to time. Thereby, you will enjoy the utmost flexibility.
- Enhanced Credibility: When you set up a strong business presence with full ownership, it will enhance your company’s credibility with international clients and partners.
Prospr can help you get a trade license in Dubai without a local sponsor.
Finally, we have explained all the steps you need to take to get a trade license in Dubai without a local sponsor. The process is simple, but you may find it challenging as an expat needs to worry because Prospr’s business consultants are always ready to help you. Whether you plan to set up a business in the Mainland or freezone or are even interested in opening an offshore company in Dubai, we can guide you through the process. We can expedite the visa processing for you and your family through our visa and PRO services. Send us an inquiry, anytime at hello@prospr.ae.
FAQs
Do I need a sponsor for business in Dubai?
If you open a company in a free zone, you don’t need any sponsor. However, if you start a business on the Mainland, you may or may not need a local sponsor based on your business activities and industry.
Do you need an Emirati partner to open a business in Dubai?
Yes, you need an Emirati partner to open a business in certain industries on Dubai Mainland. However, outside the Mainland or in the free zone, you don’t need an Emirati business partner.
Can I sponsor myself with trade license in Dubai?
You can sponsor yourself with employment and investor visas. In another visa case, self-sponsorship isn’t possible.