Dubai’s commercial potential has only grown over the last few decades. Its pro-business regulations, strategic position, business facilities, and investment-friendly market attract entrepreneurs and small to medium-sized businesses to enter the market and establish a presence in this global trading hub. It’s the newest attraction for entrepreneurs, small and medium-sized businesses, and business visionaries. As Dubai encompasses highly favourable policies, many foreign investors are interested in learning more about the Business Partnership in Dubai.
Let’s look at:
- What is local sponsorship in Dubai/ business partnership in Dubai?
- Who are local service agents in Dubai?
- Why you might need them?
- Types of local sponsorships
- How can they help you?
Business Partnership in Dubai/Local Sponsorship in Dubai
A non-Emirati entrepreneur or a foreign business visionary who wants to start a firm in the UAE can do so in a free zone and have 100% ownership. However, setting up a firm in the mainland UAE necessitates forming a business partnership in Dubai. With the appropriate legal structure of a business that requires geographical freedom to engage in any industrial, commercial, or trading operations, one has to get a Local Sponsorship in Dubai or a Local service Agent in Dubai on board.
According to commercial law, forming a limited liability corporation requires the formation of a local sponsorship or business partnership in Dubai. Local sponsorship in Dubai comprises forming a partnership with a UAE native, known as an Emirati. The national owns 51 percent of the company and works as a local representation to the government. Under UAE regulations, this could be an entity or a corporate arrangement for onshore enterprises.
Why Do You Need a Local Sponsorship in Dubai?
According to the law, anyone interested in forming an LLC should pursue a business partnership in Dubai with a UAE citizen. However, you will need to engage with a local sponsor or a local service agent in Dubaiif you want to create a business in a sector that does not allow foreign ownership.
Finding a local sponsor in Dubai is relatively easy and brings forth several advantages such as all-time access to the local market trends and diversified skill sets.
Types of Local Sponsorships:
There are two types of local partnerships/sponsorships, each with its own set of pros and cons:
1. Corporate Partnership/Sponsorship
ADubai-based corporation or firm might provide local sponsorship to a foreign company interested in establishing a business in the city. The UAE corporate body owns 51 percent of the company’s shares and liabilities. This is the most common type of sponsorship in Dubai.
2. Individual Partnership/Sponsorship
In this case, a UAE native (an Emirati) becomes a local sponsor in their capacity as a 51 percent shareholder and functions as the government’s authorized agent. The local sponsor does not have to be involved in the business activity or be a business owner.
3. Local Service Agents
Local Service Agents in Dubai are an excellent option when looking for local partnerships/sponsorships. Local Service Agents function as a representative to enable a foreign entrepreneur to create a business in which the foreign entrepreneur owns 100% of the company. Within an agreement and a general fee, they will not meddle with the business’s day-to-day operations. They have no authority or accountability over the administration or the business assets.
Benefits of Getting a Local Sponsorship in Dubai:
Tax Benefits: Limited liability firms formed with local sponsorship in Dubai are tax-free, and foreign investors can repatriate 100% of their profits.
Legally More Robust: When you have a local service agent in Dubai, you are legally stronger since they have previous relationships with authorities and are familiar with the regulations. A corporate sponsorship frequently brings on board a legal team that watches out for your firm and keeps you stronger.
New Opportunities and Networking: Getting a sponsor opens up a new door to their contacts and established network, which can give your business new opportunities and a path to success.
Securing Visas: Partnering with a local sponsor in Dubai earns you an investor’s status and facilitates the acquisition of a residency visa for you and your family.
Local sponsors, on the other hand, are rarely involved in decision-making, have no claim to revenues, and are often compensated with an annual fee. Therefore, a local sponsor in Dubai is not a liability but rather a valuable asset. Moreover, because a reputable local sponsor will supply the company with ready-made goodwill, this regulation by the Dubai government equally benefits the local sponsors as well as the firms that hire them.
Finding a trustworthy local partner in a foreign country might be challenging for many new investors. As a result, one should constantly be cautious and seek out a reliable partner who fully comprehends your business objectives and drafts a contract outlining the terms and conditions to ensure optimum benefits.
Hi I am Hend Galal and a business developer in UAE based business consultancy firm ‘The Corporate Group’. The Corporate Group is one of the best Emirati holding corporate companies in Dubai. With subsidiaries operating in Dubai, Abu Dhabi and London.