Business Setup
Mainland
All 7 emirates in the UAE are divided into different zones, each with their respective regulations for the purpose of serving various business sectors and their objectives. One such region is referred to as the ‘Mainland’. All businesses in the Mainland in all 7 emirates are regulated by the Department of Economic Development (DED) of their respective Emirate. For example, all Mainland companies in Dubai are regulated by the DED in Dubai now also known as the Department of Economy and Tourism (DET).
As of June 1, 2021, the UAE government has reformed earlier laws which required a UAE based business to have a local partner owning 51% shares in the business. This reform applies to over a 1000 business activities applicable across commercial & industrial sectors.
However, 7 sectors with strategic impact such as ‘Security, Defence, and Military activities; Banks, Exchange houses, and Finance companies; Insurance; Currency Printing; Communications; Haj and Umrah services; and Quran centres have been excluded from this regulatory reform.
Now individuals & corporates seeking to establish their companies in the UAE can do so with 100% ownership with the exception of the sectors mentioned above. There is however, the requirement of having a ‘Local Service Agent’ often referred to as ‘LSA’. Such agents are expected to help the company navigate regulatory and administrative requirements with the respective government bodies to ensure the company’s smooth operation and that it remains compliant with local regulations. A ‘Local Service Agent’ in the UAE, does not hold any shares in the company. His or her arrangement with the company is merely contractual and they’re paid an annual fee for their services. The necessity to have a male or a female local service agent may be defined by the industry the business operates in, for example, setting up a nursery requires a female service agent.
The legal types that require a Local Service Agent are a ‘Sole Establishment’ and ‘Civil Company’. Other legal types such as LLC; LP; PJSC; PrJSC do not require a Local Service Agent. They are instead incorporated using a Memorandum of Association (MOA).
Freezone
Now that you’ve got a strong understanding of the Mainland, let’s look at the other popular zone that exists in every Emirate in the UAE, aside from the Mainland – Freezone.
A ‘Freezone’ is essentially a designated area with its own governing body or ‘Freezone Authority’ which has its HQ within the freezone. Free Zones authorities have full discretion over the type of businesses permitted within the Free Zone; the business activities the companies may or may not conduct; labour laws the companies are bound by; the minimum infrastructure necessary to carry out certain types of business such as ‘warehouse and logistics’ or ‘e-commerce’.
A Free Zone authority also has the right to uphold compliance, penalise non-compliant companies and have their own laws with regards to taxation, and repatriation of profits and wealth generated by the companies in its Free Zone.
Until June 1st, 2021, Free Zones were mainly preferred by first time entrepreneurs as well as foreign companies looking to do business in the UAE, due to their business friendly nature, including not requiring a local sponsor that held 51% shares in the company. However, since the change of this regulation in the mainlands across the UAE, this has also increased the popularity of Mainland incorporation.
Having said this, Free Zones continue to maintain their demand by adding to their infrastructure, lowering business setup costs, and reducing the processing time and documentation required to set up a Free Zone company in the UAE.
There are over 60 free zones across the UAE including but not limited to Meydan (Dubai); DIFC (Dubai); IFZA (Dubai); Dubai Internet City (Dubai); DMCC (Dubai); Masdar City (Abu Dhabi); ADGM (Abu Dhabi); SPC (Sharjah); SHAMS (Sharjah); Ajman Free Zone (Ajman); RAKEZ (Ras Al Khaimah); FCC (Fujairah); and UAQFTZ (Umm Al Quwain).
Offshore
A salient feature of an Offshore Company is that while they can be registered in designated Free Zones in any Emirate, they may however, not have a physical presence there or conduct any business or trading activities.
Offshore companies are generally established to create a corporate holding structure, whereby it has controlling shares or stocks in other companies established in the UAE. It may also purchase properties in its own name. However, an offshore company may not lease or rent out an office facility in its own name.
Since such companies are restricted from carrying out business activities, incorporation of an offshore company does not come with a ‘Trade Licence’. Instead, the shareholder(s) receive a ‘Certificate of Incorporation’ which identifies the company as an offshore company within the Free Zone where it is established and the date of incorporation.
Free Zones popular for setting up offshore companies in the UAE are RAK ICC (Ras Al Khaimah); JAFZA (Dubai); and DAFZA (Dubai).
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Frequently Asked Questions
This depends on the license issuing authority. Mainlands permit inclusion of all activities within the same activity group whereas freezones permit 1 – 5 activities depending on your chosen package. Reach out to our representative for the most updated information on what business activities
Most licenses are valid for 1 year unless you decide to purchase a multi-year license. Multi-year licenses are available at a discounted rate than renewing every year.
- This is defined by the business activity you intend to carry out. While the mainland and freezones accept most business activities, some freezones have infrastructure and regulations that support and promote specific kinds of businesses like manufacturing, warehousing & logistics, cryptocurrency & virtual assets etc. Quikly’s expert business advisors can guide you on the best jurisdiction for your business.
A payment voucher is issued by the Department of Economic Development (DED) to the owner/shareholder of the company that is being incorporated in the ‘Mainland’. This voucher includes charges for the license issuance; immigration card etc which must then be paid by the shareholder to receive the business license.
An e-trader license is issued by the Department of Economy and Tourism, Dubai (DET) for home-based business. This is a low cost license comprising various activities that allow the owner to carry out operations from their home. Some features of this license include:
- Business can be operated in Dubai only.
- Can be availed by UAE nationals as well as Expats.
- Activities available to you depend on your nationality.
- This license does NOT allow you to store or trade goods/services in a physical location or warehouse.
- Visas cannot be availed on this license – Unless you are a UAE national.
- Platforms: Can operate businesses through online platforms & social media. (influencer marketing NOT included)
- The license is a ‘Sole Proprietorship’ and issued in the name of the owner only. License will be issued within 1 business day.
- Can open a company bank account with an e-Trader license.
- Low cost license – This is the most economical license available allowing small businesses and solopreneurs to “test” their ideas from the comfort of their home – Get your e-Trader license now!
The Department of Economic Development (DET) has started issuing ‘Instant Licenses’ for certain permissible business activities without the need for signing an Memorandum of Association (MOA) or a lease agreement for the 1st year only. This speeds up the process of license issuance from a few days to a day or less. Want to get your instant license? Check if your business activity qualifies for this.