Historic Developments: Mainland Business Regulations in Dubai

Mainland business regulations in Dubai have evolved to support economic growth and attract global investors. A few years back, foreign investors were required to have a UAE national as a local sponsor and also to owe 51% of the business. The recent changes now require 100% foreign ownership in many sectors. It has been a wonderful amendment to provide a freedom and growth to business community in Dubai.

These changes have made it easier for international entrepreneurs to set up and manage companies directly under the UAE Commercial Companies Law (Federal Decree-Law No. 32 of 2021). The updated regulations also simplify licensing and encourage fair competition to make Dubai a more open and business-friendly market. Emirate of DUBAI is very flexible and friendly market for businesses.

There are certain business regulations that govern the mainland companies in Dubai. The laws define the ways in which businesses are conducted and how investors can establish their business in the UAE. These rules and laws are made to create a discipline in the business environment. The businesses in the Mainland are also referred to as the primary commercial zone of the UAE.

The companies that operate within the mainland are registered with the relevant authorities. One among them is, Dubai Department of Economy and Tourism (DET). DET had a different name in the past. It was called DED which is Department of Economic Development.

The laws of these departments are business-friendly to attract handsome investments into the country. Professional lawyers in Dubai guide businesses about these regulations and local laws to set up their business with ease. The regulations honor transparency, fairness, and compliance, which make business easier. As a result, it contributes immensely towards the country’s overall revenues, cash flows, and economic growth.

The mainland companies get a direct license from the DET. They usually operate in Dubai and in other parts of the UAE without any limitations. They are not restricted to any area or market access. They are different to free zones. The free zone companies have a limited horizon, accessibility, and face trade restrictions. On the contrary, the mainland companies in Dubai are allowed to trade goods and services all around the UAE. They can also trade outside the UAE and operate internationally.

Mainland companies usually work directly with government contracts. They are permitted to expand their operations across different Emirates without any limitations. Several entrepreneurs and businesses choose to operate within the Mainland route. This offers a greater flexibility and a better accessibility within Dubai markets. There are strict requirements, laws, and regulations for companies operating in free zones of the UAE. It also provides better accessibility and full market coverage, which gives more opportunities to be untapped.

There are certain requirements that every mainland company in Dubai must adhere to. They must obtain a valid and lawful trade license from the concerned authorities of Dubai.

The Emirati lawyers and legal consultants, help businesses obtain the required licenses. They also prepare documents and obtain the right approval from the Dubai Department of Economy & Tourism (DET).

DET is the authority that is responsible for issuing the license and giving approvals.  There are different types of licensing available in Dubai, that is discussed below:

• A commercial license is mainly for trading and general business activities across Dubai.
• Professional licensing is available for service-oriented businesses, companies, and professionals.
• An industrial license is basically for manufacturing or industrial-related businesses.

A business may require approvals or permits from the relevant authorities.  For instance, if we take the health services sector, it will require additional approvals after obtaining permission. They may need additional approvals from the Dubai Health Authority, other than the basic licensing. The schools, colleges, universities, and educational institutions also need additional permits. These licenses are issued by the Knowledge and Human Development Authority.

The business may need a special permit in addition to the DET trade licenses sectors like healthcare, tourism, and finance. The healthcare services adhered to strict licensing issues. They need more permits from other authorities and also from the Dubai Health Authority DHA.

The Tourism businesses also need to obtain additional approvals. They can seek permits from authorities like the Department of Economy and Tourism in Dubai. Added, the financial services need oversight by the Central Bank of the UAE. The business that operates in the food, construction, and education sectors also requires additional certifications and permits to operate legally in Dubai.

The mainland companies previously required, a UAE national must own the company. According to it, at least 51 percent of the business must belong to UAE nationals. However, over the past few years, lenient policies have been adopted by the UAE.

The notable reforms introduced allow foreign nationals to own 100 percent ownership of the business, commercial, or professional operations.

The updates were enacted to encourage direct foreign investment into the country. This gives entrepreneurs and businesses the confidence to own their business. It gives them a greater control over the business operations and also provide major benefits.

There are a few sectors in the UAE where this new reform is not applicable. Few of the sectors like oil, gas, and defense have the exemption. They continue to require local partnership in ownership.

Businesses and entrepreneurs need to choose from a wide range of legal structures while establishing a mainland company in Dubai. Some of the lucrative options available are as follows:

• Partnerships
• Limited Liability Company (LLC)
• Sole proprietorship or Establishments
• Civil Company
• Private or Public Joint Stock Company

Every structure option has its own documentation, capital specification, and liability considerations.

There are some legal requirements to operate in the Mainland, which are the essentials before starting your company. You can get assistance from the lawyers in Dubai in the requirements and how to meet them lawfully, following the region’s law.

One of the eminent regulations for mainland companies is having a proper office space and meeting the location requirements. It is compulsory for mainland companies to have a physical office.

The virtual offices are not enough. A physical office is compulsory. The minimum space specification is also established by the authorities. It mainly depends on the nature, scope, and scale of the business activity in the Emirates.

This makes sure that companies operating in Dubai are compliant with the requirements. It further ensures transparency and fairness in their business dealings. It helps businesses to maintain their physical presence in the UAE.

Once you have secured a physical office in the Emirates. The next step is to have a valid and legal tenancy agreement.

The agreement is registered via the EJARI system in Dubai. It is an official platform to register tenancy contracts. Professional Dubai lawyers can assist the companies’ owners here and provide help in this process. Commercial Lease and EJARI registration are a step for any business operating in the Mainland. They require a valid and legal EJARI certificate. The certification helps in the following:

• Obtaining trade licensing
• Renewal of licensing
• Hiring of staff and visa issuance
• Applying for an investor or employment visa

The mainland companies are allowed to issue the sponsor visas to their workers, employees, investors, and dependents. They must comply with the following laws:

• UAE Labour Laws
• Quota Limits
• Insurance requirements

Any failure to comply with the labor laws will result in legal implications. There are strict penalties associated with non-compliance. It may result in fines, penalties, and suspension of the visa. Dubai lawyers can provide guidance in this, too.

It is mandatory to comply with the taxation rules of the Emirates. Undoubtedly, it is ranked as one of the most tax-friendly nations in the world. The Corporation tax was officially introduced in 2023 in the UAE.

The Mainland companies in Dubai must comply with UAE federal tax specifications. It requires official registration with the relevant authorities, mainly from the Federal Tax Authority (FTA). They need to pay taxes if their profits exceed the taxable threshold.

The companies must file for corporate tax returns annually. Besides, it is necessary to comply with Value Added Tax (VAT) rules. It must be fulfilled if their annual turnover exceeds the registration limit. The business must maintain proper financial records. This helps them to avoid the audits and punitive actions.

New entrepreneurs and foreign investors may find it overwhelming to comply with the long list of requirements and licensing approvals. Legal assistance will be necessary to prepare for trade licensing applications, permits, and approvals. They advise companies regarding the right type of corporate structure. It is essential to meet the compliance requirements for the Mainland. There are tax regulations, and compliance is instrumental.

Dubai has strict compliance requirements but offers safety to business and their investments. The recent reforms are a progress towards an open and business-friendly destination.

This makes things easier, simpler, and convenient for startups and existing businesses. It allows them to thrive, expand, and grow in the UAE. It offers greater stability, transparency, and confidence to the entrepreneurs.