Everything you should know about a local sponsor while setting up a business in Dubai Mainland
One of the most challenging things entrepreneurs face while setting up business in Dubai Mainland is the issue of foreign ownership. This is because any commercial or industrial Mainland business needs to have a local sponsor.
Thus, foreign entrepreneurs who wish to start their business must have knowledge and clarity about why they need a local sponsor for business in Dubai and what will be the repercussions. This is because they can be 100% foreign-owned and are formed with the help of local service agents. But if you will be involved in commercial, industrial, or trading activities in Dubai Mainland, you will definitely need to find a local sponsor for business in Dubai.
Here are the factors you need to understand before you start finding a sponsor in Dubai
- Local sponsors usually don’t help businesses with their operations or any other work. They merely offer their service as a local representative and enable a foreign entrepreneur to establish their business in the Mainland. And for these services, they are paid a fixed annual fee or a certain profit share.
- In the UAE, you can find many high profile or even celebrity sponsors who claim to be different from others by offering network opportunities or opening doors for specific industries because of their status. Even though this can be true, you need to be aware so that you don’t end up paying extra amount for something that you could easily get through other channels for a smaller amount.
- Things can go wrong in some cases. For instance, in case of death of a sponsor, their share will be passed on to their heir; and if the heir is not interested in being your local sponsor then you will be in major trouble and will not be able to continue trading. So, you can avoid such a situation by going for corporate sponsorship.
Major Advantages of Local Sponsor
In addition to gaining access to the local market, you get to enjoy other major benefits as well when you get a local sponsor for business in Dubai.
Limited Liability Companies that are formed with a local sponsor are completely free from tax, and a foreign investor can repatriate 100% of their profits. Also, you can open multiple branches of your company all across the UAE and can get hold of various government projects that you cannot attain if you are a free zone company.
Lastly, collaborating with a local sponsor for business in Dubai gives you the status of an investor in UAE, which enables you to obtain residence visas for you and your family.