Updated 24 Jan 2021
The major challenges faced by aspiring entrepreneurs while setting up business in the UAE is the issue of sole ownership. The reason is that, to conduct any commercial or industrial business activity in UAE Mainland, a local sponsor in Dubai is required.
Though late in 2020, amendments to the Commercial Companies Law paved way for 100% foreign ownership. Even in Limited Liability Company (LLC) structure. This implies that there would be no need for local sponsor in Dubai. Thus, foreign entrepreneurs wanting to start their business must have clarity on why they need a local sponsor for business in Dubai. 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 any of the emirates, you will definitely need to get a local sponsor for business in Dubai, Sharjah or Abu Dhabi.
Here are the key factors regarding sponsorship
- UAE company local sponsors usually don’t help businesses with their operations or any other work. They merely offer their service as a local representative. They also enable a foreign entrepreneur to establish their business in the Mainland. And for these services, they have to be paid a fixed annual local sponsor fees 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. They offer network opportunities or opening doors for specific industries because of their status. Even though this can be true, you don’t need to 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 a death of a sponsor, their share is passed on to their heir. And if the heir is not interested in being your local sponsor, 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 companies in Dubai.
Major advantages of local sponsor
Besides gaining access to the local market, you can enjoy other perks as well with a local sponsor for business in Dubai.
Limited Liability Companies that are formed with a local sponsor are free from tax. And a foreign investor, you can repatriate 100% of your profits. Also, you can open multiple branches across the UAE and get hold of various government projects.
Lastly, collaborating with a local sponsor for business in Dubai gives you an investor status in UAE. This enables you to obtain residence visas for you and your family.
How to find a local sponsor in Dubai?
If you are looking for UAE local sponsorship get in touch with Shuraa Business Setup, a pioneer in providing expert company formation services. Shuraa has sown seeds for more than 35,000 firms with its customised business solutions, and helped them grow with value-added services, including ready-to-move co-working offices, PRO, banking assistance, and VAT and accounting support, among others.