This is something that the vast majority of expatriates I speak to do not think is possible when it comes to onshore businesses in Dubai. It is an urban myth that in my opinion has contributed to the success of various free zones that have sprouted up mainly in the neighboring Emirates targeting all manner of entrepreneurs and businesses. Total foreign ownership and control is something that these free zones use abundantly in their marketing campaigns. Listeners of many popular radio stations broadcast in Dubai will have heard the jingles and ads promoting these free zones (my ten year old daughter can name the most advertised free zones and recite their tag lines verbatim!).
Just because you can, as a foreigner, own a business in a free zone does not mean that you cannot own an onshore business. The fact is that for a wide range of business activities you can, either as an individual or as a foreign company. The majority of professional service activities fall into this category, where qualified and experienced foreign individuals can have full ownership and control of their business. A foreign company in the field can also set up as a branch or representative office, allowing them to offer their services directly to the local market. A good example of a business activity that falls under this category is management consultancy.
What you will need is a Local Service Agent, which can be either an Emirati individual or in some cases an Emirati owned entity. This is not be confused with a Local Partner who would have shareholding in the company. The Agent does not have any ownership or control over the professional license, and is paid an annual fee to act in this capacity. This fee varies depending on the level of service and support provided by and required of the Agent, who is responsible for registrations with the Department of Economic Development, Ministry of Labour, and Immigration Department. Ongoing support may involve assistance with employment visas and necessary approvals, renewals etc.
The benefits of setting up onshore? These really depend on the type of business and more importantly the target audience. Very often businesses licensed onshore are perceived as being more legitimate and stable because of the involvement of Local Service Agent. There are also situations where certain government projects and tenders are restricted only to onshore businesses. I have personally come across numerous cases where contracts were lost simply because the business in question was licensed in the wrong jurisdiction.
What about the costs involved? The costs of setting up onshore can be slightly higher because of the requirement to take up physical office space, which many of the free zones do not require. Note however that in the long term costs can be higher because as your business grows, many free zones will require that you take up office space exclusively with them in order to obtain more employment visas. It is also worth mentioning that it is not possible to change license jurisdictions once you have set up a business. If you set up in a free zone and later decide that you want to be licensed onshore, you will need to go through the entire licensing process from scratch which will effect various registrations, employment visas, banking, trade name, and in some cases business continuity.
It is best to let a professional determine the best licensing option for your business. You can also take advantage of serviced office facilities to minimize your onshore office costs and better manage your cash flow. For further information on setting up your business in Dubai, please contact Sentinel Business Centres.