If you’re setting up shop in the Middle East, there’s probably no better place than the United Arab Emirates. Don’t just take my word for it; ask the World Bank. In its Ease of Doing Business Ranking for 2020, the UAE continued its pole position in the Middle East and Arab World. Globally, it came 16th in a field of 190 countries.
Once you’ve decided on the UAE as pretty much your default choice, chances are you’ll head to head to Dubai. It’s the region’s foremost business hub, linking markets across the Middle East and Africa to reach a combined population in the billions. Dubai is also densely connected, and has the infrastructure and talent a budding business requires.
When getting a business licence, you might be steered towards one of the city’s many free zones because you’ve been told it’s the only way to guarantee 100% foreign ownership. You might be led to believe that registering business on the mainland, under the ambit of the Department of Economic Development, requires a 49-51% ownership split in favour of an Emirati partner.
That’s not true. As an expatriate, you absolutely can keep 100% ownership of a professional services business registered with the DED.
These are businesses that deal with services innovation, intellectual property, digital goods, marketing, and so on. They stand in contrast to businesses that trade in physical goods – where the 51% Emirati ownership stipulation DOES apply.
So you’re in the business of building, manufacturing, smelting or trading tangible goods, you’ll need to share ownership. It’s worth noting that free zone licences aren’t an option for businesses engaging in the trade of physical goods anyway. A mainland licence is a must.
So now that we’ve clarified the 49-51% split, let’s address a few other concerns. For some reason, popular opinion has it that a DED licence requires multiple visits to government offices, reams of paperwork, and quite a bit of time. Some also tend to think that a DED licence is more expensive than free zone alternatives.
Again, this isn’t the case.
No, it’s not more expensive to register with the DED for a mainland business compared to a free zone setup. It doesn’t need more paperwork or legwork either. To give you an example: we’ve created an all-in-one package that includes a DED licence, local service agent, and requisite office space – at AED 3,200 a month without any upfront fees. You can be up and running inside a week. This is just an example of what’s possible in terms of costs and convenience.
And let’s face it, mainland licences give you advantages. There’s credibility, for one. More doors open for you, and people tend to take mainland companies more seriously – whether you choose to set up as a sole proprietorship or, in case of multiple shareholders, a civil company. It’s also easier to work with government clients — some of whom consider a mainland licence a prerequisite for vendors.
Of course, every entrepreneur must make their business licence choice after considering a range of variables. But suffice it to say, a lot of enduring ideas about DED licences are either completely outdated or just incorrect from the outset. I wanted to set the record straight. For professional service businesses, a DED licence is an attractive and viable setup option well worth investigating.
Prajit Arora is the Managing Director at Sentinel Business Centres.