Opening up a business in Dubai is a goal for many foreign business owners. This offers several tax savings options for the business as well as a booming economy that is very investor friendly.
However, unlike in some countries, there is a more formalized method of company formation in Dubai. The most critical and central decision that most foreign business owners and investors will have to determine is if they want to open a business they retain 100% ownership of or if they should partner with a Dubai sponsor, who must be national.
Free Zone Considerations
For company formation in Dubai with 100% foreign ownership the option to open a business in the free zone areas will be the focus. This offers tax-free benefits, low cost of living and excellent opportunities to market your goods outside of the country.
Businesses in the free zone have specific requirements that must be met to be approved. Additionally, they are limited to only operating in the designated free zone based on their business category. These are also known as offshore companies.
Sponsorship
A foreign investor can partner with a Dubai business owner and create a working agreement where the foreign owner retains up to 49% of the business. In turn, the Dubai sponsor will be paid an annual amount to assist the foreign owner and provide insight and support.
This is not a true partnership in the common understanding of the word in that the Dubai business owner is not directly responsible for the operation of the business or the financial aspects of the business.
With the choice of the sponsorship agreement, a mainland company can be formed. These companies can operate anywhere outside of the free zones, and they can also do business with Dubai.
Both of these options may be ideal for different business types and models. Working with a law firm familiar with Dubai business formation can assist a foreign investor in understanding the pros and cons of each. Visit the website www.stalawfirm.com for more information.
