REQUIREMENTS AND REGULATIONS FOR MAINLAND BUSINESSES

Setting up a Mainland business in the UAE allows companies to operate freely across the entire UAE and engage in local trade without restrictions. However, starting a Mainland business requires compliance with specific regulations and procedures governed by UAE law. This guide outlines the key requirements and regulations that entrepreneurs need to follow when establishing a Mainland business.

Before registering a Mainland business, the first step is to determine the business activity and select the appropriate legal structure. The Department of Economic Development (DED) classifies business activities, and choosing the correct one is essential for obtaining the proper licenses.

Common legal structures for Mainland businesses include:

1. Sole Establishment: Suitable for individuals wishing to retain full control of their business.
2. Limited Liability Company (LLC): The most common structure, providing limited liability protection and allowing for multiple shareholders.
3. Branch of a Foreign Company: A Mainland extension of an international company.
4. Civil Company: Used for professional services such as consultancy, law, or healthcare.

Recent reforms in UAE commercial law have made it possible for foreign investors to own 100% of Mainland businesses in most sectors. However, certain strategic sectors may still require local sponsorship, where a UAE national or company holds 51% of the shares.

For businesses that still require a local sponsor, a Local Service Agent (LSA) can be appointed to handle administrative tasks. The LSA has no ownership rights but acts as a representative for regulatory processes.

Choosing an appropriate trade name for your Mainland business is a key step. The trade name must comply with the UAE’s naming conventions, which include:

1. The name should not include offensive or religious terms.
2. It should not conflict with the names of existing businesses.
3. It must reflect the nature of the business activity.

After selecting a name, it needs to be approved by the DED.

All Mainland companies must have a physical office in the UAE. The DED requires businesses to submit a tenancy contract as part of the licensing process.

1. For small businesses or startups, business centers and shared workspaces are available as more affordable alternatives to traditional offices.
2. The office space must be in compliance with the regulations set by the Dubai Municipality or the respective emirate’s governing authority.

The type of license required depends on the nature of the business activity. The most common types of licenses include:

1. Commercial License: For trading and commercial activities.
2. Industrial License: For manufacturing and industrial operations.
3. Professional License: For service-oriented businesses, including consulting and professional services.

In addition to a DED license, certain industries (e.g., healthcare, real estate, food services) require additional approvals from specific regulatory bodies, such as:

1. Dubai Health Authority (DHA)
2. Real Estate Regulatory Agency (RERA)
3. Food Safety Department

Mainland businesses in the UAE are required to comply with UAE commercial regulations, which include:

1. Annual Financial Audits: All LLCs and other business structures must submit audited financial statements annually to the government authorities.
2. Taxation Compliance: Although the UAE does not have corporate income tax for most sectors, some businesses may be subject to VAT (Value Added Tax). VAT registration is mandatory for businesses with annual revenues exceeding the VAT threshold.
3. Employee Benefits: Companies must comply with UAE labor laws, which mandate certain employee benefits such as annual leave, end-of-service gratuity, and health insurance.

Mainland businesses have the advantage of unlimited visa eligibility, allowing them to sponsor employees and their families. Key points include:

1. Visa Quotas: The number of visas a company can apply for is often linked to the size of the office space. Typically, businesses get one visa per every 8-10 square meters of office space.
2. Investor Visa: Business owners can also apply for an Investor Visa, which grants residency in the UAE.
3. Employee Visas: Mainland companies are responsible for sponsoring work visas for their employees, including managing their visa renewals and cancellation when needed.

Setting up a Mainland business involves paying government fees for registration, licensing, and approvals. Typical costs include:

1. Initial Trade License Fee
2. Local Sponsor/Service Agent Fees (if required)
3. Office Rental Costs
4. Visa Fees

It’s important to budget for ongoing costs, including license renewals, office lease renewals, and employee visa fees.

Conclusion

Setting up a Mainland business in the UAE offers unrestricted market access and the ability to operate across the UAE. However, it also involves navigating a more complex regulatory framework compared to Freezone setups. Understanding the key requirements and regulations will help you stay compliant and make the most of your Mainland business.

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