Dubai Onshore Company Formation

What are onshore companies in Dubai?

An onshore company in Dubai is a business located within the city that can be, in certain cases, owned 100% by anyone, including a foreign national. An onshore company has the freedom to operate freely within the entire UAE market and internationally.

Types of onshore companies in Dubai

There are several types of onshore companies in Dubai you can choose to setup:

  • Limited partnership
  • Public shareholding company
  • Private shareholding company
  • Limited liability company
  • Joint venture

There is another option known as a ‘general partnership’ although this is available to UAE nationals only.

Business Growth in Dubai

The number of foreign companies in the UAE continues to increase, with the National Economic Register (NER) revealing 3,209 were registered by the close of 2020. 763 were branches of other Gulf companies and 2,446 were foreign businesses, most of which were based in Dubai.

Compared to the same period last year, the first quarter of 2022 saw an increase of new business licences being issued, with 24,662 being given to new start-ups. 57% of these were professional and 43% commercial. 16,577 of these licenses were given to businesses based in Dubai.

What industries are booming in Dubai?

Contrary to popular belief, Dubai is not an oil-based economy, with 95% of its GDP produced through other sectors. As of 2021-22, the city represented a GP of US$ 46,665 billion. Some of the largest industries in Dubai include:

  • E-commerce

    The e-commerce market is predicted to reach Dh12 billion of local GDP by 2023, growing 64.7% over the next 4-5 years. It is one of the fastest growing e-commerce sectors in the world.

  • Real estate

    Dubai’s real estate market continues to go from strength to strength. The first quarter of 2022 saw the highest number of transactions in a 3-month period since 2010, with 25,972 sales generating AED 55.5bn.

  • Healthcare and wellness

    The pandemic presented a host of new opportunities for the healthcare and wellness sector in Dubai and the country. Some have predicted it could be worth as much as AED 39.4 billion by 2025.

Benefits of having an onshore company in Dubai

Some of the main benefits of having an onshore company in Dubai are:

  • Easy access to local markets

    Bring present on the mainland opens your business up to a variety of other sectors you can collaborate with, helping you to maximise a wealth of new opportunities.

  • Limited liability

    As an onshore company you are given limited liability, which gives your personal assets protection against legal and financial instability.

  • Ownership flexibility

    LLCs are not limited on the number of owners involved, so you have the option to partner with foreign shareholders and corporations if needed.

Who can obtain an onshore company in Dubai?

There are no limitations on who can set up an onshore company in Dubai. So, if you are a foreign investor looking to get started, you simply need to check the conditions related to the type of business you want to start.

Charterhouse offer professional support for this part of the process, helping you make the right decisions to quickly pass through the setup process so you can focus on starting trade.

How to set up an onshore company in Dubai?

To set up an onshore company in Dubai, you will need to follow these steps:

  • Obtain initial name approval.
  • Find a location that can be used as the onshore company’s legal address.
  • The Memorandum and Articles of Association need to be drafted and notarised.
  • You can then set up a bank account where the share capital can be deposited.
  • Shareholder and company director information and statutory documents must then be filed
  • Register the company for tax and apply to receive a VAT number
  • Apply for the relevant license (professional/trade/manufacturing)

What are the ongoing compliance requirements for onshore companies in Dubai?

Tax laws have changed recently in Dubai. From 1 June 2023, all mainland businesses will be liable to pay a standard tax rate of 9%.

Whether your business is registered as a mainland or freezone company you must also pay 5% VAT. You must register for VAT if:

  • Taxable supplies within the UAE are higher than AED 375,000 over the previous 12 months.
  • Over the next 30 days taxable supplies are likely to exceed AED 375,000.

Other compliance issues to be aware of include:

  • Audit of Financial Records

    Mainland companies must have their financial records audited, while audit requirements vary for freezone businesses depending on the jurisdiction.

  • Economic Substance Regulations (ESR)

    UAE entities working within certain sectors are required to maintain an adequate “economic presence” in that country, relevant to their activities.

  • Ultimate Beneficial Owner (UBO)

    All companies must have a UBO register or register of shareholders kept up to date.

  • Anti-Money Laundering (AML) and Counter Finance Terrorism (CFT)

    If you work as a broker, in real estate, deal with precious metals and stones, offer independent accountant services or a are a corporate service provider, you must comply with AML and CFT regulations.

What are the common mistakes made when setting up an onshore company in Dubai?

It’s important to pay attention to the details of setting up an onshore company in Dubai to avoid making mistakes such as:

  • Only using internet-based information

    There is a lot of information online, but you can never be certain if it is 100% correct. Seeking advice from an experienced consultant will ensure you follow the correct legal procedures and do not delay the start of your business venture.

  • Picking the wrong company type and licencing zone

    You need to ensure the right licencing location is chosen (free zone, onshore or offshore) as this will affect the scope and activities of your business. The business type and activity also need to be correct when making an application.

  • Not recording partner arrangements

    Working with a friend or family member has its benefits, but should things go wrong, you should have a legal agreement in place to avoid things becoming even more complicated further down the line.

How can Charterhouse Lombard help?

Charterhouse Lombard have a long and successful track record of helping onshore businesses to get started in Dubai. We offer a variety of professional consultancy services that will help you navigate the legal requirements quickly and easily.

It’s something we’ve been doing for well over 15 years, working with onshore businesses across all sectors who are looking to become part of Dubai’s thriving economy. From managing the documentation to submitting your application, we’ll ensure everything is in order, so you can focus on other important areas of your company, giving you the best chance possible of a successful launch.

If you want to find out more about our onshore company formation services in Dubai, contact the Charterhouse team today and we’ll be happy to discuss your options in more detail.