All about Local Sponsor in Dubai

Local Sponsor in Dubai: Everything You Need to Know

Overview

Setting up a business in Dubai can be a complex process, especially for foreign entrepreneurs. One of the most critical requirements is having a local sponsor. This article will provide a comprehensive overview of local sponsors in Dubai, their roles, and the benefits they offer to foreign investors.

What is a Local Sponsor?

A local sponsor in Dubai is a UAE national or company that provides support and guidance to foreign investors in setting up and running a business in the country. The local sponsor holds at least 51% of the shares in the business, while the foreign investor owns the remaining 49%. This structure allows foreign investors to operate in the UAE market while complying with local regulations.

Types of Local Sponsors

There are three main types of local sponsors in Dubai:

1. Corporate Local Sponsor: A government or local body that holds a minimum of 51% equity in the business. This type of sponsor is often used for large-scale projects or ventures that require significant capital investment.

2. Individual Local Sponsor: A UAE national who holds 51% of the shares in the business. This type of sponsor is commonly used for smaller businesses or startups.

3. Local Service Agent: A UAE national who acts as a representative for the business, handling tasks such as visa sponsorship, compliance, and licensing. This type of sponsor is often used for businesses that do not require significant capital investment.

Role of a Local Sponsor

The local sponsor plays a crucial role in the business setup process. Their responsibilities include:

1. Legal Representation: Assisting in legal matters and government dealings.

2. Visa Sponsorship: Providing sponsorship for work permits and visas for foreign company employees.

3. Compliance and Licensing: Ensuring compliance with local laws and regulations and obtaining necessary licenses and approvals.

4. Local Knowledge and Connections: Offering valuable insights into local market conditions and business practices to build new connections in the country.

5. Business Setup Assistance: Facilitating various processes to set up the business in Dubai, such as business registration, office space leasing, and other administrative tasks.

Benefits of Having a Local Sponsor

Having a local sponsor in Dubai offers numerous benefits to foreign investors, including:

1. 100% Tax-Free Status: Companies with a local sponsor are 100% tax-free, allowing foreign investors to repatriate 100% of their profits.

2. Access to Local Market: A local sponsor helps the company carry out trade locally within the UAE market.

3. Increased Credibility: Having a local sponsor increases the credibility of the business, making it easier to secure contracts and partnerships with local companies.

4. Government Support: Local sponsors often have connections with government officials, which can be beneficial in securing government contracts and approvals.

5. Visa Sponsorship: Local sponsors can provide sponsorship for work permits and visas for foreign company employees.

Finding a Local Sponsor

Finding the right local sponsor is crucial for the success of a business in Dubai. Here are some tips to help you find the best local sponsor:

1. Research: Research local sponsors and their reputation in the market.

2. Referrals: Ask for referrals from other business owners or industry experts.

3. Professional Services: Consider hiring a professional services company that specializes in business setup and local sponsorship.

4. Direct Contact: Establish direct contact with the local sponsor and discuss their terms and conditions.

5. Agreement: Ensure that the agreement is registered in Dubai courts by the notary public and includes the terms and conditions of the sponsorship.

Conclusion

Having a local sponsor in Dubai is a critical requirement for foreign investors who want to set up and run a business in the country. The local sponsor plays a vital role in the business setup process, providing legal representation, visa sponsorship, compliance, and licensing assistance. By understanding the role and benefits of a local sponsor, foreign investors can make informed decisions about their business setup in Dubai.

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