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Dubai has charming business possibilities that can reach many consumers catering from the Gulf to the international audience. From neighboring countries in the Middle East, Eastern Europe, Africa, and Asia, businesses situated in Dubai have over one million people. The emirate also claims 0% personal and corporate tax. Thus, living in Dubai is lower than in most developed cities and is investor-friendly, so many foreigners also like to establish their identity in Dubai. However, there should be a thorough knowledge of the UAE market and an indulgence of the initial costs of business setup in the UAE before forming any startup in the UAE.

The approval through various government departments for the formation of a company is also required. It can be completed with the help of a local sponsor who files for the paperwork and is responsible for 51% of its shares. A single error will result in a resubmission of the form along with financial loss. The three types of famous UAE companies are Free Zone Business Setup, Business setup in the mainland, and offshore Company Setup in UAE. In the free zone business setup, foreign companies and individuals own 100% shareholding are allowed by UAE. Each free zone has its detailed list of activities that are allowed to perform inside that free-zone. UAE mainland comprises business entities that directly get registered under the economic department of Dubai.

Virtual companies with no official requirements or visa eligibility are offshore companies. The shareholders will get a certificate of incorporation or provide required documents and sign their memorandum and article of association with offshore authority. The company can form in two days subject to government approval as an expert’s presence is not required. Offshore companies behold the bank account without any shareholder being a resident of the country.

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Who is a Sponsor?

All foreigners need a UAE local sponsor to visit Dubai (whether on holiday or business) or live and work there. A sponsor can be an individual, a company, or an institution. Those aiming to do business or set up a business in Dubai should research the local business environment. Establish contacts and find an individual or company with a good status and experience in the relevant field to act as your sponsor, who will expect compensation for his services. Finding a local sponsor in Dubai who is reliable could be the most crucial task for setting up a business. In an individual act as a sponsor, it is compulsory to hold a residence visa in Dubai and have a minimum income of AED 10,000 per month.

Immigration control is an effective form of the sponsorship system. Foreigners who want to set up businesses in the free trade zones do not need a sponsor. Company sponsorship comprises two types, and they are local sponsorship and corporate sponsorship.

Local vs. Corporate Sponsorship

With local sponsorship, you are sponsored by an individual rather than a business. This individual must be an Emirati national; aside from that, your partnership may dictate much of the arrangement’s detail. On the other hand, with corporate sponsorship, you are sponsored by an Emirati company. There are plenty of companies out there that specialize in offering sponsorship services, but what they offer can vary extensively.

Pros and Cons of Local and Corporate Sponsorship

The primary reason why many entrepreneurs choose corporate sponsorship over local sponsorship is the reliability and assurance to get high-profile prospects. Many high-powered Emirati business people are sponsors of foreign companies. But not every potential local sponsor for business in UAE has the same connections. However, for local sponsorship, the UAE locals incline to travel frequently. Since much of the subsequent business decisions’ setup process relies on the local sponsor, their availability is vital to your success. Local sponsors may interfere with the company.

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One of the most significant advantages of corporate sponsorship is that your corporate sponsor will never interfere with the business, and corporate sponsorship deals provide entrepreneurs with additional security. But unfortunately, corporate sponsorship is expensive when it comes to service packages. Thus, you need to know each prospect of a company’s service level before agreeing to any condition.

Lastly, Local and corporate sponsorship have their advantages and disadvantages, but it depends on the business of what type of support they are seeking.

 

Shabbir Ahmad

Shabbir Ahmad is a freelance enthusiastic blogger & SEO expert. He is the founder of Shifted Magazine & Shifted News. He contributes to many authority blogs including porch, hackernoon & techcrunch.

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