Do You Need a Sponsor to Start a Business in Dubai? The Truth

If you’re considering setting up a business in Dubai, you’ve probably heard about the requirement for a local sponsor holding a 51% stake in your company. This rule has deterred many international entrepreneurs in the past. But how true is this requirement in 2025? Let’s dive in to clarify the facts and explore the evolving landscape of ownership structures in Dubai.

The Sponsor Rule: A Historical Overview

Traditionally, businesses operating on Dubai’s mainland required a local Emirati sponsor to hold 51% ownership. This applied to most industries and created hesitancy among foreign entrepreneurs who were concerned about control and profit distribution.

While sponsors often acted as silent partners with mutually agreed arrangements, the concept itself posed a challenge to those seeking full ownership and autonomy.

Breaking Free: Federal Decree-Law No. 26 of 2020

In a major step to attract international investors, Dubai introduced Federal Decree-Law No. 26 of 2020, which allows 100% foreign ownership of mainland companies in many industries. This eliminates the need for a local sponsor in several high-growth sectors, including:

• Consulting and advisory services
• Technology and IT
• Healthcare
• Manufacturing
• Renewable energy
• Agriculture

This landmark reform gives entrepreneurs the ability to own their mainland businesses outright, maintain full control, and access the local UAE market without restrictions.

The Alternative: Free Zones

If you want to avoid navigating mainland regulations altogether, Dubai’s free zones are an excellent option. These zones are tailored to specific industries and offer significant benefits:

• 100% Foreign Ownership: No local sponsor or partner is required.
• Full Profit Repatriation: Take all your earnings back home without any deductions.
• Zero Import/Export Duties: Perfect for trading businesses.
• Specialized Support: Each free zone offers infrastructure and benefits customized for specific sectors.

Some popular free zones include:

• Dubai Multi Commodities Centre (DMCC):  Ideal for trading, commodities, and e-commerce.
• Dubai Internet City (DIC):  Perfect for IT, software, and tech startups.
• Dubai International Financial Centre (DIFC):  The go-to zone for financial services and hedge funds.

However, one key consideration is that free zone businesses cannot directly trade in the UAE’s local market. To do so, you’ll need to partner with a local distributor or open a mainland branch.

Offshore Companies: A Global Advantage

Dubai also offers the option to establish offshore companies, ideal for businesses focused on international trade or asset protection. Offshore entities provide:

• 100% Foreign Ownership:  No local sponsorship required.
• Tax Efficiency:  Offshore companies are exempt from UAE taxes.
• Confidentiality:  Offshore structures allow for greater privacy and asset protection.

These companies are not permitted to trade within the UAE but are excellent for holding investments, real estate, or conducting international transactions.

Why Ownership Structures Matter

Choosing the right ownership structure is critical to your business strategy. If you’re looking for complete market access, mainland businesses now offer 100% ownership in many sectors. For industry-specific benefits or international trade, free zones and offshore companies provide unmatched flexibility.

Dubai’s progressive policies demonstrate its commitment to being a global hub for entrepreneurs, creating an ecosystem where ambition is rewarded, not hindered.

Key Takeaways for Entrepreneurs

1. Mainland Ownership:  Many industries, including consulting, now allow 100% foreign ownership. Check the latest approved sectors to determine your eligibility.
2. Free Zones:  Offer full ownership and tax-free benefits but restrict direct access to the local UAE market.
3. Offshore Entities:  Best for asset protection and international trade but not for local UAE operations.
4. Expert Guidance:  Navigating Dubai’s evolving regulations requires careful planning. Engage professionals to ensure compliance and maximize benefits.

Ready to Make the Shift?

At Dubai Shift, we specialize in helping UK entrepreneurs and high-net-worth individuals navigate Dubai’s business landscape. Whether you’re setting up a mainland business, a free zone entity, or an offshore company, our experts are here to guide you every step of the way.

Book your call today, and let’s map out your journey to a tax-friendly, growth-focused future in Dubai.

Your next move awaits! 

Haseena from Dubai

A founder, a Dubai insider, globally seasoned. Writing to you from the city I’ve always called home — but now see with fresh eyes.