DED for Business setup in Dubai?

Understand the role of the Department of Economy and Tourism (DET, formerly DED) for Business setup in Dubai. Learn about mainland licenses, benefits, and key steps.

Key Takeaways:

• The Department of Economic Development (DED) is now part of the Department of Economy and Tourism (DET).
• DET is the primary authority for licensing mainland companies in Dubai, offering full access to the UAE local market.
• Mainland companies benefit from 100% foreign ownership in most sectors and flexibility in office location and visa quotas.
• The setup process involves choosing a business activity, legal structure, trade name, securing initial approval, and obtaining a physical office with Ejari.
• While free zones like SPC Free Zone in Dubai offer distinct advantages, a mainland setup is often preferred for businesses targeting the local UAE market directly.

For any aspiring entrepreneur or established corporation planning a Business setup in Dubai, understanding the role of the Department of Economy and Tourism (DET) is fundamental. Previously known as the Department of Economic Development (DED), this governmental body is the cornerstone for establishing a “mainland” company in Dubai. A mainland company offers unparalleled access to the local UAE market, the ability to engage directly with government entities, and the flexibility to operate across all seven emirates. While free zones provide their own unique incentives, a DET-licensed mainland company often represents a deeper commitment to the UAE’s domestic economy and offers broader commercial scope.

The Role of DET in Business setup in Dubai

The Department of Economy and Tourism (DET) serves as the principal regulatory authority for all economic activities in Dubai’s mainland, playing a pivotal role in the Business setup in Dubai ecosystem.

1. Primary Licensing Authority:
   • DET is responsible for issuing trade licenses for all types of businesses operating on the Dubai mainland. This includes commercial, professional, industrial, tourism, and various other specialized licenses.
   • The trade license is the legal permit that allows a company to conduct its specified business activities within Dubai and across the wider UAE. Without a valid DET license, a business cannot legally operate on the mainland.
2. Economic Regulation and Promotion:
   • Beyond licensing, DET’s mandate extends to planning, supervising, developing, and promoting Dubai’s business and tourism sectors. It works to enhance Dubai’s diversified, innovative, service-based economy.
   • DET aims to attract foreign investment, support entrepreneurs, enforce consumer protection laws, and drive digital transformation to strengthen Dubai’s position as a global hub.
3. Jurisdiction:
   • DET primarily governs mainland companies. These are distinct from free zone companies, which are regulated by their respective Free Zone Authorities (FZAs), such as SPC Free Zone in Dubai.
   • A key difference lies in market access: mainland companies can directly trade with the local UAE market and other mainland companies, whereas free zone companies generally have restrictions on mainland trade without a local agent or a mainland branch.
4. Key Functions for Businesses:
   • License Issuance and Renewal: Processing applications for new trade licenses, amendments, and annual renewals.
   • Activity Classification: Defining and approving the specific business activities a company is permitted to undertake.
   • Legal Structures: Overseeing the registration of various legal structures, such as Limited Liability Companies (LLCs), Sole Proprietorships, Civil Companies, and branches of foreign companies.
   • Consumer Protection: Ensuring fair business practices and handling consumer complaints.
   • Strategic Initiatives: Launching initiatives and policies to foster a business-friendly environment and stimulate economic growth.

For anyone undertaking a Business setup in Dubai with ambitions to fully engage with the local market, the journey inevitably involves the DET.

Advantages of a DET-Licensed Business setup in Dubai

Opting for a DET-licensed mainland company offers several significant benefits that attract a wide range of investors and entrepreneurs to set up their Business setup in Dubai.

1. Unrestricted Access to the UAE Local Market:
   • This is perhaps the most compelling advantage. A mainland company can trade freely and directly with any customer or business anywhere in Dubai and across all seven emirates of the UAE. There are no restrictions on engaging with local consumers or government entities.
   • This direct market access is crucial for businesses targeting the large and growing local consumer base, engaging in retail, services, or large-scale trading within the UAE.
2. 100% Foreign Ownership:
   • A landmark amendment to the UAE Commercial Companies Law in 2021 abolished the long-standing requirement for a 51% local Emirati sponsor for most commercial and industrial activities on the mainland. This means foreign investors can now enjoy 100% foreign ownership of their mainland companies in many sectors.
   • For professional activities (e.g., consultancies, legal firms), 100% foreign ownership was already common, though a Local Service Agent (LSA) might still be required for administrative purposes (without any shareholding). This significant change has made mainland setup even more appealing for international investors seeking full control.
3. Flexible Office Location and Unlimited Visas (based on space):
   • A mainland company has the flexibility to lease office space anywhere across Dubai, whether it’s a prestigious address in Business Bay, a retail unit in a shopping mall, or an industrial warehouse in Al Quoz. The choice of location can be strategically aligned with operational needs and target markets.
   • While a physical office (registered with Ejari) is mandatory, the number of employee visas a mainland company can sponsor is generally unlimited, provided there is sufficient office space to accommodate the staff. This offers greater scalability for businesses planning significant local operations and employee numbers.
4. Enhanced Credibility and Growth Opportunities:
   • A mainland license often carries greater credibility with local banks, government bodies, and large corporate clients within the UAE. It signals a deeper commitment to the local economy.
   • Mainland companies are eligible to bid for government contracts and participate in public sector tenders, opening up significant business opportunities that are generally inaccessible to free zone entities.
   • The ability to open multiple branches across the UAE mainland allows for geographical expansion and building a stronger local presence over time.

These advantages position a DET-licensed mainland company as a robust option for businesses aiming for significant and integrated operations within the UAE.

Key Steps for a DET Business setup in Dubai

The process for a Business setup in Dubai under the DET involves several structured steps, ensuring compliance and smooth registration.

1. Determine Business Activity & Legal Structure:
   • Business Activity: The first step is to precisely define your business activity. DET has a comprehensive list of over 2,000 permitted activities. Each activity is associated with a specific legal form. Ensure your chosen activity is available and suitable for a mainland setup.
   • Legal Structure: Select the appropriate legal structure for your business. Common structures for foreign investors include:
     • Limited Liability Company (LLC): Most common for commercial and industrial activities. Now allows 100% foreign ownership in many sectors.
     • Sole Proprietorship: For single-owner professional services (e.g., consultancy). Requires a Local Service Agent (LSA) for administrative purposes.
     • Civil Company: For partnerships of professionals (e.g., law firms, engineering consultancies).
     • Branch of a Foreign Company: Allows international companies to establish a presence without forming a new legal entity.
     • Representative Office: Limited to marketing and promotional activities for the parent company.
2. Trade Name Reservation & Initial Approval:
   • Trade Name: Choose a unique trade name for your company, adhering to DET’s naming guidelines (e.g., no offensive words, no religious references, must reflect the business nature). Submit a few options for reservation.
   • Initial Approval: Apply for initial approval from DET. This signifies that the government has no objection to the proposed business activity and legal structure. This step often requires submitting passport copies of shareholders and managers, and a basic business plan.
3. Draft Memorandum of Association (MOA) / Local Service Agent (LSA) Agreement:
   • For an LLC, a Memorandum of Association (MOA) must be drafted and notarized by a UAE public notary. This document outlines the company’s capital, ownership structure, management, and objectives.
   • For a professional sole proprietorship or civil company with 100% foreign ownership, a Local Service Agent (LSA) Agreement is required. The LSA is an Emirati national or a UAE-owned company that acts as your administrative liaison with government departments but holds no ownership stake.
4. Secure Physical Office Space & Ejari Registration:
   • A physical office space is a mandatory requirement for mainland companies. The size of the office impacts the number of employee visas you can obtain.
   • Once a lease agreement is signed, it must be registered with Ejari, the official online system of the Dubai Land Department (DLD) for attesting tenancy contracts. A valid Ejari certificate is essential for obtaining and renewing the trade license and processing employee visas.
5. Obtain External Approvals (If Required) & Final Submission:
   • Depending on your specific business activity, you may need additional approvals from other government authorities before DET issues the license. For example:
     • Healthcare: Dubai Health Authority (DHA)
     • Education: Knowledge and Human Development Authority (KHDA)
     • Food-related: Dubai Municipality
     • Financial services: Central Bank of UAE or Securities and Commodities Authority (SCA)
   • Once all initial approvals, MOA/LSA, and Ejari are in place, the final application and all supporting documents are submitted to DET.
6. Trade License Issuance:
   • Upon successful review and payment of the required fees, DET will issue your trade license, allowing your Business setup in Dubai to commence operations legally.

Differences Between DET and Free Zone Business setup in Dubai

While both DET and free zones facilitate Business setup in Dubai, they cater to different business needs and offer distinct regulatory frameworks. Understanding these differences is crucial for making the right choice.

1. Regulatory Authority:
   • DET (Mainland): Regulates companies operating across the entire Dubai mainland and the wider UAE.
   • Free Zones: Each free zone (e.g., SPC Free Zone in Dubai) has its own independent Free Zone Authority (FZA) that governs companies registered within its specific geographical boundaries.
2. Market Access:
   • DET (Mainland): Full access to the local UAE market, ability to engage in B2C and B2B trade anywhere in the UAE, and eligibility for government contracts.
   • Free Zones: Primarily designed for businesses focused on international trade and re-export. Trading directly with the UAE mainland market typically requires a local distributor or agent, or setting up a mainland branch.
3. Ownership Structure (historical vs. current):
   • DET (Mainland): Historically required a 51% local Emirati sponsor for most commercial activities. Now, 100% foreign ownership is permitted for most activities, a significant change. Professional licenses often require an LSA.
   • Free Zones: Always permitted 100% foreign ownership and full repatriation of capital and profits, which was a key historical advantage.
4. Office Space Requirements:
   • DET (Mainland): A physical office space with Ejari registration is mandatory. Visa quotas are generally tied to the size of the office.
   • Free Zones: Offer more flexible office solutions, including flexi-desks, co-working spaces, serviced offices, and dedicated offices. While a physical presence is usually required (even if shared), some free zones offer packages with lower physical footprint requirements, like SPC Free Zone in Dubai‘s flexible desk options. Visa quotas are often tied to the specific office package chosen.
5. Audit Requirements:
   • DET (Mainland): Annual statutory financial audits are generally mandatory for most mainland companies, especially with the new Corporate Tax law.
   • Free Zones: Audit requirements vary by free zone and company type. Some free zones, like certain packages in SPC Free Zone in Dubai, may have simplified audit requirements for smaller entities, while others (especially larger ones) mandate full audits.
6. Cost and Time:
   • DET (Mainland): Initial setup costs can sometimes be higher due to physical office requirements and government fees. The process might take slightly longer due to more external approvals.
   • Free Zones: Often offer more competitive initial setup packages, especially for virtual or flexi-desk options, and the setup process can be faster due to streamlined FZA processes.

Choosing between a DET-licensed mainland company and a free zone entity for your Business setup in Dubai depends entirely on your business model, target market, and long-term strategic objectives. Consulting with a professional business setup advisor is highly recommended to evaluate these factors and ensure you select the optimal jurisdiction for your venture.