It’s been a major question ever since foreign business people started flocking to Dubai decades ago. And as the emirate continues to attract global entrepreneurs it remains a key consideration: Do you need a local sponsor to set up a business in Dubai? The answer very much depends on exactly where and how you choose to establish your business. The choice of free zone or mainland setup will be central to determining this. So in this article, we will look at the latest government guidelines and clarify when exactly a local sponsor is needed. We will also break down the various types of business licenses available in Dubai and touch on the many benefits to setting up a business in the city. So let’s get started.

Is a local sponsor required for business license in Dubai?

Let’s begin with the official UAE government website. When it comes to sponsorship, it states: ‘The UAE Commercial Companies Law does not require foreign companies wishing to open a branch and practice their business in the UAE to have a local national sponsor/agent, giving a strategic advantage to foreign companies and enhancing the ease and transparency of doing business in the country.’

So what does this mean in practical terms? In most cases, it’s clear that a local sponsor is not needed for foreign investors to get a business license in Dubai, as long as the business is established in a free zone. Free zones are designed to make life easy and to encourage foreign investment by allowing 100% foreign ownership as well as streamlined licensing procedures. The various free zones each cater to specific industries, whether that’s finance, tech, media, and so on. Through these zones a foreign investor can get tailored support for startups and international companies looking to establish a presence in Dubai.

The answer is a little more complex if a foreign investor wants to set up a business outside of a free zone – ie, establishing on the Dubai mainland. There have been, however, recent reforms which have meant that many professional and commercial license types now allow 100% foreign ownership even on the mainland. This move has changed the historical requirement for a local Emirati sponsor or service agent. It should be noted, though, that there are a few strategic sectors that may still require local involvement or at least special approvals. The best advice here is to speak directly with a company setup specialist who can guide you if your business type does fall into one of these strategic categories: These may include defence, oil & gas, and security.

Types of business licenses in Dubai

In Dubai, we can look at six distinct types of license which serve as a kind of framework for most licensing structures. Keep in mind, the UAE officially recognises over 2,000 distinct business activities, but the license types are far broader: commercial, industrial, craftsmanship, tourism, agricultural, and professional.

Let’s look at these now:

  • Commercial License: A commercial license is for companies engaged in trade and general commerce which would cover the buying and selling of goods and services. Under this umbrella you would find import/export, retail stores, logistics, real estate brokerage, and general trading. Generally, these licenses are issued by the Department of Economic Development (DED).
  • Industrial License: Businesses involved in manufacturing or industrial production will require an industrial license. Areas covered include the processing of raw materials or assembling of products (eg, food processing units, textile manufacturers, packaging firms, chemical plants, and so on). The local DED or free zone authority issues these licenses but additional clearances may be required from the government. 
  • Craftsmanship License: This license supports individuals and businesses involved in manual trades and skilled labour (eg, electricians, carpenters, plumbers). They are issued by the DED of the relevant emirate. 
  • Tourism License: If your business is in the tourism and hospitality industry, then you need a tourism license. Some of the key areas covered by this license include travel agencies, tour operators, and event planners. In Dubai, these licenses are regulated by the Department of Economy and Tourism. 
  • Agriculture License: Companies involved in farming, livestock, or fisheries need an agricultural license. Some of the activities included are operating farms, greenhouses, fisheries, and dairy production. These licenses may also require approvals from environmental and agricultural regulatory bodies. 
  • Professional License: A professional license allows individuals or companies to offer services based on academic or technical qualifications. This category includes a number of professional areas including educators, consultants, IT professionals, lawyers, medical advisors, designers, and many more.

Advantages of starting a business in Dubai

Let’s now break down the many advantages and benefits of starting a business in Dubai:

  1. A Thriving Global Commercial Hub: Dubai has firmly positioned itself among the world’s leading business cities with a strong administrative framework and attractive investment climate. It’s focus on non-oil sectors make it a strategic choice for startups and multinational firms. With high-return commercial real estate and forward-thinking economic policies, Dubai offers an ideal launchpad for companies seeking international growth.
  1. Business-Friendly Environment with Tax Advantages: Dubai is known for its investor-friendly regulations and low-tax regime. Foreign entrepreneurs enjoy zero personal income and capital gains taxes, and a modest 5% VAT which is the lowest among major global business hubs. These financial incentives create an attractive environment for both small enterprises and large corporations. 
  1. Exceptional Global Connectivity: Dubai’s world-class aviation infrastructure makes it a gateway to international markets. With two major international airports and thousands of flights connecting to cities worldwide each week, business professionals benefit from unparalleled accessibility. Whether you’re managing operations across continents or meeting global clients, Dubai offers seamless global mobility. 
  1. Easy and Efficient Company Formation: Setting up a business in Dubai is straightforward, thanks to streamlined procedures and the availability of expert business setup services. With just a few key documents entrepreneurs can initiate the licensing and registration process. Company setup specialists can handle the legalities, making the journey from idea to operation fast and hassle-free. Many packages also include additional benefits like a residency visa and assistance when opening a corporate bank account. 
  1. Direct Access to International Markets and Clients: Dubai’s strategic location and well-developed infrastructure provide immediate access to key global markets across Asia, Europe, and Africa. With its diverse economy and strong presence of B2B and B2C industries, businesses find ample opportunities to network, trade, and expand. From major ports to skilled talent pools, everything is in place for ambitious businesses to scale quickly.

About One Business Centre

At One Business Centre (OBC), we have a variety of flexible workspace solutions which cater for a range of business needs. Our offerings include fully furnished private offices, coworking spaces, and virtual offices available across our locations in Dubai and the wider UAE. Whether you are a solo entrepreneur, a startup founder, or a freelancer, regardless of the business you are growing, OBC’s workspaces help you optimise operations and present a strong business image.

Please contact us today to find out more about OBC’s workspaces, and book a free tour of our premium facilities.